Author: Peter Warr, ANU
Food security and agricultural development are back on the international agenda after a long absence.
Between 1980 and 2011 annual foreign assistance for agricultural development fell from US$8 billion to US$3 billion, dropping from 17 per cent to 3 per cent of total foreign assistance to less-developed countries. In the 1980s 25 per cent of US foreign aid went to agriculture. In the 1990s this proportion fell to 6 per cent, and to 1 per cent in 2011. The share of World Bank lending going to agriculture was 30 per cent in 1978, 16 per cent in 1988 and 9 per cent in 2011. Within many developing countries themselves, public commitment to investment in rural infrastructure and to agricultural research and development has also waned.
Complacency about the adequacy of food supplies was shaken by the international food price increases of 2007–08 and subsequent price surges, which have included dramatic rises in the price of rice, wheat and maize. The international price of rice, the staple food of most of Asia, more than tripled between 2003 and 2008.
Price changes generate both gainers and losers. When food prices rise, net sellers of food gain and net purchasers lose. Most Asian countries have large numbers of farmers, yet the net purchasers of food generally outnumber them, even within rural areas. Net purchasers include all nonagricultural workers and all landless labourers working within agriculture. Poor people are the most vulnerable to increased food prices because food is a large component of their total budgets. For them, and for the institutions concerned with their welfare, the international food price increases of 2007–08 were deeply unsettling.
Food is not a typical commodity. It has no substitutes and its storage life is limited. The prospect of food insufficiency is frightening for anyone, which is why it makes sense to speak of ‘food security’ and not of, say, ‘clothing security’ or ‘entertainment security’. People can survive for a long time without new supplies of clothing or entertainment, but food is different. ‘Security’ implies a concern with the future and not just today. The concept of food security therefore relates to forward-looking expectations about the continuous availability of food, both at the household and national levels.
For most households, food insecurity is a matter of purchasing power. The rich are never hungry, except in the most extreme circumstances of wars or natural disasters, and even then the poor are more severely affected. The key to enhanced food security at the household level is sustainable poverty reduction, regardless of whether food prices are volatile.
Because of its dependence on weather, agricultural production is volatile, and this leads to periodic episodes of food shortages in some regions. International trade is a powerful mechanism for overcoming temporary food shortages. But international markets are volatile too, and the responses of national governments to this volatility have undermined the capacity of international trade to perform its stabilising function.
At the national level, food security is often interpreted as food self-sufficiency, meaning that sufficient food is present within the country to make imports unnecessary. The aversion to imports arises, in part, from mistrust of international markets as reliable sources for a nation’s food requirements. But the concept of food self-sufficiency is different from food security at the household level and can be in conflict with it.
Consider a country that normally imports food. One way to reduce imports is to prohibit them. This will raise food prices within the country, discouraging consumption and stimulating additional supplies, thereby reducing imports. But the increase in food prices means that the level of food consumption for households will be reduced and, for some poor households, may fall below nutritional requirements. In this way food self-sufficiency can be in conflict with food security.
The short-term response of some food importing countries exacerbated the international price increases of 2007–08. Fearing that the country would be unable to obtain the rice needed for domestic consumption, the government of the Philippines — then the world’s largest importer — sharply increased its demand for imported rice to replenish the stocks held by its food agency, the National Food Authority. This panic buying further exacerbated the international price increases.
Food self-sufficiency can also conflict with food security if exporters restrict trade in response to international price volatility. This happened during the 2007–08 crisis when Russia introduced export bans on wheat, and India and Vietnam did the same for rice. These bans were intended to protect domestic consumers from high international prices. Although the bans attracted a great deal of international criticism, the political reasoning behind them is easily understood. The export bans predictably contributed to international price spikes. Estimations suggest that, between them, the export bans and the panic buying explain most of the international price increase for rice.
National food security is best achieved not through trade restrictions but through poverty reduction initiatives and improved agricultural productivity. Raising productivity facilitates expanded food production without raising domestic prices — which directly affect the poor — and without necessarily drawing large areas of additional land into agricultural production — which often involves destroying forests and other ecologically important habitats.
The flow of new agricultural technologies emerging from the Consultative Group on International Agricultural Research (CGIAR) system has slowed. Renewed international commitment is required. But so is investment within the developing countries themselves, both in agricultural research and in training the next generation of agricultural researchers. Research and training are critical for maintaining the momentum of productivity growth in agriculture and for finding ways to adapt to climate change.
Peter Warr is Head of the Arndt-Corden Department of Economics, John Crawford Professor of Agricultural Economics and Director of the Poverty Research Centre at the Crawford School of Public Policy, Australian National University.