2 Jun 2014

Global Food Security and Poverty : An Analysis !

global-food-securityFood insecurity, or the inability to access food of sufficient quantity and quality to satisfy minimum dietary needs, is the most basic form of human deprivation. Before people can provide for their education, health care, or even clothing and shelter, they need to satisfy their hunger and feel secure that their future meals will indeed be available. Thus, the issue of food security is central to any discussion on poverty. Food security is defined as the situation when “all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” (FAO 2002). To achieve food security, food should be available, accessible, and properly utilized at all times.

Availability of food refers to the supply side of the food security issue: whether there is enough food to feed people. Even when people are able to obtain food, it must be properly utilized—that is, it must be able to satisfy their dietary needs and preferences. The term “utilized” here refers to the use of food for the body’s nutrition and to the utility attained from food. The first usage, regarding nutrition, is easy to understand—it is not enough for people to just have 2,000 kilocalories per day, which technically can be obtained solely from carbohydrates. But people also need ample amounts of proteins, fruits and vegetables, and micronutrients to maintain physical and mental health. The second aspect— utility or pleasure—is equally important given the centrality of food in determining one’s quality of life. Food is often one of the few pleasures the poor can afford. The food needs to be culturally acceptable and in line with people’s preferences to contribute to their well-being.

Here in this article we will talk over:

Ø What are the implications of population growth and changes in consumption patterns for food security, given the limited resources for producing and distributing food?
Ø  How does food price inflation and volatility affect food security?
Ø What are the impacts of increasing food prices on poverty?
Ø  What are the factors that exacerbate food price volatility and market instability?
Ø What can policymakers do to improve food security: a global perspective?

The Rising and Changing Global Demand for Food:

global-food-security-chainStrong income growth and rising population in developing countries have been key drivers behind the rapidly growing global demand for food. Rapid income growth and an expanding middle class, particularly in populous economies, are powerful drivers of increased demand for food. Along with income growth, economic development brings about visible structural transformation, which has implications for the pattern of food consumption. As incomes increase, growth in the world’s per capita grain consumption is expected to slow due to the low income elasticity of food, particularly for grains. With rising affluence, people usually shift their diets to a lower share of coarse grains and more meat, fruit, vegetables, and vegetable oils. Rapid urbanization also contributes to the changing diets, as higher value processed food, dairy products, and tropical beverages such as coffee become more readily available. Food security is indispensable to long-term sustainable growth and development. Well-nourished individuals are likely to have higher productivity and contribute more to economic growth. Food insecurity is often a source of instability in households, communities, and nations, impeding their growth and development. As such, food security has been high on the development agenda of all countries, and poor countries that have many food-insecure people often call urgently for action on the issue. Reducing the number of underweight children and ensuring appropriate levels of dietary energy consumption are integral to achieving the Millennium Development Goals.

Food Prices and Poverty:

Food price inflation is an important barrier to economic access to food. Based on the FAO’s index for food prices, real global food prices increased by 14% in just 6 months, from 151 points in June 2009 to 172 points in January 2010 (World Bank 2010).

global-food-security-componentsThe World Bank attributed the food price spikes to increases in demand due to the use of food crops for biofuels, speculation in agricultural commodity futures markets, and policies such as export restrictions. Concerns over food prices are mounting because inflation erodes the purchasing power of households, especially those with low incomes, and could undermine the gains in poverty reduction and human development achieved during the last few decades. Many people who were poor before the price increases may now be on the verge of hunger and malnutrition, and those who were barely above the poverty line may slip back below it. In this context, it is important to examine the impact of food prices on poverty. At the macroeconomic level, higher food prices hurt countries that provide substantial food subsidies. High levels of food subsidies may crowd out public investment in other areas, such as health, education, and infrastructure. At the household level, small-scale farmers and poor consumers are hit hardest by food price hikes. The average household in the developing world spends roughly half of its total budget on food. And for households living below the poverty line, food will likely constitute an even greater portion of expenditures. Indeed, globally, poor households allocate more than 60% of total household consumption to food.

