K4D DFID Learning Journey on Changing

Food Systems:

Conclusions and implications for DFID

By: Jim Woodhill and Evert-jan Quak

Institute of Development Studies (IDS)

2 August, 2019

Contents:

• Learning Journey activities and knowledge products.

• Key trends for changing food systems.

• Why food systems (should) matter to DFID?

• Understanding agrifood structural change.

• Food systems in different contexts (protracted crises, extreme poor

and marginalized, unrealized viable economic potential,

commercialized export oriented businesses).

• Food systems and the economic transformation of developing

countries.

• New players in the food system.

• Implications for DFID.

Learning Journey Process and Activities

The Learning Journey on Changing Food Systems started in March

2018 and finishes in April 2019. During this period DFID staff was

involved in 2 framing sessions, 3 thematic sessions, 3 work sessions on

the country level (Ghana, Nigeria, Ethiopia) and 1 policy meeting.

Objectives of this Learning Journey, were:

1. To strengthen understanding of the drivers, nature and evidence

surrounding the changes taking place in food systems, and the

interface with, and implications for, human health and economic

development.

2. To identify the changes in processes, programmes and partnerships

required to realise opportunities and manage current and future risks;

whilst identifying areas of research to meet evidence gaps.

Learning Journey Knowledge Products (1)

Framing sessions:

1 video and 1 PPT highlighting the main trends in food systems.

Thematic sessions:

1. Nutrition, urbanisation, and purchased food.

1 input report (K4D HDR 383), 1 output report with a summary of

presentations and discussions, and 1 video.

2. Food systems in the context of protracted crises.

1 input report (K4D HDR 447), 1 output report with a summary of

presentations and discussions, and 4 videos.

3. Capturing food economy opportunities for the poor.

1 input report (K4D EIR 22)

Learning Journey knowledge products (2)

Country work sessions:

3 reports (Ghana, Nigeria and Ethiopia) highlighting the outcomes of

the mapping exercise and discussions.

Policy meeting:

1 PPT presentation summarizing the main conclusions and

implications for DFID.

Others:

Webpage on the Foresight4Food website with all Learning Journey

knowledge products (https://foresight4food.net/k4d/).

What is a food system approach?

• A food system approach looks beyond the food value chain and takes

into account health, nutrition, decent jobs, poverty reduction, food

safety, climate change and environmental outcomes.

• It aims to understand the linkages between the different outcomes.

Learning Journey Story Line

Importance:

Consensus:

Contexts:

Implications for DFID:

Rapidly growing global

attention to food systems

Food systems are central to all

SDGs and DFIDs Goals

Massive transformations are underway in

food systems with big implications for poverty

and prosperity

Food systems are one of the

biggest drivers and risk factors of

climate change

Systemic risks

Transformational

opportunities

Wide consensus that food systems require:

• Shift to diverse plant based diets;

• Reduction in waste and loss;

• Rapid development and adoption of efficient and climate smart

production/distribution;

• Creating inclusive economic opportunities.

• Protracted crises;

• Extreme poor and

marginalized;

• Unrealized economic

potential;

• Large scale, export oriented

businesses.

Does DFID need an

integrated perspective on

how it is responding to food

systems issues?

How does DFID ensure longer-

term changes in food systems are

adequately considered in policy

and programming?

How can DFID be more explicit

about interventions needed in

different food system contexts?

Why food system (should) matter to DFID

Food system are central to achieving most of the SDGs;

Employment in agriculture and food systems is by far the biggest employer in DFIDs priority countries;

Food systems are critical to climate change mitigation, adaptation and resilience –Food production and trade is likely to be heavily impacted by climate change;

Peace and stability depends on people being able to afford basic food needs –pressures and shocks to food systems present significant future risks;

The bulk of world poorest and most vulnerable people earn their livelihoods in the food sector, remain affected by hunger and malnutrition and are subject to exploitation and modern slavery within the sector;

The food and agriculture industry has opportunities for the prosperity agenda and not dealing with food system risks and the obesity epidemic will undermine prosperity;

There is a need to deal with nutrition, agriculture, health, climate, employment and migration in a much more integrated way.

