Sources of food price volatility and child malnutrition in Niger and Malawi

In recent times, considerable attention has been paid to the nutritional impact of the sharp hikes in the international food prices which took place in 2007–8 and 2010–11. While understandable, this growing focus has perhaps obscured the impact of other variables affecting malnutrition in Sub-Saharan Africa, i.e. the long-term impact of agricultural policies on food supply and prices, large and persistent seasonal variations in food prices, and the impact of famines which still affect parts of the continent. This paper focuses on the relative impact of these factors on child malnutrition (measured by the number of child admissions to feeding centres) in Malawi and Niger, two countries which closely represent the situation of other small, landlocked, subsistence agricultural economies facing severe food security problems. Our analysis shows that in these countries the drivers of changes in domestic staple prices and child malnutrition are related not only – or not primarily – to variations of international food prices but also to the impact of agricultural policies on food production and prices, in a persistent food price seasonality, and in recurrent and poorly managed famines. These factors can exert a strong upward pressure on food prices and child malnutrition even during years of falling international prices.     

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.     

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.     

Self-reported food insecurity in Africa during the food price crisis

This article analyzes data on self-reported food insecurity of more than 50,000 individuals in 18 Sub-Saharan African countries over the period 2005–2008, when global food prices increased dramatically. The average level of self-reported food insecurity was high but remarkably stable over time, at about 54%. However, this average hides large heterogeneity, both within countries and across countries. In eight of the sample countries, self-reported food security improved, while it worsened in the ten other countries. Our results suggest that heterogeneous effects in self-reported food security are consistent with economic predictions, as they are correlated with economic growth and net food consumption (both at the household and country level). Specifically, in the face of rising food prices, self-reported food security improved on average in rural households, while it worsened in urban households – a finding that holds when using global prices or domestic food prices. Improvements in food security over time were also positively correlated with net food exports and GDP per capita growth. While the self-reported indicator used in this paper requires further study and one should carefully interpret the results, our findings suggest the need for a critical evaluation of the currently used data and numbers in the public debate on food prices and food insecurity.     

Three bubbles and a panic: An explanatory review of recent food commodity price events

This paper is a summary of the behaviour of food commodity prices in 2007–2008 and a review of the causes of the price increases, extracted from a report to the Chief Scientific Advisor to Her Majesty’s Government [Thirtle, C., Piesse, J., 2008. An Explanatory Review of the World Food Commodity Price Events of 2007–2008. A Report to the Chief Scientific Advisor. Department for Innovation, Universities and Skills, London]. The historical background shows that the price spike was much less severe than in the 1970s. The conventional wisdom that prices of the main food commodities were falling prior to 2006 is questioned. Most ceased falling and were quite stable from the 1980s. The paper separates the causes of the spike from the underlying changes driving the long run trends. The literature on the causes of the spike is critically reviewed and summarised. There is a reasonably broad consensus on most of the causes, but much less on the impact of the depreciation of the US Dollar. There are also concluding speculations on the future.     

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.     

Economic factors affecting the increase in obesity in the United States: Differential response to price

A sharp increase in obesity during the last 15 years in the United States became one of the nation’s main public health problems. The theory of rational addiction seems to explain human behavior in food consumption leading to obesity reasonably well. The interesting thing about our results is that the tax policy, normally used to correct various distortions, is to serve in this case as the preventive policy: additional taxes on future prices of the addictive (sweet) foods contribute to lower sugar consumption and BMI at present time. On the other hand, increasing education level is usually considered a preventive type of policy. In this case, it leads to lowering the levels of the BMI in already overweight and obese population.     

Assessing the impact of migration on food and nutrition security

Migration has become a key component in the livelihood strategies of an increasing number of households across the developing world and remittances have expanded dramatically in the last decade. This has come at a time when an increased emphasis has been placed on reducing malnutrition to achieve Millennium Development Goal (MDG) targets. While this is the case, there has been little attention on the interface between migration and nutrition even though migration can influence nutrition through a number of channels. The objective of this special issue is to present state-of-the-art analyses of the link between migration and nutrition in developing countries. In this paper, an overview of the conceptual and empirical issues in identifying the link between migration and nutrition are considered. Further, the results from seven country case studies are synthesized and policy implications are drawn.     

On the costs of food price fluctuations in low-income countries

Conventional welfare measures of the costs of food price fluctuations in low-income countries are extended to allow for both economic growth and food security effects. The analysis reveals that growth and food security effects may dominate more conventional welfare costs of food price fluctuations, although estimating the empirical magnitude of the effects is hampered by the lack of consensus on the extent to which food price fluctuations actually reduce economic growth and food security. Even if the welfare costs of food price fluctuations are high there are many challenges to the design and successful implementation of price stabilization schemes.     