Developing countries in Asia and the Pacific are no exception: households with daily per capita consumption of less than $1.25 at 2005 PPP dollars spend 60%–70% of their total budget on food. Therefore, the poor suffer a disproportionately high adverse effect from food price inflation. Without a change in prices, poverty reduction will depend on two factors: average income (or expenditure) and its distribution. An increase in average income without a change in distribution reduces poverty, while an increase in income inequality without a change in average income increases poverty. However, any change in food and non-food prices also alters purchasing power, influencing the percentage of people living below the poverty threshold. Increases in food and non-food prices will reduce people’s real income, which in turn increases poverty. Shares of food and non-food consumption vary across income groups—the poor spend a relatively large share of their income on food consumption—thus, a change in food versus non-food prices will also have implications for the distribution of real income.

In this context, a change in poverty can be divided into three factors:

(i) an income effect encompassing changes in average income expenditure and its distribution,
(ii)  a food price effect, and
(iii) a non-food price effect

The pure income effect measures the impact of changes in people’s nominal income on poverty, assuming food and non-food prices remain the same. The food and non-food price effects measure the impact of changes in these prices on poverty, assuming nominal incomes do not change. Given this decomposition method, the combined effect of the three components will result in the net impact on poverty reduction.

Food Price Volatility and Market Instability:

1. Volatility in Recent Food Prices

In recent years, the world has witnessed staggering volatility in food prices. Prior to the global financial crisis, international prices of wheat, rice, and maize reached record highs in 2007–2008. There were many causes for this increase, such as increased demand from emerging economies, competition for resources from bio-fuel production, and supply disruptions due to droughts and wildfires. Although the global financial crisis and a related fall in demand temporarily dampened the rise in food prices, the eventual recovery and the inflationary effects of financial bail-outs and low interest rates may again put upward pressure on food prices, while ongoing structural transformation associated with the strong economic rise of large developing countries and climate change suggest a grim outlook for sustaining the food supply in the long run.

2. The Causes of Food Price Instability

Food prices fluctuate due to a combination of short-term shocks and long-term trends. Population growth, economic growth, and changing consumption patterns are among the major factors influencing long-term trends on the demand side. However, these demand-side trends are not new. Most recently, these trends were apparent in the 1960s and 1970s, when it seemed that food production may not be able to cope with global population growth and the increasing post-war affluence of Europe, Japan, and the United States. However, in the 1970s, the impending food crisis was averted by the Green Revolution that significantly improved food production around the globe, particularly of staple grains. This eventually led to a decades-long decline in food prices. Indeed, increasing and changing demand may not be an issue if supply can catch up. The recent food crisis, however, has been characterized by supply-side as well as demand side constraints. In the last several decades, the rise of large emerging market economies has been spectacular, and has brought about rapid structural transformation with significant impacts on agriculture, environment, and food production. Along with the rush to integrate into the global economy, many poor countries have been competing for markets and investments by offering investors favorable wages and building the most attractive and efficient infrastructure. Accompanying this has been a massive structural transformation away from agriculture, with land once used to grow basic food crops being reallocated to expanding cities and factories producing higher value export products. While land available for food production has been threatened by competing needs from population growth and urban expansion, the quality of land already used for production has been deteriorating due to poor management, pollution, and degradation (e.g., erosion and desertification). Reduced attention to agriculture is having serious consequences: it has resulted in endangering food security, degrading the environment, uprooting rural communities, and increasing vulnerability among the poor. Trade disruptions also played a key role in increasing the volatility of food prices. In a regime of food production surpluses, trade openness had a positive impact on the global economy, allowing efficient food-producing countries to specialize and increase output while at the same time encouraging inefficient food producers to diversify into non-food production.

global-food-security-components

3. Climate Change: A Realistic Threat to Food Security

The greatest threat to food security, however, is climate change. While trade policies and resource management issues, in principle, can be solved quickly with the right mix of interventions, problems caused by climate change are much more difficult to resolve in the short term and will require long-term and internationally coordinated solutions. Sustainable food security is a key to long-term sustainable development; however, achieving sustainability in food availability, access, stability, and utilization is increasingly challenged by the changing climate and environment. The global climate change has already affected food security in a variety of ways. Rising temperatures tend to reduce crop productivity in the tropics.

