Food Security, Domestic Policies and Trade Liberalization

1
Food Security, Domestic Policies and Trade
Liberalization

• Linda M. Young
• Dept. of Agricultural Economics
• December 3, 2003

2
What is food security?

• Secure access at all times to sufficient food
  for a healthy life
• Sufficiency enough food for a healthy life, not
  just survival
• Access determined by individual resources
• Derived from human and physical capital
• Security chronic, transitory or cyclical
  insecurity
• Appropriate unit of measure is the household

3
(No Transcript)
4
Distribution of Income or Consumption
5
Food Gaps

• Food availability Grain and root production,
  imports and food aid
• Status quo maintain per capita consump.
• Nutritional req. to meet min cal/day
• Distribution gap needs accounting for income
  distribution (lower income quintiles lower per
  capita availability)

6
Food Gaps 2002 and 2012 (1,000 tons)
D Distribution
7
2050 percent of population living on 1/day
50 percent of population living on 1/day
8
2050 percent of population living on 2/day
50 percent of population living on 2/day
9
War increase in protracted emergencies

• During war
• Producers forced off the land
• Holding camps
• Distribution of food aid
• May lower prices
• Supply channels disrupted
• Foreign exchange diverted
• Food as a weapon

10
The Stock of Refugees and Civil Wars, 19512001
Source Gleditsch and others (2002) UNHCR (2002).
11
Duration of Civil Wars over Time
Source Collier, Hoeffler, and Söderbom (2003).
12
Chronic Hunger

• Measures have huge shortcomings
• Hunger without disruption to production
• Famine occurs in times of economic expansion
• Amarta Sen
• Think about entitlements
• Individual endowments
• Changes in endowments (loss land, labor)
• Changes in entitlement mapping (prices, wages,
  loss of employment)

13
Child Malnutrition under Low and Medium
Population Projections, 2000
Source IFPRI IMPACT projections, June 2001
14
AIDS and Food Security

• 3.5 million orphans
• 36 million people with AIDS-95 in developing
  countries
• Mortality 10X that of war
• SSAgt10 HIV positive

15
Impact on Food Security

• Loss of 7 m ag workers
• Rural communities hard hit
• ? dependents per worker
• Social customs perpetuate-brother marry the widow
• Women vulnerable

16
How to Achieve Food Security

• Food security enhanced by
• Domestic production
• Not self-sufficiency
• Ability to import
• Contingent on adequate exports
• Poverty alleviation
• More income equality
• Safety nets
• Peace and good governance critical

17
Taxing Agriculture

• Developing countries taxed agriculture
• Transfer out of agriculture 45 1960-84
• Why
• ? terms of trade in world markets, developed
  country protectionism
• Agriculture
• thought price unresponsive (involvement in
  markets low),
• wanted technical change in industry

18
Cheap Food Policies

• Low food prices for urban areas (no food riots)
• Subsidized industry
• Consequently
• Low producer prices
• Food aid accepted ie India
• Industrial subsidies discouraged ag investment
• Overvalued exchange rates, differential exchange
  rates-discouraged exports

19
Trade Liberalization for Poor Countries

• Result of structural adjustment programs
• World Bank and IMF
• What happened?
• Debt crises
• Bail out required
• How many countries ?
• 35 countries (agriculture) 1979-1993
• World Bank total 55 between 1980-90

20
Elements of Structural AdjustmentThe Washington
Consensus

• Trade liberalization plus
• Fiscal discipline-deficits reduced, expenditures
  reprioritized
• Exchange rate devaluation
• Foreign direct investment encouraged
• Privatization

21
What did this mean?

• Food subsidies abolished
• Low world prices into developing country markets
  for agriculture
• Input prices increased
• Unemployment high lack of flexibility
• No safety net for unemployed
• Example abolition of parastatals

22
Successful Policies Mexico and Progressa

• Ended universal tortilla subsidies 1999
• Universal subsidies inefficient, costly
• Food large expense vis a vis income
• Progressa
• Cash grants to poor rural household
• Children must attend school
• Household visit health clinics, workshops

23
Progressa continued

• Free basic health care, prenatal care,
  nutritional supplements for children, money for
  food
• Conditional on attendance at workshops and health
  clinics
• Financial transfers to women
• Higher assistance for girls in school

24
Research on Gender

• Mothers education critical
• Egypt-increasing mothers education- to complete
  primary school reduces living below poverty
  line by 33
• Women devote more to childrens nutrition
• Increasing women's assets and access to land and
  capital
• Women at nutritional disadvantage

25
Keep Criteria in Mind

• Go back to what we need for food security
• Agricultural production-enough
• Exports to allow imports when needed
• Poverty alleviation-reduction of income
  inequality
• Safety nets

26
Idea Behind Trade Liberalization

• Comparative advantage
• Specialize in what you are good at producing
• Remove government interference from the market
• Occurred extensively in manufactured goods
• Many rounds of negotiation through the GATT
• Agriculture had been a special case
• Negotiations started in 1986

27
Benin, Burkina Faso, Chad and Mali Cotton
Initiative

• All west African cotton exporters
• World price depressed due to US cotton policies
  (also EU, China)
• US cotton policies include marketing loans and
  decoupled support
• Advanced proposal at the Cancun Ministerial that
  the U.S. and other countries would
• Phase out support for their cotton producers
• Over three years

28
Compensation

• Provide compensation to cotton-producing LDCS to
  offset lost revenue during this transition
• to local cotton producer associations
• Compensation Losses calculated at 250 million
  direct, with indirect 1 billion
• Compensation decreases as subsidies decrease
• Want to benefit from their comparative advantage

29
Developed Country Agricultural Subsidies

• IFPRI
• Subsidies displaced some US40 billion in net
  agricultural exports and reduced incomes in those
  countries (spin offs and dynamic effects not
  included
• ½ due to EU
• 1/3 due to US
• 1/5 due to Japan

30
If All Industrialized Countries Liberalized
Their Policies

• Increase in incomes (ag and agro-industrial) in
  of income
• China-1.5
• Thailand-11
• Carribean-9.5
• Boswana-14.6
• Zambia-5
• It would have an impact
• But is not enough

31
Conclusions

• Overall, food security has improved but
• Still problematic, SSA, South Asia
• Trade and trade policy can make a difference
• Domestic conditions matter-a lot
• Good governance (Peace!)
• Institutions, education, poverty alleviation,
  reducing income inequality, health care

32
Least developed countries have become major net
importers of agricultural products
33
Share of food imports in total apparent food
consumption