Nut 304: Food Security, Nutrition, and Development

1

Investing in Food Production, Part I Guest
lecturer Will Masters (william.masters_at_tufts.edu)

• Nut 304 Food Security, Nutrition, and
  Development
• November 16, 2010

2
Investing in food production This week in
context -- the Nutr 304 story so far

• Definitions and measurement (weeks 1-3)
• Household-level interventions
• Capital formation microcredit programs (wk. 4)
• Income support conditional transfers (wk. 5)
• Nutrition enhancement child feeding etc. (wk. 6)
• Policy analysis exercise on food transfers (wk.
  7)
• Market-level interventions
• Price levels and stability (week 8)
• Agricultural trade (week 9 from Lynn Salinger)
• Investing in food production (weeks 10 11)
• Economywide growth (wk 12 from Bea Rogers)
• Integrated policies (week 13)

3
Investing in food production Background readings
for this week

• World Bank, World Development Review 2008
  Agriculture for Development
• released October 2007, first WDR to address
  agriculture since 1986, whose theme was Trade and
  Pricing Policies in World Agriculture WDR 1982
  was also on ag.
• W.A. Masters (2005), Paying for Prosperity How
  and Why to Invest in Agricultural Research and
  Development in Africa, J. of Int. Affairs,
  58(2), 3564.
• Review for a special issue on Finance Challenges
  of the Millennium Development Goals.
• Rockefeller Foundation (2006), Africas Turn A
  New Green Revolution for the 21st Century.
• Launch document for AGRA, the Alliance for a
  Green Revolution in Africa
• Glenn D. Stone (2010), The Anthropology of
  Genetically Modified Crops. Annual Review of
  Anthropology 39 381-400.
• Nice impartial review from an outside discipline
  (not agricultural science or economics)
  insiders are much more pro-GMO

4
Investing in food production Outline for today

• Why a special focus on agriculture?
• Why do some regions, like Africa, lag behind?
• How does farm size matter for productivity?
• How has foreign aid for food productivity
  changed?
• How has private agricultural RD changed?

5
Investing in food productionWhy a special focus
on agriculture?

• In low-income places where food is scarce,
  agriculture is
• The largest sector
• most people, most use of natural resources, most
  exports
• The poorest sector
• most poor people, most degradation of resources,
  most taxation of exports

6
Farming is what poor people do!
Source World Bank (2007), WDR 2008 Agriculture
for Development. Washington The World Bank.
7
Farming is what poor people doShould donors
join the exodus from agriculture?

• In low-income places where food is scarce,
  agriculture is
• The largest sector
• most people, most use of natural resources, most
  exports
• The poorest sector
• most poor people, most degradation of resources,
  most taxation of exports
• In general, agriculture offers
• low productivity relative to other sectors
• variable productivity relatively to other sectors
• limited prospects for growth or future stability
• The overwhelming flow of investment is to
  off-farm activity
• the route out of poverty is out of agriculture
• Within rural areas richer farmers invest in
  nonfarm rural enterprises
• Within poor countries individuals and households
  migrate to urban areas
• Across countries migration, trade and investment
  favors non-farm work
• Why not focus on urbanization, to buy the food
  people need?

8
Investing in food productionWhy a special focus
on agriculture?

• In any given year
• Food availability is limited, so someone must
  grow food
• Objective 1 is productivity, so even more people
  and resources can move to faster-growing sectors
• Nonfarm jobs are limited, so the poorest farmers
  have no choice
• Objective 2 is productivity, to relieve poor
  farmers poverty, during the transition before
  they move to faster-growing sectors
• Among non-farmers, the poorest spend more on food
• Objective 3 is productivity, to reduce the cost
  of food and allow people to spend more on other
  things
• And eventually
• Farmland remains available, and food production
  remains important for environmental, cultural and
  social reasons
• Objective 4 is productivity, for
  multifunctional objectives
• Investment in agriculture is always about
  productivity,
• to fuel other sectors farm output rarely grows
  very fast

