The billboard propped up at the side of the dusty road offers what the land it stands on cannot provide : a sack of grain, the top prize in an advertising campaign sponsored by a mobile phone company.

Here in Niger, lottery winners win food. And looking beyond the signs along the sweltering route to Tillabéri– a region 18.5 miles (30km) from the capital, Niamey, on a road which stretches north into the Sahara desert and Timbuktu – it is not hard to see why.

Fields of stunted millet stand baking in the 35C heat, a land pocked by dry river beds, and the occasional carcass of a starving cow. This is a picture of hunger – one that is raising increasing concerns from international aid bodies and humanitarian organisations.

Nearly 12 million people in Niger – about 80% of the population – are now affected by food insecurity, a status that indicates they have as few as 10 days' food supplies remaining with all other income-generating activities exhausted.

Without urgent assistance, there are fears that many will starve.

The causes of the crisis are complex. Last year, exceptionally heavy rainfall destroyed crops and devastated this year's harvest. The resulting fall in production in staples like maize, millet and sorghum has affected much of West Africa's Sahel – fragile in the best of times – including neighbouring Chad and northern Nigeria.

But Niger is the country most greatly affected, in particular its children, 17% of whom are already malnourished, well above the 15% threshold for an emergency. Save the Children now estimates that as many as 400,000 children in Niger are facing starvation.

Aid agencies have been monitoring levels of food insecurity since 2005, when the last crisis was triggered by drought and locusts destroyed much of the previous year's food production.

But the extent of today's food crisis – and the deterioration of so many children's nutritional status in particular – has taken many by surprise.

"These are very high levels of child malnutrition, the situation is bad," said Gianluca Ferrera, deputy director for the UN world food programme (WFP) in Niger. "The loss in harvest last year was worse than expected, and the lean season started earlier than anticipated for a larger share of the population.

"In some areas, there is a 50% malnutrition rate for children under 2. Many of these children will not survive."

Fatoumata Soumana, disaster risk and emergency response adviser for the Niger branch of Plan, a non-governmental organisation, said the situation was getting worse. "In some areas, things are worse than in 2005." Plan invited the Guardian to Niger out of concern for the lack of media coverage of the crisis.

Along the route to Tillabéri, a large crowd has gathered at a busy clearing beside the road. Hundreds of people from local villages – teenage cattleherders, elderly farmers, nursing mothers and young children – jostle for space in the intense heat, forming separate queues for men and women that snake loosely around sacks of tightly packed corn.

The goal for those here is the allocation of 100kg rations for each seven people – the average size of a family in Niger. Talata Sourghakoy, an animated elderly woman sweating profusely under a long, black hijab which covers her traditional African cloth, has travelled from the nearby village of Sakoria and has been waiting all day.

"There are 15 people in my family, this will not be enough," she said. Despite her emaciated frame and the obvious severity of the situation facing her Sourghakoy jokes about the need for more food. Her smile reveals only a few bottom teeth, and prompts lively interruptions from other women standing nearby. As they move back and forth between the piles of corn and the donkeys lined up along the roadside, the women insist that the distribution is insufficient to protect their families from hunger.

It is not the first time they have received free food. In June a government report showed malnutrition levels in Niger had already passed the emergency threshold. Sourghakoy said food given out then ran out less than two weeks after she received it.

Like many villagers in the area, she has a field but last year it produced no harvest. She has survived by selling pepper and dried onions in the market – which earns her 50p a day. She now uses this to buy small portions of the crops which her family should have been able to grow.

"I have been feeding my family half portions – I make dinner and divide it in two, we eat the other half for breakfast. We are hungry. I pray to God that there will be food from the harvest this year. If there isn't, we will need more food distributions, or we will die."

The paradox of this year's worsening food shortage is the presence of plentiful quantities of food in many markets throughout the country. "There is a relatively good flow of food into the markets in Niger, yet prices remain extremely high," said Ferrera. "Since 2008 there has been a lot of speculation and tension in the markets. There has been good food production in neighbouring countries, yet prices are abnormally high."

The potential for high food prices to cause food insecurity and famine has been criticised in recent years. Speculation in agricultural commodities on the international financial markets since 2006 has been blamed for price increases of up to 300% for some basic foodstuffs, including rice and cereals, a phenomenon described by UN special rapporteur on the right to food, Jean Ziegler, as "silent mass murder".

"There is food in the markets but the purchasing power of the people is very weak," said Mahamadou Danda, Niger's prime minister. "Without assistance, the people cannot afford to buy it."

The willingness of the authorities to acknowledge the severity of the situation has surprised many aid workers. A military junta toppled the elected government in a coup in February, but is gradually receiving the backing of the international community amid the promise of elections early next year.

The authorities say they are doing their best to address the food crisis. "We are now dealing with two or three emergencies," said Colonel Abdoulkarim Goukoye, head of a high commission for food security and a member of the junta.

"Over the last week the first rains have caused heavy flooding. There are villages where everything has been completely destroyed."

"We are also facing problems of security in northern regions where teams cannot gather information and reach certain parts. In addition this is a nomadic population, which is constantly moving, making it hard to assess the needs."

Experts say the security situation – including armed rebellions in some oil and uranium rich areas of Niger, and the activity of groups linked to al-Qaida around the desert borders – have complicated efforts to distribute food.

Last week it emerged that Michel Germaneau, a 78-year-old French aid worker kidnapped near the border with Mali, was executed by the group al-Qaida in the Islamic Maghreb three months after his capture. "We are very concerned about the security situation in parts of Niger," said Ferrera. "It is a major handicap that prevents us from the proper monitoring of food insecurity."

But international organisations say that the immediate obstacle preventing them from meeting the urgent food needs of hundreds of thousands in Niger is a donor shortfall of over $100m.

"It has been very difficult to raise enough funds," said Ferrera. "There is a lot of donor fatigue [and] many countries are suffering austerity measures. Funding contributions are coming in slowly, but the window for buying food is now."

At the food queue on the road to Tillabéri, Ramatou, 19, heavily pregnant but painfully thin, waits for her rations.

"I don't know how this will be enough," she said. "I remember food problems when I was a child, but nothing like this. And now that I have my own children I don't know how we will cope. I am afraid a time will come when we will just have to go without food."