Examining the link between food prices and food insecurity: A multi-level analysis of maize price and birthweight in Kenya

In developing countries where many poor people rely on rainfed, locally produced food for the majority of their caloric intake, shifts in climate and weather patterns can dramatically reduce agricultural productivity. The reduction in agricultural productivity reduces overall food availability and ultimately impacts food accessibility, putting millions of people at risk for malnutrition. In this project we focus on Kenya where roughly a third of households are food insecure. We examine the relationship of the price of maize and low birth weight to help quantify the impact of local food prices on one outcome of household food insecurity. Using spatially referenced data from recent Kenyan Demographic and Health Survey datasets, price data, livelihood information, and a remotely sensed-based measure of local growing season productivity, we develop a dataset linking pregnancies occurring from 2001 to 2008 to the spatially and temporally relevant maize price data. We construct several regression models to examine the impact of local maize prices and remotely sensed based estimates of crop production on infant birth weight – specifically low birth weight. The results of the models highlight the importance of including community crop production to evaluate maize price impacts on low birth weight outcomes. Also, because of the positive correlation between pre-pregnancy maize prices and birth weight, the results suggest that some households may benefit from high prices or that high prices may impact the number of conceptions. More generally, our work demonstrates that multilevel models that account for community-level variation are important for disentangling these complex relationships and can contribute to the discussion of how to design more effective food policies.     

Assessing the effect of food retail subsidies on the price of food in remote Indigenous communities in Canada

The Canadian government currently subsidizes food retailers in the 25 remote communities in Nunavut through the Nutrition North Canada program. The program expects each dollar of the food subsidy to be fully passed on to the consumer in the form of lower prices. Unfortunately, existing audits and reviews of the program have failed to determine the pass-through rate of the subsidy. Using regression analysis on food price data in each of the 25 communities, subsidy rates, and covariates that control for community characteristics, we overcome the limitations of past research and provide the first-ever estimate of the pass-through rate of Nutrition North in Nunavut. Our results suggest that most, if not all, of the subsidy is passed on to the consumer in lower food prices.     

REDD policy impacts on the agri-food sector and food security

Recent research shows that the combined contributions of deforestation, forest degradation and peat land emissions account for about 15% of greenhouse gas emissions. The REDD policy which preserves forests and values standing forests, enables substantial emission reductions. Since agricultural production and area expansion is a primary driver of tropical deforestation, REDD policies might limit the expansion possibilities of agricultural land use and therefore influence competitiveness of the agricultural sector, agricultural prices, trade patterns, agricultural production and therefore food security in the world. This paper studies the impact of REDD policies on the agri-food sector and food security with a global CGE model called MAGNET using a scenario approach. It focuses on the restrictions on agricultural land expansion within the REDD policy package. Simulation results show that REDD policies start to affect the agri-food sector in some lower developed countries if more than 15% of potentially available agricultural areas are protected from deforestation. A stringent REDD policy that protects 90% of land reserves that could potentially be used for agriculture production results in a global real agricultural price increase of almost 7.6%, and a worldwide agricultural production decrease of 1.7%. Regional differences are large, with real agricultural price changes ranging from 4% in North America to about 24% in Sub-Saharan Africa and South-East Asia. Food access rapidly deteriorates for low-income population in these regions in the case of high forest protection levels. Compensatory payments are necessary from a food security point of view if the level of forest protection increases. Our results indicate that from a food security perspective REDD policy should stop short of trying to protect more than 40% of global carbon if the compensation mechanism is not effectively implemented within REDD.     

Putting the 2007/2008 global food crisis in longer-term perspective: Trends in staple food affordability in urban Zambia and Kenya

Staple food prices in cities in eastern and southern Africa rose sharply between late 2007 and early 2009, leading to estimates of massive increases in food insecurity and hunger. However, in assessing the impacts of soaring food prices on urban consumers’ access to food it is important to consider food price changes relative to changes in per capita incomes. In this study, we use the case studies of Zambia and Kenya, where data are available on food prices, wage rates, incomes, and other indicators of urban purchasing power to answer two main questions: (i) how did staple food purchasing power at the height of the food price crisis compare to levels over the last 15 years? and (ii) did the food price crisis exacerbate an already declining trend in staple food purchasing power, or did it reverse a trend of stable or improving staple food affordability? Results indicate that staple food purchasing power in urban Zambia and Kenya improved markedly in the 10–12 years prior to the food price crisis. Most measures of bread and maize meal affordability at the start of the crisis in 2007 were at levels 1.0–4.3 times higher than in the mid-1990s. These gains for urban consumers were slashed but not completely reversed during the food crisis. Between 2007 and 2009, maize meal and bread were still more affordable in urban Zambia than all periods between 1994 and 2003. In urban Kenya, staple food purchasing power as of 2008/2009 was comparable to levels in 2000/2001–2004/2005 according to some indicators, while other measures suggest that the food price crisis reduced staple food purchasing power to levels lower than any other year in the period 1994/1995–2007/2008.     

