Does food security matter for transition in Arab countries?

Expectations are high that transition in Tunisia, Egypt, Libya, and Yemen will bring about more freedom, justice, and economic opportunities. However, experiences from other world regions show that countries in transition are at high risk of entering conflicts, which often come at large economic, social and political costs. In order to identify options on how conflict may be prevented in Arab transition countries, this paper assesses the key global drivers of conflicts based on a dataset from 1960 to 2010 and improved cross-country regression techniques. Results show that unlike in other studies where per capita incomes, inequality, and poor governance, among other factors, emerge as the major determinants of conflict, food security at macro and household-levels emerges as the main cause of conflicts in the Arab World. The high exposure of Arab countries to global food price variations proves to be an important source of vulnerability for a peaceful Arab transition. If history is also a guide to the future, improving food security is not only important for improving the lives of rural and urban people; it is also likely to be the key for a peaceful transition. The paper concludes with a set of policy options on how to improve food security at macro and household-levels, including safeguard mechanisms against excessive price volatility, export-led and pro-poor growth, the creation/expansion of social safety nets and targeted nutrition programs.     

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.     

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.     

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.     

Evaluating the impact of reforming the food subsidy program in Egypt: A Mixed Demand approach

Food subsidy is one of the policies considered to protect consumer welfare against food price increases, in particular when the insufficient local production has to be complemented by food imports with volatile prices. Egypt has experienced several “food crises” (the latest in 2008), which put an halt to attempts to reform in depth the system of food subsidies because of social unrest. In this paper, we use a Mixed Demand approach to analyze the consumption structure of Egyptian households. Our model specification takes into consideration the characteristics of the Egyptian food subsidy system, where some food items have predetermined quotas while others are associated with predetermined (subsidized) prices. Price, income and quota elasticities are estimated from the Egyptian family expenditure survey, and welfare change measures are derived by income class. Simulations of various options to eliminate subsidies on selected food items are conducted. We estimate the negative welfare impact of the reforms, especially in the context of increasing food prices, by comparing welfare effects of policy options by income quartiles and by household category (rural, urban).     

Consequences of unintended food policies: Food price dynamics subject to the Israeli–Palestinian conflict

Israel’s imposition of military security measures in the Palestinian territories as a consequence of the long-lasting violent conflict between them has negative economic effects on all parties concerned. One crucial outcome is the limited ability to carry out trade, which brings about welfare losses. Conflict-induced policies such as security measures can result in sizable unintended externalities that shape the markets of and the trade in food. We assess the dynamics of daily wholesale prices of food produced in Israel and the West Bank that is traded between them and is therefore subject to restrictions on movement. To do so, we suggest a regime switching cointegration model which is estimated using a novel extension of the Johansen estimation method. We find that the two major wholesale markets of the two regions are integrated with regard to these main trading products. Deviations from price equilibria are quickly adjusted. The model suggests that movement restrictions temporarily cut off markets from each other. Implications of conflict-induced closures for welfare depend on the direction of trade and are harming both Palestinian and Israeli consumers.     

An improved maize marketing system for African countries: the case of Zimbabwe

This article proposes a system for Zimbabwe which retains government control of national stocks and enables the parastatal marketing system to stabilize prices, at the same time ensuring a more rational delivery system in rural areas with prices reflecting storage and transport costs. The local population is encouraged to fulfill local needs, thus avoiding the expense of directing all marketing and processing through the urban areas. A more localized system will also have greater multiplier effects. Zimbabwe's maize marketing system is used to show how this system could be modified with benefits to rural consumers, producers and government. Data suggest there is little market exploitation: price differentials between markts reflect transport costs, returns on storage are reasonable, and voluntary procurement operations are usually able to stabilize prices. Zoning, movement restrictions and compulsory procurement have been shown to destabilize food markets; prices between markets are higher in periods of strict control than when marketing is relatively free. Controlled marketing answers a real political and economic need in Zimbabwe. Existing public food marketing agencies are not inherently inefficient. While stabilizing maize supply, there are important advantages in announcing preplanting prices, but any trade in maize only takes place after price setting. It is unlikely that there would be both imports and exports in any 1 year, except when previous contracts are being fulfilled. 2 policy options are available to cover anticipated periods of insufficient national maize production: the maintenance of a strategic reserve; and importation of maize to cover supply shortfalls. Single-channel marketing should be replaced by an internal free market operating between floor and ceiling prices by supply manipulation to prevent excessive producer and consumer welfare fluctuations. This system would be more efficient and have beneficial effects on development. It is more equitable for the rural poor, and result in greater stability of producer incomes, more reliable food supplies, higher producer prices and the release of public funds.     

