State intervention for food price stabilisation in Africa: Can it work?

Although its arguments may have more general applicability, this paper discusses the desirability and options for the stabilisation of staple food prices principally in Eastern and Southern Africa. It addresses three broad questions: (i) why is stabilisation of food (grain) prices desirable? (ii) what is technically feasible? and (iii) can the governance and trade issues thrown up by suggested mechanisms be solved? It considers a number of options for price stabilisation, assessing the strengths and weaknesses of each and suggesting situations in which each may be appropriate.     

Managing food price risks and instability in a liberalizing market environment: Overview and policy options

Managing food price risks and instability is a major challenge in the midst of ongoing food market reforms. Key findings from the papers in this special volume revolve around five broad areas: (i) the sources and magnitudes of food price instability in different country contexts; (ii) the economic and social costs stemming from price instability; (iii) the lessons from food market reforms to date; (iv) the design of policy reforms in ways that promote efficient and stable market development and protect the interests of the poor; and (v) potential policy responses to food price instability in a liberalizing market environment.     

Risks and spatial connectivity evidence from food price crisis in rural Indonesia

This paper examines the impact of the agricultural commodity price surge globally experienced in 2007/2008 and thereafter on income growth of agricultural producers and non-producers using recent panel data from Indonesia. First, during this period, producers experienced significantly higher earnings and total income growth than non-producers (narrowing their income gap). Second, the negative effect on non-producers’ real incomes was smaller in spatially well-connected areas, where, to mitigate the impact, private transfers (such as remittances) as well as employment incomes increased among non-producers. In contrast, government programs did not effectively cushion the income shock. Therefore, informal insurance was more effective than formal government-funded social protection programs to mitigate the crisis shock.     

International trade and world food security : The role of developed countries since the World Food Conference

No mechanism is in place for the international coordination of grain stocks. World market stability is largely dependent upon the actions of major grain trading countries. These countries have avoided the exportation of their domestic supply variations onto world markets over the past decade, but have been reluctant to allow domestic consumption to respond to world shortages and surpluses. Improvement in the sensitivity of domestic storage and consumption to world conditions could increase their contribution to world food security.     

Wheat markets,food aid and food security in Afghanistan

In Afghanistan, after two decades of civil strife and successive droughts from 1998 to 2002, large inflows of food aid, distributed mainly to returning refugees and through food for work programs, have helped offset production shortfalls of wheat, the country’s major staple. At the same time, private international trade from neighboring countries, especially Pakistan, has also played a major role in augmenting wheat supply and stabilizing prices.     

Rice market integration and food security in Nepal: The role of cross-border trade with India

Coarse rice market integration between Nepal and India is analyzed applying a threshold autoregressive model. The price response behaviour of traders is found to be consistent with an asymmetric price adjustment mechanism, indicating coarse rice prices in Nepal respond to shocks originating in India. The results show that adjustments to negative price deviations from long-run stable equilibrium are faster than adjustments to the positive ones given a null threshold. Given that trade flows mainly from India to Nepal, Nepali traders would adjust their prices upward to align with the long-run equilibrium value relatively more quickly in the case of negative price deviations, than if the price deviations were positive. Such a high speed of adjustment to negative price deviations could be detrimental to net food buyers’ food security status in the absence of a price stabilization mechanism. However, a price stabilization policy in Nepal, a food deficit and import dependent country, would hardly have any effect on prices unless further effort is made to build up the level of national food reserves for short-term food security interventions. In the current context of structurally low levels of national food reserves, an alternative short-term policy such as foreign aid, in the form of food or income transfers, targeting the most vulnerable households to price increases is necessary through social safety net programmes. In the long-run, an improvement of transportation infrastructure between market hubs (other than the Biratnagar trade basin) in the Terai (Nepal) and India would contribute to the reduction of transaction costs and create incentives for more competition in formal cross-border trade with India. In times of negative shocks such as the high food price crisis in 2008, restrictive food trade policies in India will continue to undermine household food security in Nepal.     

Poverty effects of food price escalation: The importance of substitution effects in Mexican households

Recent food price increases reportedly caused significant numbers of households to fall into poverty, particularly in the developing world. Most research into the welfare effects of these food price changes assumes constant demand or approximates second order substitution effects. Poverty forecasts with these assumptions may overestimate or underestimate the effect of food price increases in a nation where most households consume diverse food baskets. We account for full substitution by calculating a theoretically consistent food demand system, accounting for household responses to food price changes by decreasing some food purchases and increasing other food purchases. We use Mexican data to confirm the mitigation of adverse welfare effects from food price increases after accounting for country-specific dietary preferences in modeling demand. In comparison to previous literature, our welfare measures predict theoretically consistent numbers of Mexican households entering poverty due to recent food price changes.     

The food situation in developing countries : Two decades in review

This article presents an overview of the general changes in the food situation in developing countries over the past two decades, and especially since the 1974 World Food Conference. Following an examination of trends in production, consumption and trade in basic food staples of Third World countries, the article looks at possible strategies for improving their food situation.     