9
Investing in food productionWhy a special focus
on agriculture?
The classic formulation is

• Increasing supply, so as to meet rising demand
  demand growth population growth
  elasticityincome growth
• Increasing exports, so as to buy imports for
  other things
• Reducing labor use, so as to free workers for
  other things
• Generating capital, for investment in other
  things
• Increasing rural demand, for buying other things

10
Investing in food productionWhats different now?

• In starting AGRA, the Alliance for a Green
  Revolution in Africa, the Rockefeller Foundation
  (2006) argued
• Africa missed out on farm productivity gains
  elsewhere,
• RD-driven productivity gain requires
  philanthropic action, beyond what companies
  governments can do.
• Some reasons for the neglect of agricultural
  productivity are
• Gains are non-excludable (private firms cant
  capture value)
• Gains are international (national governments
  cant either)
• Gains are difficult to observe and predict (need
  impact data)

11
Investing in food productionWhy did Africa miss
out on the green revolution?
Source World Bank (2007), WDR 2008 Agriculture
for Development. Washington The World Bank.
12
Why do some regions lag in food production?
Kenneth Bouldings answer, written (hastily) in
1966
The Old Agricultural Lag, in No Easy Harvest
The Dilemma of Agriculture in Underdeveloped
Countries, by Max Millikan and David Hapgood.
Boston Little, Brown and Co., 1967.
13
Why do some regions lag in food production?
Looking at the data. How can we explain this
classic observation?
14
There is a close link between new seeds
fertilizer
Source Y. Hayami and V. Ruttan (1985)
Agricultural Development An International
Perspective. Baltimore, The Johns Hopkins
University Press.
15
Today, the main concern is Africas lag
Source Reprinted from W.A. Masters, Paying for
Prosperity How and Why to Invest in
Agricultural Research and Development in Africa
(2005), Journal of International Affairs, 58(2)
35-64.
16
Africas fertilizer use grew in the 1960s-70s,
but could not be sustained
Source Reprinted from W.A. Masters, Paying for
Prosperity How and Why to Invest in
Agricultural Research and Development in Africa
(2005), Journal of International Affairs, 58(2)
35-64.
17
Africa faces big geographic hurdles
18
More recent data Is Africas green revolution
finally arriving?
USDA estimates of average cereal grain yields
(mt/ha), 1960-2010
Source Calculated from USDA , PSD data
(www.fas.usda.gov/psdonline), downloaded 7 Nov
2010. Results shown are each regions total
production per harvested area in barley, corn,
millet, mixed grains, oats, rice, rye, sorghum
and wheat.
19
Rural population pressure varies widely by
region and over time
Africa faces a severe demographic headwind
Current rural population
Rising rural population implies decline in
available land per rural person
480 m.
1.1 b.
310 m.
1.4 b.
we are here
Falling rural pop. allows rising land per rural
person
Source Calculated from FAOStat (downloaded 17
March 2009). Rural population estimates and
projections are based on UN Population
Projections (2006 revision) and UN Urbanization
Prospects (2001 revision).
20
How many people work on each farm?
Note Countries shown are, from left to right
China, Cape Verde, Japan, Yemen, Lao P.D.R.,
Philippines, Pakistan, Senegal, Greece, Morocco,
French Guiana, Algeria, Portugal, Netherlands,
Belgium, Ireland, Austria, Germany, France,
Denmark, Luxembourg, Venezuela, Finland, Brazil,
Chile, Sweden, Uruguay.
21
Average farm size is available land per farm
household
Reprinted from Robert Eastwood, Michael Lipton
and Andrew Newell (2010), Farm Size, chapter 65
in Prabhu Pingali and Robert Evenson, eds.,
Handbook of Agricultural Economics, Volume 4,
Pages 3323-3397. Elsevier.
22
A big window of opportunityAfricas rural pop.
growth rate is slowing fast
Demographic conditions are changing
From above 2 per year, for over 30 years
to about 1.3 per year and falling
no change
Source Calculated from FAOStat (downloaded 17
March 2009). Rural population estimates and
projections are based on UN Population
Projections (2006 revision) and UN Urbanization
Prospects (2001 revision).
23
How does farm size relate to technology adoption?
Reprinted from Thomas P. Tomich, Peter Kilby and
Bruce F. Johnston, 1995, Transforming Agrarian
Economies Opportunities Seized, Opportunities
Missed.  Ithaca Cornell University Press.
24
How does farm size relate to labor use?
Reprinted from Thomas P. Tomich, Peter Kilby and
Bruce F. Johnston, 1995, Transforming Agrarian
Economies Opportunities Seized, Opportunities
Missed.  Ithaca Cornell University Press.
25
How does farm size relate to access to credit?
Reprinted from Thomas P. Tomich, Peter Kilby and
Bruce F. Johnston, 1995, Transforming Agrarian
Economies Opportunities Seized, Opportunities
Missed.  Ithaca Cornell University Press.
26
Taking account of all inputs Farm size and
total factor productivity
Reprinted from Thomas P. Tomich, Peter Kilby and
Bruce F. Johnston, 1995, Transforming Agrarian
Economies Opportunities Seized, Opportunities
Missed.  Ithaca Cornell University Press.
27
So, how does farm size distribution matter?
Reprinted from Thomas P. Tomich, Peter Kilby and
Bruce F. Johnston, 1995, Transforming Agrarian
Economies Opportunities Seized, Opportunities
Missed.  Ithaca Cornell University Press.
28
Investing in food production Todays story so
far

