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?

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

International Maize Prices

Source: FAO, http://www.fao.org/giews/pricetool2/

International Rice Prices

Source: FAO, http://www.fao.org/giews/pricetool2/

International Rice Prices versusRice 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/

Maize Weekly Price Minus12-Month Moving Average

1995

-80

-60

-40

-20

0

20

40

60

80

100

Rice Weekly Price Minus12-Month Moving Average

1990

-150

-100

-50

0

50

100

150

200

250

300

350

Wheat Weekly Price Minus12-Month Moving Average

19992001200420062009-100

-50

0

50

100

150

Volatility in Weather Patterns

Drought Flooding Strong Winds

Production Volatility

Irregular RainfallPatterns

Production Volatility

Supply Responses

Government Policy

Market Information

Speculation

Government Policies

Energy Prices

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

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 inPercent of Use in China, 2005-2011 (%)

Source: USDA, World Agricultural Supply and Demand Projections, Several Years.

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-1205

101520253035404550

28.9 29 30.2

37.441.1

37.2

43.7

%

%

India – Grain Stock2005/06 – 20011

15

25

54

0

10

20

30

40

50

60

70

2005/06 2007/08 2009/10 2011

Estimate

Rice

Wheat

MillionTons

65

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 21st Century, Center on Food Security and the Environment, Stanford University.

Approaches to Managing Food Price Volatility

Prevent Cope

Private StorageTransportation

InsuranceHedging & Futures Markets

Public Buffer StocksImport/Export ControlsFinancial Market Regulation

Safety NetsTransfers

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

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

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2015

400

500

600

700

800

900

1000

1100

848

923

1020

863

842

421

Data

91-04

WFS

Mil

lion

s

925

Source: FAO 2006

Progress Towards Meeting the MDG Globally

1990

-92

1995

-97

2000

-02

2005

-07

2008

2009

2010

0%

5%

10%

15%

20%

25%

20%18%

16% 16% 17% 18% 17%

Food Policy Challenges

Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel

Population Growth Rate

CIS E. Asia LAC Dev'ing Avg S. Asia W/C Africa E/S Africa0

0.5

1

1.5

2

2.5

3

Source: UNICEF 2006

Source: PRB, 2007

Annual Average Population Growth Rate, %

World More Developed Regions

Less Developed Regions

0

0.5

1

1.5

2

2.5

1950-20002000-20502050-2100

Under-Five Mortality Rate(per thousand)

World More Developed Regions

Less Developed Regions

0

50

100

150

200

250

300

1950200020502100

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

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

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 Emissionsper Kilogram of Food Item

Source: Williams, Audsley, and Sandars 2006.

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

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

Source: Haggblade, Steven. 2011. Modernizing African agribusiness: Reflections for the future. Journal of Agribusiness in Developing and Emerging Economies 1(1): 10-30.

Growth multiple:2050 value/2010 valueConsumption

DistributionPackagingProcessingMarketing

Farming

Inputs

6X

3X

9X

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

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

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

Environmental Kuznets Curve

Hypothetical Relationships Between Income and Deforestation/Soil Mining

Hypothetical Relationships Between Income and Deforestation/Soil Mining

Concluding Questions

Can future generations be well fed?

Concluding Questions

Can future generations be well fed? Is environmental degradation necessary to meet

future food needs?

Concluding Questions

Can future generations be well fed? Is environmental degradation necessary to meet

future food needs? Is the food price increase since 2005 the beginning

of a long-term trend of increasing food prices?

Concluding Questions

Can future generations be well fed? Is environmental degradation necessary to meet

future food needs? Is the food price increase since 2005 the beginning

of a long-term trend of increasing food prices? Will biomass be an important source of energy?

Concluding Questions

Can future generations be well fed? Is environmental degradation necessary to meet

future food needs? Is the food price increase since 2005 the beginning

of a long-term trend of increasing food prices? Will biomass be an important source of energy? Will everybody get access to the food they need?