Does trade openness contribute to food security? A dynamic panel analysis

Despite significant progress in the fight against hunger during the last decades, food insecurity remains a major problem in many countries, especially developing ones. In this study, we use a large cross-country data to investigate the impact of trade openness and other factors on food security, measured by dietary energy consumption. We employ a system GMM approach to account for unobserved heterogeneity, correlated individual effects and potential endogeneity of the explanatory variables. The empirical results reveal that trade openness and economic growth exert positive and significant impacts on dietary energy consumption, and also contribute to improvements in dietary diversity. The results are robust to the inclusion of additional variables capturing specific agro-climatic constraints (e.g. weather-related) and regional/country characteristics and to the sample composition. Most geographical regions are found to have significantly higher food security levels compared to Sub-Saharan Africa. Additional results indicate that besides calorie consumption, trade openness also improves dietary diversity and diet quality-related aspects of food security.     

Egypt: Food security and food aid

This article examines the multifaceted notions of food security and food aid through a case-study of a rather exceptional country in political terms - Egypt. Egypt has achieved a high degree of food security with lessened reliance on domestic production and has become one of the largest recipients of cereal food aid. The analysis considers significant questions about the interdependence of food security and food aid, the maintainability of an externally dependent food system, its implicit resource costs and its internal distribution and equity impact.     

Romania’s accession to the EU: Short-term welfare effects on food consumers

This paper focuses on estimation of the welfare effects on different Romanian households of assumed food price changes as a result of EU accession. Using the Slutsky compensating variation approach, results suggest that these changes affect welfare differently for various categories of households. Although on average the welfare loss is 2.6%, a higher impact is estimated for low-income groups. However, the relatively high share of home-produced consumption of food diminishes these impacts, in particular for rural households, and somewhat smaller monetary amounts would be required if compensation is paid.     

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 food security challenge

The article first describes current market conditions and the nature of the food security challenge they present. Second, the article considers the kinds of food security measures which have been or could be taken with respect to improving LDC operations in commercial grain markets, using reserves to achieve supply and price stabilization objectives and making food aid a more effective instrument for food security.     

Impact of metal silos on households’ maize storage,storage losses and food security: An application of a propensity score matching

Maize is the most important food staple in Eastern and Southern Africa, with a highly seasonal production but relatively constant consumption over the year. Farmers have to store maize to bridge seasons, for food security and to protect against price fluctuations. However, the traditional storage methods do not protect grain well, resulting in large postharvest losses. Hermetically sealed metal silos kill storage pests by oxygen deprivation without pesticides. Popular in Central America, they are now being promoted in Africa, but their impact here has not yet been studied. This study used propensity score matching to evaluate the impact of metal silos on duration of maize storage, loss abatement, cost of storage, and household food security. Metal silo adopters (N = 116) were matched with non-adopting farmers from a representative sample of 1340 households covering the major maize-growing zones in Kenya. The major effect of the metal silos was an almost complete elimination of losses due to insect pests, saving farmers an average of 150–200 kg of grain, worth KSh9750 (US$130). Metal silo adopters also spent about KSh340 less on storage insecticides. Adopters were able to store their maize for 1.8–2.4 months longer, and to sell their surplus after five months at good prices, instead of having to sell right after the harvest. The period of inadequate food provision among adopters was reduced by more than one month. We conclude that metal silos are effective in reducing grain losses due to maize-storage insects, and that they have a large impact on the welfare and food security of farm households. The initial cost of metal silos is high (KSh20,000/1.8 ton) and therefore policies to increase access to credit, to reduce the cost of sheet metal, and to promote collective action can improve their uptake by smallholder farmers.     

Long-term crop productivity response and its interaction with cereal markets and energy prices

Crop yields are endogenous as long as economic agents adjust to permanent changes in expected prices. The literature, however, does not offer a definitive value of how much yield would change in response to sustained price changes. To fill the gap, we use available scientific findings and data to estimate yield elasticities that enable agricultural commodity and food policy analysis. Using a world market model with short- to long-run yield response, we show the impacts of sustained energy price shocks on global cereal supply and demand. The results highlight substantial differences in quantity and price effects depending on the yield elasticities. These results demonstrate the need to recognize yield response when assessing impacts of energy prices or biofuel production on food uses or, more generally, on food security in the face of income and population growth, evolving dietary patterns, climate change implications, or other long-run pressures.     

