_GLOBAL FOOD INSECURITY OUTLOOK_ _19_ In April 2022, immediately following the outbreak of the Ukraine crisis, the FAO Food Price Index (FPI) stood at 154.9, a +27.5% increase over the previous year (+31.7% taking the March reading). To offset the impact of this level of price increase on household expenditures, an aid program would need to meet a 21.5% replacement cost (24.1% taking the March reading) or roughly 25% to account for basic overhead. The cost of a minimum calorie sufficient diet has been put previously at a conservative average figure of US $ 0.75 per capita per day for the IDA countries in the WFP cohort in 2020 (FAO, IFAD, UNICEF and WHO, 2021).<sup>23</sup> In some regions this figure is higher.<sup>24</sup> For tractability and simplicity, the cost coefficient is kept fixed across countries, thus assuming food for aid is bought at IDA-typical prices everywhere. Narrower future needs assessments leveraging the proposed projections could use region-specific values or take into account the prices that prevail in source countries.

Using the projected severely food insecure populations and the per capita response costs of US $ 0.75, adjusted annually for food price inflation, figure 2 projects the 25% replacement cost needed to offset an approximate 30% food price inflation in the minimum costs of daily caloric needs.<sup>25</sup> The compounding effects of rising food insecurity and rising food prices since 2020 have a drastic effect on the projected needs, reaching over US $ 106 billion in 2022 alone, up from under US $ 60 billion for an equivalent 25% expenditure replacement prior to the pandemic. In IDA countries alone, the projected needs exceed the total IDA commitments that followed the pandemic by about 14%.

The result also highlights that while food insecurity was already on the rise during 2015-2019, the impact on financing resources were largely evened out by favorable developments in global food prices so that development assistance financing needs rose only modestly. This signifies the difference in the current global situation. The long-term projection highlights that even though the prevalence rate was projected to improve slightly, the continued growth in population totals offsets this, keeping the global population that is in need of assistance relatively flat through 2027. If this occurs jointly with ‘only’ a normalization of food price inflation toward the 2005-2022 long-term average, then development assistance needs are set to spiral largely out of control, reaching about US $ 150 billion set development objectives, such as improved schooling or climate change resilience, toward addressing chronic food insecurity. The shortfall in funding itself introduces a major risk for humanitarian finances. 23It is important to note that the costs of a nutrient adequate (US $ 2.33 global average) and healthy diet (US $ 3.75 global average) are higher, and unaffordable even for the populations who live above the US $ 1.90 poverty line but are vulnerable to becoming poor.

> 24The Global average is US $ 0.79, while it is as high as US $ 0.88 in lower middle-income countries, and as low as US $ 0.70 in low-income countries.

> 25The US $ 0.75 figure is indexed to the annual FAO Food Price Index. The FPI for 2023-2027 is extrapolated using the 2005-2022 geometric average rate of annual increase, thus reflecting a normalization or ‘soft landing’ of inflation pressures rather than deflation, as happened after the 2008 market collapse. In the downside scenario, the increased food price inflation of the WEO’s downside are used. At the current FPI reading (148.3, September 2022), this corresponds to about 53 days of US $ 1.90 income. At the end of 2019, replacing 25% of the minimum calorie diet would have only equated to 36 days of US $ 1.90 income, or 3 days of extreme poverty income per month.