Food Policy Challenges and Opportunities 2011 and Beyond Per - PDF document

10/3/2011 Food Policy Challenges and Opportunities 2011 and Beyond Per Pinstrup-Andersen The Willard W. Cochrane Lecture in Public Policy, University of Minnesota September 30, 2011 What Food Crisis? 1. International food price increase and volatility? 2. Starvation in the Horn of Eastern Africa? 3. Hunger, nutrient deficiencies and death among millions of children? 4. Overweight, obesity, chronic diseases and death among millions of children and adults? 5. The earth’s future productive capacity? 1

10/3/2011 Source: FAO, http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/ 2

10/3/2011 International Maize Prices Source: FAO, http://www.fao.org/giews/pricetool2/ International Rice Prices Source: FAO, http://www.fao.org/giews/pricetool2/ 3

10/3/2011 International Rice Prices versus Rice Prices in Delhi, India Source: FAO, http://www.fao.org/giews/pricetool2/ International Maize Prices versus Maize Prices in Niger Source: FAO, http://www.fao.org/giews/pricetool2/ 4

10/3/2011 Maize Weekly Price Minus 12-Month Moving Average 100 80 60 40 20 0 -20 -40 -60 -80 Rice Weekly Price Minus 12-Month Moving Average 350 300 250 200 150 100 50 0 -50 -100 -150 5

10/3/2011 Wheat Weekly Price Minus 12-Month Moving Average 150 100 50 0 -50 -100 1998 1999 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Volatility in Weather Patterns Irregular Drought Flooding Strong Winds Rainfall Patterns Production Volatility 6

10/3/2011 Production Volatility Speculation Supply Responses Government Policies Government Policy Energy Prices Market Information Demand Changes Price Volatility Policy Response to Food Price Increases  Maintaining government legitimacy  Emphasis on Short-term measures  Price controls, export bans, lifting import tariffs, rationing, food distribution  Emphasis on short-term transfers to urban lower middle class  Continued neglect of the rural poor  Expanding food production  Renewed interest in national self-sufficiency  Reserve stocks, acquisition or control of land across borders 7

10/3/2011 The Effects of Export Restrictions on Rice Prices Source: Derek D. Headley, “Rethinking the Global Food Crisis: The Role of Trade Shocks,” International Food Policy Research Institute Discussion Paper 0958, March 2010. Stock of Rice, Maize, and Wheat in Percent of Use in China, 2005-2011 (%) % 50 45 43.7 41.1 40 37.4 37.2 35 30 30.2 29 28.9 25 % 20 15 10 5 0 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Source: USDA, World Agricultural Supply and Demand Projections, Several Years. 8

10/3/2011 India – Grain Stock 2005/06 – 20011 Million Tons 70 65 54 60 50 40 Estimate 30 25 Rice Wheat 20 15 10 0 2005/06 2007/08 2009/10 2011 Approaches to Managing Food Price Volatility Prevent Cope Private Storage Insurance Transportation Hedging & Futures Markets Public Buffer Stocks Safety Nets Import/Export Controls Transfers Financial Market Regulation Source: Timmer, P. 2011. Managing Price Volatility: Approaches at the Global, National, and Household Levels. Stanford Symposium Series on Global Food Policy and Food Security in the 21 st Century, Center on Food Security and the Environment, Stanford University. 9

10/3/2011 What do we want from the food system?  Food Security and good nutrition  Efficient and Sustainable Resource Use  Reasonable incomes for farmers  Reasonable prices for consumers  Meeting Non-food Demands  Support of general economic growth Food Policy Challenges  Widespread and increasing hunger and malnutrition 10

10/3/2011 The Triple Burden of Malnutrition 1. Energy and protein deficiencies: Hunger 2. Specific nutrient deficiencies: Hidden Hunger 3. Excessive net energy intake: Overweight & Obesity Progress Towards Meeting the WFS Goal Globally 1100 1020 1000 842 923 925 900 863 848 Millions 800 Data 700 91-04 600 WFS 500 421 400 Source: FAO 2006 11