Existing Frameworks/Strategies/Policies

• DFID’s Conceptual Framework on Agriculture (2015) mentioned “food system” 11 times. However, only in the context of “sustainable food systems” (environment and climate change), but not in the context of inclusiveness, job creation and economic development.

• DFID’s Global Nutrition Position Paper (2017) mentioned “food system” 7 times. It seeks for ways to build food systems that are “nutrition smart”, ensuring safe and nutritious diets.

• DFID’s Economic Development Strategy (2017) mentioned “food system” 1 time, only in relation with nutrition and food safety. However, not in the context of job creation or inclusive businesses.

Supporting Functions

Information

InfrastructureSkills &

technology

Input Supply

Regulatory Environment

Standards

RegulationsLaws

Informal

Rules &

Norms

Core Activities

Drivers

Demographics &

Development

Consumption

Technology

Climate &

Environment

Markets

Policy &

Geopolitics

Food &

Nutrition

Security

Environmental

Sustainability

Economic &

Social Well-

being

System

Outcomes

Finance

Food System’s Framework:

Systemc c

Food system trends

Population growth: The population continues to grow globally until 2050. Sub-Saharan Africa and South Asia will continue to have the highest concentration of young people (FAO, 2017). For the food economy, this means an increasing demand for food from an increasing number of working age adults in low and middle-income countries.

Income growth: Higher incomes, particularly, the emergence of a middle class (rural and urban) has an impact on the demand for food, shifting towards a diverse food intake, more proteins, and higher processed food consumption.

Urbanisation: Over the next decades, the urbanisation rate will increase mainly in sub-Saharan Africa and Asia. Urbanisation means that households increasingly rely on markets and look for foods that are more diverse and convenient to buy, prepare and consume.

Climate change: Climate change has a direct impact on agricultural productivity. A combination of climate change and rapid population growth increases water scarcity, outbreaks of pests and diseases, and greater variability of temperatures and rainfall (Jayne et al., 2017). This could result in an increase in conflict over natural resources.

Technology: Innovations in processing, storage, logistics and packaging, and digital technologies (e.g. mobile and digital platforms, big data, blockchain) will change food systems in the next decades. It will shape agricultural productivity, demand for jobs and working of food markets in the years to come.

Transforming food systems:

key for the SDGs.

• Food Systems are central to all

of the Sustainable Development

Goals.

• Yet the current food system is

leaving billions of people either

underfed or overfed, has huge

interconnections with climate

change, is over stretching use of

natural resources and many who

produce food remain

impoverished.

• However, changes in food

systems also offer many

opportunities for contributing

positively to the SDGs.

Connecting multiple facets of the

environment with society,

interventions within the food

system can help achieve all of

the SDGs.

Understanding AgriFood Structural Change

Domestic

Investment

Growth of

Food

markets

Much smaller number

of farmers meet most

of the future demand

Large number of

marginal producers

being left behind

Significant employment

opportunities in agri-food

system but not enoughMarket Dynamics

Living

Income

“Quiet

revolution” of

MSM

enterprises

Emergent

farmers

Land size

for living

income

Growth of

medium

sized farms

80/20 pattern

of production

Population and

Urbanization

Economic

development

Income

Diversification

Incentives for

Productivity

Understanding Market dynamics

Developing countries are in a process of shifting food systems from “traditional” to “modern” systems, being in a “transitional” phase (Reardon et al., 2018). During this process food systems become spatially longer (as cities grow and their catchment area is larger and larger) but still fragmented. Value chain actors are increasingly using a mix of labour-intensive and capital-intensive technologies. There are emerging public standards of quality. Spot market relations, however, are still dominate.• “Quiet revolution” (Reardon) refers to the initial transformational phase in

which many micro and small scale food processing and food service businesses are popping-up in the food system.

• “Emergent farmers” refers to a new group of domestic urban investors (middle class) in agriculture.

• “Income diversification” refers to the importance of non-farm activities for a household income. However, farming remains an important economic activity and for food security.