The Thrifty Food Plan and low-income households in the United States: What food groups are being neglected?

Food assistance programs in the United States provide low-income households with the resources to purchase a healthy, nutritious, and palatable diet, if they buy the market baskets of food outlined in the Thrifty Food Plan. This study compares the cost of these baskets with actual spending on food at home by low-income households. Simulations reveal at-home food spending by low-income households to represent only 86% of what is needed to follow the Thrifty Food Plan. Married couples with children and female-headed households with children spend only 73% and 82%, respectively, and just 43% and 50% for at-home fruits and vegetables.     

Urban agriculture,poverty, and food security: Empirical evidence from a sample of developing countries

Urban agriculture may have a role to play in addressing urban food insecurity problems, which are bound to become increasingly important with the secular trend towards the urbanization of poverty and of population in developing regions. Our understanding of the importance, nature and food security implications of urban agriculture is however plagued by a lack of good quality, reliable data. While studies based on survey data do exist for several major cities, much of the evidence is still qualitative if not anecdotal. Using a recently created dataset bringing together comparable, nationally representative household survey data for 15 developing or transition countries, this paper analyzes in a comparative international perspective the importance of urban agriculture for the urban poor and food insecure. Some clear hints do come from our analysis. On the one hand, the potential for urban agriculture to play a substantial role in urban poverty and food insecurity reduction should not be overemphasised, as its share in income and overall agricultural production is often quite limited. On the other hand, though, its role should also not be too easily dismissed, particularly in much of Africa and in all those countries in which agriculture provides a substantial share of income for the urban poor, and for those groups of households to which it constitutes an important source of livelihoods. We also find fairly consistent evidence of a positive statistical association between engagement in urban agriculture and dietary adequacy indicators.     

Food scare crises and price volatility: The case of the BSE in Spain

Recent incidents of contaminated food products coupled with the widespread diffusion of news by mass media and the growing social concerns about food safety, have resulted in significant food market crises. One of the most highly publicized recent food scares involved Bovine Spongiform Encephalopathy (BSE). In our analysis, we evaluate the impacts from a BSE outbreak on the price volatility transmission along the Spanish food marketing chain by using a smooth transition conditional correlation (STCC) GARCH model. Our work is the first to assess price volatility responses to food scares. Results suggest that two distinct regimes involving different price volatility behavior can be distinguished, one characterized by turbulent markets and another where markets are calming down.     

Postmodern conceptualizations,modernist applications: Rethinking the role of society in food security

Food security studies, while giving ever more attention to issues of perception and local knowledge in food outcomes, have yet to engage in a systematic discussion of the role played by society in food outcomes. While contemporary studies of food outcomes address issues of the social, especially as social structures relate to access to and production of food, this literature lacks an accompanying theory of the social that might lend it broad, cross-contextual coherence.     

Prospects for food demand and supply in Central Asia

Central Asia has experienced massive economic and social shocks during the past decade following the dissolution of the former Soviet Union. Demand for cereals, particularly for staple cereals and meats, has fallen significantly even as production and productivity have plummeted. Although agricultural reforms were launched in 1991, the performance of the agricultural sector has been weak across the region. Prospects for food security in Central Asia appear mixed. Projections indicate that a growing and urbanizing population in Central Asia with rising incomes will increase demand for cereals by 32% between 1995 and 2020 to reach 24 million tons, and for meat by 47% to reach 2.9 million tons. Improvements in crop productivity will be essential to meet the increases in demand projected for the region. Cereal production is forecast to keep pace with demand such that Central Asia will be virtually self-sufficient in cereals. However, national food self-sufficiency or food security does not necessarily translate into household or individual food security. Moreover, self-sufficiency comes with a high price-tag of opportunities foregone and inappropriate use made of resources. Given the growing enthusiasm for food self-sufficiency in Central Asia, it is imperative that research be undertaken to assess the full costs and benefits of such a policy.     

The impact of food safety standards on processed food exports from developing countries

This paper examines the impact of food safety standards on processed food exports in developing countries. A panel data econometric analysis of processed food exports in developing countries was undertaken. The Sanitary and Phytosanitary Standard (SPS) is incorporated into the model to capture the impact of food safety standards. The empirical model shows that food safety standards imposed by developed countries could impede processed food exports from developing countries. This could emerge because practically, SPS is less transparent than tariffs or quotas. There is an ample room for developed countries to tweak the standards stronger than necessary to achieve optimal levels of social protection, and to twist the related testing and certification procedures to make their competing imports more competitive. In addition, limited supply-side capacity of developing countries, especially in terms of resources, manpower as well as institution, constrains the countries to overcome food safety standards. Because of the potential benefits that could emerge from imposing food safety standards such as a reduction in transaction costs and trade friction, developing countries should view SPS not just as a trade barrier but also as an opportunity to upgrade quality standard and market sophistication. Supply-side capacity in developing countries needed to be improved, especially upgrading agriculture sector. Multilateral efforts are also needed to mobilize additional financial and technical assistance to help redress constraints in developing countries in meeting the required food safety standards imposed by developed countries.     