国际油价冲击与中国的经济增长——基于非对称关系视角的分析

本文基于季度数据，引入非对称协整模型，考察国际油价与中国经济增长的动态关系，并鉴于油价波动对不发达经济体可能的冲击，还测度了油价的不确定性并探析其对经济增长的影响，结果表明：（1）从短期来看，国际油价变化是国内经济增长的单向Granger原因，“中国因素”对全球油价变化的影响尚不明显；（2）从长期来看，国际油价和经济增长具有非对称协整关系，油价上涨对经济的影响明显大于油价下跌所产生的效应；（3）国际石油市场存在正反馈交易行为，导致油价波动在油价上涨时表现更加明显。油价不确定性在短期内对经济增长存在负面影响，长期中则不会显著影响经济增长。以上结果意味着必须高度重视石油安全问题，加强油价波动预警与风险管理系统。     

Export restrictions – Do consumers really benefit? The wheat-to-bread supply chain in Serbia

Our approach combines price transmission and gross margin analysis at different stages of the wheat-to-bread supply chain. Results suggest that the effects of export restrictions on the end consumer prices for bread, and thus food price inflation, heavily depend on the price behavior of the intermediates. In contrast to theory, consumers in Serbia experienced welfare losses despite comprehensive governmental market interventions. In particular, consumers were confronted with increasing flour and bread prices, which cannot be fully explained by increasing production costs, whereas mills, bakeries and retailers increased their profits. Thus, export controls in combination with high price volatility in the supply chain have to be considered as a further factor driving food price inflation.     

Food scare crises and developing countries: The impact of avian influenza on vertical price transmission in the Egyptian poultry sector

A bivariate smooth transition vector error correction model is applied to monthly poultry price data to analyze the effects that avian influenza has had on price transmission along the Egyptian poultry marketing chain. In order to reflect consumer awareness of the crisis, an avian influenza food scare information index is developed and used within the model as a transition variable. Our results suggest that price adjustments to deviations from the market equilibrium parity depend on the magnitude of the avian influenza crisis. Further these adjustments are found to have very different implications for market equilibrium: during the crisis retailers use their market power to increase marketing margins. In contrast, wholesaler margins are found to decline. Results also suggest that food safety information indices contribute to understanding the economic effects of food scare crises in developing countries.     

Food aid and household food security in a conflict situation: Empirical evidence from Northern Uganda

It is well-established that armed political conflict has a detrimental effect on food security and household welfare: conflict induces food insecurity by reducing own food production, access to food through the market, and various other resources to sustain healthy and productive lives. One way of mitigating these adverse effects is to provide food aid. In this study we evaluate the impact of a World Food Programme intervention on household food security and asset protection among conflict-affected households in Northern Uganda. We employ propensity score matching to estimate the average treatment effect on food expenditure, food consumption and preservation of assets using a sample of 1265 observations from a 2008 survey. Our results reveal that the operation’s system of targeting beneficiaries was effective and in accordance with programme objectives. Food aid considerably reduced food expenditure of households, suggesting that recipients were net buyers of food, and that the food aid received was effectively consumed within the household. A corresponding positive effect on non-food expenditure was not found. Our results also indicate that food aid was effective in increasing meals consumed and in avoiding distress destocking of low value assets, but, surprisingly, only for male headed households.     

Impact of tissue culture banana technology on farm household income and food security in Kenya

While tissue culture (TC) technology for vegetative plant propagation is gradually gaining in importance in Africa, rigorous assessment of broader welfare effects for adopting smallholder farm households is lacking. Using survey data and accounting for selection bias in technology adoption, we analyze the impact of TC banana technology on household income and food security in Kenya. To assess food security outcomes, we employ the Household Food Insecurity Access Scale (HFIAS) – a tool that has not been used for impact assessment before. Estimates of treatment-effects models show that TC banana adoption, combined with improved crop management, causes considerable increases in farm and household income. Technology adoption also reduces relative food insecurity in a significant way. These results indicate that TC technology can be welfare enhancing for adopting farm households. Adoption should be further promoted through upscaling appropriate technology delivery systems.