• Food productivity growth helps to accelerate
  transition to non-farm activity, and to
  alleviate poverty during the transition
• Africa has faced particular geographic hurdles in
  food productivity, and demographic pressure
  driving farm size down
• Smaller farms are not necessarily less
  productive they
• adopt innovations faster for seeds, fertilizer
  other divisible, labor-using inputs
• and adopt more slowly for machinery and other
  lumpy, labor-saving inputs
• they achieve highest total productivity when land
  is distributed equitably,
• But in any case reduced land per farmer reduces
  farm income, unless offset by productivity growth

29
The need for more food does gradually slow down
30
But is the agricultural engine slowing down too
soon?
31
One reason for slower growth is declining Green
Revolution aid
32
Since the mid 1980s we have contributedvery
little to Africas farm productivity gains
What happened to the level and mix of foreign aid?
Foreign aid to African agriculture fell to about
US1 per capita (vs. 4/pers. in health and 38
in total ODA).
Reproduced from W.A. Masters (2008), Beyond the
Food Crisis Trade, Aid and Innovation in African
Agriculture. African Technology Development
Forum 5(1) 3-15.
33
Worldwide trends in agricultural RD
Reprinted from Philip G. Pardey, Nienke Beintema,
Steven Dehmer, and Stanley Wood (2006),
Agricultural Research A Growing Global Divide?
Food Policy Report No. 17. Washington, DC
IFPRI.
34
A global food productivity slowdown?
Julian M. Alston, Jason M. Beddow, and Philip G.
Pardey (2009), Agricultural Research,
Productivity, and Food Prices in the Long Run.
Science, 325(5945) 1209-1210.
35
The slowdown has been in the quantity of inputs
used, not overall efficiency or total factor
productivity
Source Reprinted from K.O. Fuglie (2010), Total
Factor Productivity in the Global Agricultural
Economy Evidence from FAO Data, in Julian M.
Alston, Bruce A. Babcock, and Philip G. Pardey,
eds. The Shifting Patterns of Agricultural
Production and Productivity Worldwide. Ames,
Iowa Iowa State University, pages 63-95.
36
For example, how has input use changed in the US?
Source Reprinted from Julian M. Alston, Matthew
A. Andersen, Jennifer S. James, and Philip G.
Pardey (2010), Shifting Patterns of Agricultural
Production and Productivity in the United
States, in J.M. Alston, B.A. Babcock, and P.G.
Pardey, eds. The Shifting Patterns of
Agricultural Production and Productivity
Worldwide. Ames, Iowa Iowa State University,
pages 193-227.
37
Productivity of input use is driven by RD, which
has had huge payoffs around the world
Source J.M. Alston, M.C. Marra, P.G. Pardey
T.J. Wyatt (2000). Research returns redux A
meta-analysis of the returns to agricultural
RD. Australian Journal of Agricultural and
Resource Economics, 44(2), 185-215.
38
Almost all ag. RD in poor countries is gvt.
funded private agric. RD is limited even in
rich countries