Market integration and price transmission in consumer markets of developing countries

World prices for agricultural commodities surged in 2006–08, and then again in 2011–12. In many developing countries, consumer prices for staple foods, such as bread and rice, mirrored these movements. This paper examines whether prices in urban consumer markets within developing countries are co-integrated with prices in world agricultural commodity markets. Using a single equation error correction model, we examine the response of consumer prices for wheat, rice, maize, and sorghum to changes in world market prices and exchange rates in urban centers of the developing world. Analyzing over 60 country/commodity pairings, we find that developing countries’ consumer markets are co-integrated with world markets. Yet, we also find that the transmission of changes in both world prices and real exchange rates to domestic consumer prices is not high, and that the movement of domestic consumer prices to new equilibrium with world prices after a shock to the latter is relatively slow.     

Global water crisis and future food security in an era of climate change

Food policy should serve humanity by advancing the humane goals of eradicating extreme poverty and hunger. However, these goals have recently been challenged by emerging forces including climate change, water scarcity, the energy crisis as well as the credit crisis. This paper analyses the overall role of these forces and population growth in redefining global food security. Specifically, global water supply and demand as well as the linkages between water supply and food security are examined. The analysis reveals that the water for food security situation is intricate and might get daunting if no action is taken. Investments are needed today for enhancing future food security; this requires action on several fronts, including tackling climate change, preserving land and conserving water, reducing the energy footprint in food systems, developing and adopting climate resilient varieties, modernising irrigation infrastructure, shoring up domestic food supplies, reforming international food trade, and responding to other global challenges.     

Local impacts of a global crisis: Food price transmission,consumer welfare and poverty in Ghana

This paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in Ghana. It also assesses the impacts of food price increases on various household groups. Taking the 2007–2008 global food crisis as an example, we show that prices for domestic grain products are highly correlated with world market prices. This is true both for products for which Ghana is highly import-dependent (e.g., rice) and the products for which Ghana is self-sufficient (e.g., maize). The econometric results also show that price transmission is high between regional producer markets and markets located in the country’s largest cities, and the distance between producer and consumer markets and the size of consumer markets matter in explaining the price transmission. The welfare analysis for households as consumers shows that the effect of world food prices appears relatively modest for the country as a whole due to relatively diverse consumption patterns within country. However, the national average hides important regional differences, both between regions and within different income groups. We find that the poorest of the poor—particularly those living in the urban areas—are hardest hit by high food prices. The negative effect of the food crisis is particularly strong in northern Ghana. The main explanations for this regional variation in the price effect is the different consumption patterns and much lower per capita income levels in the North of Ghana compared to other regions in the country.     

Combined price support and fertilizer subsidy policies for food self-sufficiency: A case study of rice in Bangladesh

Output price support and input subsidies, particularly fertilizer subsidies, are used in many developing countries as short-term policies for stimulating food production. This paper presents a method of evaluating combined price support and fertilizer subsidy policies, allowing for differences in emphasis on each. Bangladesh is taken as a case study. The paper also indicates the likely distributional consequences of the various combined policies and formulates policy suggestions based on the results. The guiding hypothesis for the study is that some combination of price support and fertilizer subsidies is preferable to a price support or fertilizer subsidy monopolicy in achieving rice self sufficiency in Bangladesh.     

An examination of the influence of guanxi and xinyong (utilization of personal trust) on negotiation outcome in China: An old friend approach

Managers of multi-national enterprises (MNEs) are at a disadvantage in negotiating outcomes with their Chinese counterparts when compared to local competitors. The reasons include: local competitors are more flexible in handling business terms and conditions; local Chinese managers prefer to negotiate with their old friends or insiders in the same guanxi network; and MNE managers perceive that cultural practices such as gift-giving and guanxi are problematic. This study advances our understanding of negotiation by using a model developed for the reference of MNEs to establish an “old friend” relational status with their local Chinese counterparts. This approach emphasizes cultural adaptation for MNE managers to achieve satisfying negotiation outcomes in China.The study reveals the following unique issues: 1) in addition to their problem-solving attitude, MNE managers should practice mianzi and gift-giving to build renqing with their Chinese counterparts at a new friend stage; 2) the reciprocity dynamics of renqing should enable these managers to accumulate ganqing and to become old friends of their Chinese counterparts; 3) the establishment of ganqing between MNE managers and their Chinese counterparts should enable the development of xinyong between the two exchange parties; and 4) desirable negotiation outcomes can be built on xinyong.