10/3/2011 Progress Towards Meeting the MDG Globally 25% 20% 20% 18% 18% 17% 17% 16% 16% 15% 10% 5% 0% 1990-92 1995-97 2000-02 2005-07 2008 2009 2010 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel 12

10/3/2011 Population Growth Rate 3 2.5 2 1.5 1 0.5 0 CIS E. Asia LAC Dev'ing S. Asia W/C E/S Avg Africa Africa Source: UNICEF 2006 Source: PRB, 2007 13

10/3/2011 Annual Average Population Growth Rate, % 2.5 2 1.5 1950-2000 2000-2050 1 2050-2100 0.5 0 World More Developed Less Developed Regions Regions Under-Five Mortality Rate (per thousand) 300 250 200 1950 150 2000 2050 100 2100 50 0 World More Developed Less Developed Regions Regions 14

10/3/2011 Change in the Contribution of Each Food Group to Energy Intake 1980-2005 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure 15

10/3/2011 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation Liters of Water per Kilogram of Product Source: Waterfootprint ( https://waterfootprint.org) accessed May 15, 2009; Gleick 2008 16

10/3/2011 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation  Climate change Greenhouse Gas Emissions per Kilogram of Food Item Source: Williams, Audsley, and Sandars 2006. 17

10/3/2011 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation  Climate change  Falling productivity growth rates, large losses Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation  Climate change  Falling productivity growth rates, large losses  Poor rural infrastructure 18

10/3/2011 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation  Climate change  Falling productivity growth rates, large losses  Poor rural infrastructure  Poorly functioning markets Projected Growth in African Food Systems, 2010-2050 Growth multiple: Consumption 2050 value/2010 value Distribution 6X Packaging Processing Marketing 3X Farming Inputs 9X Source: Haggblade, Steven. 2011. Modernizing African agribusiness: Reflections for the future. Journal of Agribusiness in Developing and Emerging Economies 1(1): 10-30. 19

10/3/2011 Food Policy Challenges  Widespread and increasing hunger and malnutrition  Population growth, diet transition and biofuel  Lack of government commitment, policy failure  Increasing water scarcity and soil degradation  Climate change  Falling productivity growth rates, large losses  Poor rural infrastructure  Poorly functioning markets  Food price volatility Food Policy Opportunities  Attention of policy-makers to food crisis  Application of modern science  Expanding investment in public goods  Internalizing environmental costs into private costs  Improving policies and institutions 20

10/3/2011 Suggested Priority 1  Large-scale investments in rural infrastructure, domestic markets and Human Resources  Feeder roads  Appropriate institutions  Farmer associations  Public sector institutions (contract enforcement, weights and measures, etc.)  Market information  Water management infrastructure  Primary education, health care and improved sanitation Suggested Priority 2  A doubling of public investment in agricultural research and technology  Improved water management to enhance use efficiency  Increased sustainable land and labor productivity and reduced production risks  Biotic and abiotic stresses: drought tolerance, resistance to insects and diseases  Sustainable production methods, biodiversity protection  Mitigation of impact of climate change and adaptation to changes that will occur 21

10/3/2011 Suggested Priority 3  Enhanced policy incentives for the private sector to invest in sustainable agriculture  Savings and credit institutions for farmers  Risk management tools for farmers and traders (for market and production risks)  Public goods investments  Strengthen the purchasing power of small-holders  Establish competitive funds for technology development  Assure incentives for private sector innovation Suggested Priority 4  Remove international trade distortions (both import and export restrictions)  Regulation of Land Grabbing  Clarity on water and land tenure  Full Costing  Pursue multiple-win solutions 22

10/3/2011 Environmental Kuznets Curve Hypothetical Relationships Between Income and Deforestation/Soil Mining 23