Prices of foodstuffs began to rise sharply almost two years ago, culminating in the benchmark FAO Food Price Index reaching an all-time high in March 2022.

The main factors behind the upward trajectory in food prices include robust demand supported by the swift and strong recovery from COVID-19 related economic contractions. In parallel with growing demand, higher prices for fertilizer and fuel have added to the cost of producing food and added to higher prices.

Higher costs have been manifested on international markets through logistical hurdles , higher transportation costs and disruptions of supply chains. Together, supply constraints and robust demand catapulted food prices to unprecedented heights in March 2022.

The war in Ukraine has only exacerbated matters in recent months. Both countries are major producers and exporters of wheat as well as several other commodities, casting doubt on whether international markets will be supplied with enough food to meet the import needs of a global population fast reaching 8 billion.

The Russian Federation is also the world’s leading exporter of fertilizers, especially nitrogen, which the country derives from its vast natural gas reserves.

The 2008 food crisis, which caught the world off-guard owing to a confluence of factors that shocked demand and supply fundamentals in global food markets, sending food prices to record highs. Today, policy makers are aware that the world is facing a potentially similar situation, albeit with different drivers of crisis.

This paper seeks to equip the world with preparedness, advocating a set of blueprints to safeguard food security for those most at risk of crisis – economically-vulnerable net food-importing countries. The International Monetary Fund (IMF) instigated a facility in the 1980s to finance cereal imports for such countries. This paper sets out to propose a new and comprehensive food import financing facility under the auspices of all foodstuffs, providing food and nutritional security to those countries particularly exposed to soaring international food prices, as reflected in their elevating food import bills.

Particularly at risk are poor, economically vulnerable countries with large food import needs. It is therefore proposed to equip these countries with a Food Import Financing Facility (FIFF) that helps ease their immediate food import financing costs. By tapping into the FIFF, vulnerable countries could mitigate long-lasting impacts on their agrifood systems and reduce future needs for emergency assistance.

As a first step, this technical background paper is prepared for defining eligibility criteria for countries that are in prospective need of the FIFF. The background paper also assesses the overall costs of the facility under different eligibility assumptions. These first estimates suggest a funding volume of nearly USD 25 billion, covering the 62 most exposed countries, with a total population of 1.78 billion people.