Importance of Middle-sized farms for Food

Production in Sub-Saharan Africa

Farming and the geography of nutrient production for

human use: a transdisciplinary analysis

Mario Herrero, Philip K Thornton, Brendan Power,

Jessica R Bogard, Roseline Remans, Steffen Fritz,

James S Gerber, Gerald Nelson, Linda See,

Katharina Waha, Reg A Watson, Paul C West, Leah

H Samberg, Jeannette van de Steeg, Eloise

Stephenson, Mark van Wijk, Petr Havlik

Produce of Key food

groups by farm size

Key message: Middle-size farms are

critical for the food production in sub-

Saharan Africa. Despite the common

story that small-holders produce most

food, 60% or more is produced by farms

with the size between 2-50 ha. Only 25%

is produced by large numbers of farmers

with under 2 ha.

Food Systems in Different Contexts: a practical

scoping framework for DFID.

Health and Nutrition Incomes and Jobs Climate and Environment

Data and Trends

Systemic Risks

T. Opportunities

Data and Trends

Systemic Risks

T. Opportunities

Data and Trends

Systemic Risks

T. Opportunities

Data and Trends

Systemic Risks

T. Opportunities

Food System OutcomesTrends/Risks/

OpportunitiesFood System Context

Humanitarian/Conflict/

Crisis

Extreme poor and

marginalised limited market potential

Unrealised viable market

potential

Larger scale commercial

and export

Focus area in

K4D HDR 447

and other

knowledge

products for

thematic

session 2 on

“Food systems

in the context

of protracted

crises.”

Focus area in

K4D EIR 22 for

thematic

session 3 on

“Capturing food

economy

opportunities

for the poor”. Focus area in K4D HDR

383 and other

knowledge products for

thematic session 1 on

“Nutrition, Urbanisation

and Purchased Food”.

Focus area in K4D EIR 22

for thematic session 3 on

“Capturing food economy

opportunities for the poor”.

Farm Size and Who Produces the World’s Food?

* Of 570 million farms in 161 countries, this farm size classification is from a subset of 460 million farms (classified from international comparison tables of the 1990 & 2000

rounds of the WCA for farm sizes) by Lowder 2016

† Assuming farm size percentages represent farm sizes worldwide, Lowder estimates these numbers by multiplying 570 million farms with the percentages

‡ Author estimates from Lowder 2016 - 106 country sample covering 450 million farms, representing 80% of world farms, with 85% global population, and 60% of agricultural

land world wide (does not include the Russian Federation & Australia)

ⁱ Author estimates of production from global production of key food groups from Herrero 2017 (based on data from 161 countries, 41 crops, and 14 fish functional groups)

The food system context

The food system context should be analysed on systemic risks, transformational opportunities and trends (availability of data) for four development segments:

• Building resilience against conflicts and crises.

• Extreme poor and marginalised groups with limited market potential.

• Unrealised viable market potentials throughout food value chains.

• Large scale commercial and export oriented agrifood businesses.

This analysis on the food system context should focus on three main outcomes:

• Health and nutrition: Importance of fighting obesity and undernutrition and producing the healthier options.

• Income and decent jobs: Importance of decent jobs, living wages, and fight against slavery.

• Climate and environment: Climate resilient food systems, less deforestation, less water intake and pollution, fight against land degradation.

Food system thinking within DFID should aim to make significant improvements on the three outcomes in regard with each of the above mentioned four food system contexts. The scoping framework can help DFID to find solutions for risks, incentives for opportunities, and gaps in knowledge availability.

Context 1: Food systems and protracted crises (1)

Trends based on knowledge products from Thematic session 1: “Food systems in the context of protracted crises”:

• IFPRI (2015) concludes that global chronic undernutrition becomes increasingly concentrated in conflict-

affected countries.

• The FAO (2018) states that 40% more of ongoing food crises are considered to be protracted than in 1990;

approximately half a billion people are currently affected by protracted crises (mainly in sub-Saharan Africa

and the Middle East); and, the majority of humanitarian assistance between 2005 and 2015 was directed at

protracted crises.

• Since 2010, there has been a rising trend in the proportion of people in countries with protracted crises facing

undernourishment, whereas it has been declining for all other developing countries (FAO, 2016). Almost 122

million, or 75%, of stunted children under age five live in countries affected by conflict (FAO/WFP, 2017).

• Countries with protracted crises show high vulnerability to extreme weather conditions, climate change and

agricultural productivity losses. The high vulnerability to climate change is for a large part due to weak

governance and broken institutions that cope inadequately with natural disasters.