Climate change alters rainfall and its patterns, thus affecting water supply for farming and livestock. The warming ocean and its acidification, due to greater greenhouse gas concentrations, are reducing fish populations. A hotter climate has caused sea levels to rise. In turn, this is resulting in permanent land loss, coastal inundation, and saltwater intrusion, leading to deteriorating soil quality and suitability. In extreme conditions, which have been evident in recent years, global warming has led to severe droughts, floods, which destroy crops, pasture lands, livestock, transport and agricultural infrastructure, and household assets.

Selected Policy Issues in Tackling Food Security and Reducing Poverty:

global-food-security-india-grainsFood security is a complex, multidimensional issue. The experiences clearly show that economic growth alone does not promote food security. Although rapid growth has helped to reduce the region’s aggregate poverty, the number of undernourished and hungry people has increased. Achieving food security should, therefore, be an integral part of the drive towards poverty reduction. A combination of short- and long-term; economic and social; macro and structural; and global, regional, and national policies is required to promote food security and reduce both poverty and hunger. While a comprehensive policy framework is needed to ensure food security, some policy measures can deal with food security and poverty simultaneously.

There are five basic policy strategies that could be considered:
Ø Providing food-based safety nets and related social protection programs
Ø  Enhancing the productivity of agriculture
Ø  Promoting rural development
Ø  Supporting agricultural research,
Ø  Investing in human capital and basic infrastructure.

1. Providing Food-Based Safety Nets and Social Protection Programs

Safety nets and social protection programs can offer immediate relief to the poor during times of crisis. It is important to build such programs into the system as a part of automatic stabilizers. Food price inflation strongly impacts food security. Governments often provide subsidies to keep the food prices artificially low. However, blanket food subsidies drain budgets and cannot be a viable solution if the food price increases are sustained and are caused by supply and demand market fundamentals—subsidies may in fact exacerbate existing problems. The better option when faced with rising food prices may be for the government to provide food-based safety nets and related social protection programs like,

  Ø  Cash transfer programs should be targeted only to the poor so program costs are more sustainable—even given limited fiscal space. Because cash transfer programs require large amounts of resources, they need to be well targeted to yield maximum results. Transfers to beneficiary households should be based on the minimum cost of a food basket that provides the required calories and nutrition to household members. This will help ensure that available resources are well spent and that cash transfers offer the poor minimum dietary intakes.

  Ø  Governments could consider establishing a “hunger alleviation fund,” in which they set aside a reasonable amount—say, 1% of GDP—as buffer in times of food crisis. Such a fund would provide a safety net for the poor and those most vulnerable to hunger, malnutrition, and starvation.

  Ø  Safety nets specific to farmers would include weather-based crop insurance and futures contract, which assure farmers specified prices for output, can also help mitigate risks caused by price fluctuations. Futures help assure farmers a minimum income for their harvest. While crop insurance is meant to encourage greater production, futures contracts can encourage poverty reduction.

2.   Enhancing Agricultural Productivity

Improving agricultural productivity is essential for ensuring long-term food security and promoting poverty reduction. Adequate food supply is a fundamental prerequisite for food security, especially as the global population is projected to reach 9 billion by 2050. Bolstering farm productivity through better technology and efficiency can help increase food production. Transferring modern farm technology to increase the efficiency with which land is used can produce major increases in farm yields. In this case, governments and development institutions have a critical role to play in providing access to credit, promoting farm cooperatives, and educating farmers about applying new technologies. Reducing the amount of food wasted due to poor storage or inefficient processing could significantly boost the global food supply. Innovation and adoption of new technology can help improve agricultural productivity and rural incomes. For example, waste-to-energy technologies (i.e., converting agro-biomass to energy) are slowly gaining ground, especially in the face of rising fuel prices. These green technologies help reduce agriculture’s carbon footprint and they enhance agricultural productivity and rural income. Energy can be sold or used separately and organic fertilizer generated in the process of converting biomass into energy can be used for agricultural production. Similarly, animal manure combined with biomass (e.g. rice straw, corn stover, sugarcane leaves) can be also used for biogas production.