Migration and food consumption patterns in Ghana

This paper examines the link between migration and food consumption patterns in Ghana, which has a history of widespread migration and high levels of poverty. Data from 4130 households from the nationally representative 2005/2006 Ghana Living Standards Survey are used for the analysis. Since migrants self-select into migration, an instrumental variable approach is taken to analyze the relationship between migration and total food expenditures per capita, food expenditures across a range of food categories and shares of food expenditures across these categories. Overall, the results indicate that migration does not substantially affect total food expenditures per capita, and has minimal noticeable effect on food expenditure patterns. Looking at results in different settings, the analysis indicates that only in high migration regions does migration appear to increase overall food expenditures resulting in a shift towards the consumption of potentially less nutritious categories of food, such as sugar and beverages and eating out of the home. The results raise questions about the value of migration for improving the food consumption of migrant sending households.     

A welfare measure of consumer vulnerability to rising prices of food imports in the UAE

The recent and expected continuing rise in food prices has re-ignited concern and discussion in the United Arab Emirates about the country’s vulnerability to food supply shocks. Defining vulnerability as the compensating variation relative to household income, we find that although UAE households in the lowest income quintile spend on food on average less than a quarter of what households in the highest income quintile spend, the former are 3.5 times more vulnerable to rising prices of food imports than the latter.     

Stabilizing food markets in eastern and southern Africa

A major challenge for agricultural policy in Africa is how to address the market instability-related causes of low farm productivity and food insecurity. This paper highlights structural changes affecting the behavior of food markets in eastern and southern Africa and discusses their implications for the design of strategies to stabilize food prices. These changes include (1) an increasing trend in maize prices toward import parity levels, reflecting an emerging structural maize deficit in much of the region; (2) increasingly diversified food consumption patterns in both rural and urban areas; (3) highly concentrated marketed maize surplus, which have largely unrecognized implications for the magnitude of price risk faced by most farm households; and (4) the strategic interactions between private and public marketing actors leading in some cases to heightened market instability and food crises. In the prevailing dual market environment now characterizing most of the region, greater coordination, transparency, and consultation between private and public market actors is needed to achieve reasonable levels of food price stability and predictability.     

Water scarcity and food trade in the Southern and Eastern Mediterranean countries

This study investigates food trade patterns in relation to water resources availability in the Southern and Eastern Mediterranean countries (SEMED). Examinations show that most of these countries have a high dependence on the import of water intensive crops – cereal, vegetable oil and sugar, in the domestic food supply. The region as a whole is marginally a net exporter of fruits and vegetables, while variations are substantial across countries. Multi-variable regression analyses show that intensification of water scarcity is an important factor in explaining the increase in food import in the SEMED countries during the past two decades. It also finds that while GDP per capita has a strong influence on the level of food import in a country, its impact on changes in the import during the same period is rather modest. No significant relationship is found between the trade of fruits and vegetables and water resources availability. The projection on food import with respect to the decline in per capita water resources availability results in an increase of 40%, 39% and 14%, respectively, for cereal, vegetable oil and sugar by 2020 in the region, holding other factors constant. The European Union (EU) is the major food trade partner of the SEMED countries, except for cereal. About 70% of the fruit export and 55% of the vegetable export of the region currently go to the EU market. Expanding the export of fruits and vegetables is conducive to improving the value of water use in the SEMED countries. However, the expansion is constrained partly by the barriers in the destination markets, notably the EU.     

Private voluntary standards in the food system: The perspective of major food retailers in OECD countries

The paper examines the main economic and institutional incentives which have driven major OECD food retailers in their use of private voluntary standards and discusses their growing role in shaping the agri-food system. It is based on interviews with quality and safety directors of major OECD retailers and a brief survey of retailers’ actual buyer practices. Though not all retailers are included, these firms account for over 70% of retail food sales in OECD countries. We find that the growing voice of civil society, changing legal and institutional frameworks, increased market concentration and buying power as well as their integration with financial markets has provided the setting for development of private standards. While food safety and quality standards are seen as key to maintaining and improving reputation as well as against legal liabilities, additional standards such as labour, environmental and animal welfare are also gaining ground as strategies for customer loyalty and market shares. The grass-roots retailer move in the harmonization of food safety standards is seen as an initial step towards a global approach to managing the food system, with harmonization of other standards likely in the future. Given their buyer power, these developments can be viewed as a way of governing the food system and will be important for both OECD and non-OECD food and agricultural sector evolution in the coming years.     

The impact of the Social Cash Transfer Scheme on food security in Malawi

The Malawi Social Cash Transfer Scheme (SCTS) was launched in 2006 to improve food security by directly providing cash transfers to the country’s most destitute households. Although government-implemented cash transfer schemes have gained popularity throughout Latin America, these schemes are just emerging in Africa. While where there is evidence of the beneficial impact of cash transfers on food security from Latin American countries, there is a dearth of evidence from resource poor countries in Africa.