Share of agricultural RD funded by the private
sector, 2000
Source Reprinted from P. Pardey (2010),
Reassessing PublicPrivate Roles in Agricultural
RD for Economic Development, in A.G. Brown,
ed., World food security can private sector RD
feed the poor? Deakin, Australia Crawford
Fund, pages13-23.
39
For example, how has US agricultural RD changed?
Trends in U.S. Public and Private Agricultural
RD, 1950-2007
Reprinted from P.G. Pardey (2009), Reassessing
Public -Private Roles in Agricultural RD for
Economic Development. Slides presented at the
Crawford Fund Annual International Conference,
27 October 2009, Parliament House, Canberra.
40
GMO seeds have been developed and adopted
quickly
The most visible private ag RD is in biotech
Approx. share of global farm area in 2008
Global Area of Biotech Crops, 1996 to
2009 Industrial and Developing Countries
(millions of ha)
Worldwide 2.5 of 4.96 b. ha
Indust. Co. 5.4 of 1.29 b. ha
Deving. Co. 1.5 of 3.67 b. ha
Reproduced from Clive James (2010), Global Status
of Commercialized Biotech/GM Crops 2009. ISAAA
Brief No. 41. ISAAA Ithaca, NY (www.isaaa.org).
41
GMOs have been effective in only four major crops
The impact of GMOs has been surprisingly narrow
Share of global area for that crop in 2008
Global Area of Biotech Crops, 1996 to 2009, By
Crop (millions of hectares)
Soybeans 70 of 95 m. ha
Maize 24 of 157 m. ha
Cotton 46 of 34 m. ha
Canola 20 of 30 m. ha
Reproduced from Clive James (2010), Global Status
of Commercialized Biotech/GM Crops 2009. ISAAA
Brief No. 41. ISAAA Ithaca, NY (www.isaaa.org).
42
The impact of GMOs has been surprisingly narrow
GMOs have been effective for only two kinds of
traits
Global Area of Biotech Crops, 1996 to 2008, By
Trait (millions of hectares)
Reproduced from Clive James (2010), Global Status
of Commercialized Biotech/GM Crops 2009. ISAAA
Brief No. 41. ISAAA Ithaca, NY (www.isaaa.org).
43
New biotechnologies have not (yet?) helped raise
food productivity in the worlds poorest areas
The impact of GMOs has been surprisingly narrow
Global Status of Biotech/GM Crops (hectares in
2009)
Egypt lt0.05 m.
Romania lt0.05 m.
Slovakia lt0.05 m.
Poland lt0.05 m.
Czech R. lt0.05 m.
Spain 0.1 m.
Portugal lt0.05 m.
Canada 8.2 m.
China 3.7 m.
mainly cotton
USA 64 m.
India 8.4 m.
only cotton
Mexico 0.1 m.
Philippines 0.5 m.
Honduras lt0.05 m.
Egypt lt0.05 m.
Costa Rica lt0.05 m.
Colombia lt0.05 m.
Australia 0.2 m.
Burkina Faso 0.1 m.
Bolivia 0.8 m.
Chile lt0.05 m.
Argentina 21 m.
Paraguay 2.2 m.
Brazil 21.4 m.
S.Africa 2.1 m.
Uruguay 0.8 m.
Reproduced from Clive James (2010), Global Status
of Commercialized Biotech/GM Crops 2009. ISAAA
Brief No. 41. ISAAA Ithaca, NY (www.isaaa.org).
44
To conclude
Back to todays outline

• Why a special focus on agriculture?
• Why do some regions, like Africa, lag behind?
• How does farm size matter for productivity?
• How has foreign aid for food productivity
  changed?
• How has private agricultural RD changed?