3.   Promoting Rural Development

global-food-security-indian-statesPromoting rural development can contribute substantially to poverty reduction and food security. A majority of the region’s poor live in rural areas and this often poses a dilemma for national policymakers when choosing policies to stabilize food prices and protect the agricultural sector. The most effective approach in tackling both poverty and food insecurity is through a rural-based growth strategy. A new growth paradigm should focus on support for agriculture, increasing rural income opportunities on par with the urban sector. Doing so will stem the excess labor migration from rural to urban centers that accompanies structural transformation. Rural incomes should also be diversified to improve stability, while urban-rural integration needs to be scaled up. The rural economic base can be diversified by introducing new value-adding activities, including the transformation of agricultural wastes into energy sources.

4.   Supporting Agricultural Research

Now, as during the Green Revolution of the 1970s, agricultural research is an essential factor in improving agriculture’s productivity. For example, advancements in food technology could significantly boost farm production. Advances in biotechnology can allow the production of crops that are not only more resistant to pests and weather events, but also have higher nutritional content. More research and better technologies are also needed in livestock production and fisheries—as people shift dietary preferences from cereal grains to meat and vegetables. Other areas requiring further research and development include the efficient and sustainable use of dwindling land and water resources. Higher yields are mandatory as available land for agriculture contracts. Although some virgin land areas are still available for cultivation the potential land use for food production is offset by urban sprawl and by soil erosion and degradation. Further, competition for water use by rising populations and more frequent droughts calls for the development of crop varieties that use water more efficiently or are tolerant to water interruptions. Farmers are expected to need 45% more water by 2030, but are in competition with rapidly increasing urban needs.

national-food-security-program-india

5.   Investing in Human Capital and Basic Infrastructure

Human capital investments, such as in health and education, and investments in basic infrastructure, such as water and sanitation, play a critical role in food security—as they are essential components of poverty reduction. While sustained income growth leads to poverty reduction and food security, the link between economic growth and food security may be weakened by the poor’s limited access to human capital formation and basic infrastructure. Countries that prioritize social development—boosting access to basic schooling, health, and nutrition—not only directly enhance individual welfare but also achieve higher average incomes over the long term. Prioritizing development of human capital improves food security by providing much-needed education on health and nutrition, understanding the importance of food security itself, and enabling farmers to better adopt modern and more productive farming technologies— for example, by improving processing and storage. Likewise, employing more efficient water management and sanitation will help prevent soil degradation due to pollution, and maintain a healthier, more productive population by preventing the spread of disease.

Conclusion:

national-food-security-program-indiaFood security and poverty reduction are inseparable. Although food security alone does not eradicate poverty, any strategy to fight poverty must be integrated with policies to ensure food security and to offer the best chance of reducing mass poverty and hunger. Problems related to increasing food availability, feeding the population, improving their nutritional status and reducing poverty levels continue to confront decision makers in many developing and developed countries. Program managers and policy makers who constantly deal with design, implementation, monitoring and evaluation of food security, nutrition and poverty related interventions have to make best decisions from a wide range of program and policy options. Information for making such policy and program decisions must be based on sound data-based analysis. Such analysis should be founded on statistical theory that provides an inferential basis for evaluating, refining and, sometimes, rejecting the existing policy and program interventions.


What are your suggestions for ensuring a better India and the world via efficient food security program and policies?

How the government across the world should proceed to tackle this huge global problem?

How a common people can contribute in his/her day to day life for this common and great cause?

(Written by Prakash Jha, an Alumnus of Dept. of Agriculture, BHU, Varanasi and currently JRF at IARI (Indian Agricultural Research Institute), New Delhi)







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