• In countries in protracted crises, food markets and input markets still exist; however, actors have to work

differently due to high risks, insecure situations and mistrust, owing to a complex mix of weak governance,

broken local institutions and influx of emergency assistance (Hillen et al., 2014).

Conclusion:

A food system approach in countries in protracted crises looks beyond agriculture, farmers’ and pastoral

livelihoods, and includes nutrition, health, food quality, jobs, climate change, markets, etc. A gender focus on food

systems in protracted crises is necessary, because only in cases where women gain more control of resources

during crises, household food consumption tends to increase and child nutrition improve.

Lessons learned from interventions:

• Interventions in food systems (e.g. social protection, job creation, access to knowledge and finance) are

important to reduce violence and conflict and to become more resilient to shocks. For the best outcome,

interventions should be conflict sensitive, nutrition-sensitive, gender-sensitive and climate change sensitive.

• The literature shows three pathways in which such interventions should work: 1) livelihood support that

addresses the root causes of conflicts and conflict stressors, and that promotes re-engagement in productive

economic activities, including cash transfers and social protection; 2) facilitated community-based approaches

that help build relationships and social cohesion, improving aspirations, confidence and trust; 3) interventions

that contribute to building the capacity of institutions and local actors in the food system, improving governance

and entrepreneurship to deliver equitable services (FAO/WFP, 2017).

• Donors need to implement a flexible development system for countries in protracted crises, with development

workers taking on-board emergency responses as an integrated part of their programmes.

• There is an urgent need for the constant tracking of strategies and analyses, to understand the dynamics of

conflicts, that involve both humanitarian and development experts.

(2)

Context 2: Food systems and the extreme poor

and marginalised (1)A large group of extreme poor and marginalised people with limited market potential still live in more stable

developing countries. Knowledge products from Thematic Session 1 (“Nutrition, Urbanisation and

Purchased Food”) and Thematic Session 2 (“Capturing food economy opportunities for the poor”) show:

• Urban polarisation is reality: healthy food is becoming more accessible for the middle classes and less

for poor populations. The extreme poor and marginalised in urban areas depend on purchasing power

for access to food, which makes them even more vulnerable for undernutrition and shocks.

• The extreme poor mainly have access to informal food markets without quality standards and food

safety measures. They have limited market potential in the food economy even in the informal market,

as they lack sufficient access to resources.

• The available evidence shows that only the upper tier of small-scale farmers can access the more

modern food channels. Those that are asset-poor and live in remote rural areas do not benefit of any

form of commercialisation.

• Diversification of rural household income will remain an important livelihood strategy, however, there is

no sign that this group will stop farming as they continue to rely on subsistence farming for their food

security. Therefore, a large group of marginalised small-scale farmers will continue to exist with low

productivity rates.

• This group is the most vulnerable for exploitation in the food economy, through slavery, low wages and

unhealthy work conditions.

Conclusion:

Commercialisation in the food system, could result in a growing divide in urban areas and in rural areas between the farmers who are able to increase productivity and sell their produce to commercial food markets, and the ones who continue a livelihood strategy of subsistence farming combined with some additional income from low-paid non-farm activities.

Interventions that will benefit the extreme poor and marginalised the most:

• Social protection, safety nets and social services play a key role in building resilience and increasing incomes. In particular, social protection programmes need to be responsive to rural settings, gender sensitive, and considering the employment challenges of rural youth.

• Improving the low-wages structures and sometimes precarious working conditions in the food economy, governments should improve labour policies. Introducing minimum wages in the private sector, unionisation of the workforce could improve the bargaining power of the youth for better wages, improving the skill set through on-the-job vocational training would be crucial. Health restrictions should be in place on the use of pesticides and toxic input products, and forced labour and child labour should be sanctioned.

• The experience in Asia is that decentralised approaches may offer greater benefits than centralised governments in terms of rural economic development outcomes. Evidence points to the positive contribution of community-driven development to service delivery outcomes, access to learning and information, and an increase in local procurement and local sourcing opportunities.

(2)

Context 3: The market potential of food systems (1)

Although the extreme poor and most marginalised groups will not automatically benefit from modernisation and

commercialisation, others may benefit from the unrealised market potential within food systems. The K4D report

“Capturing food economy opportunities for the poor” shows:

• As the food chain grows longer, the market volume grows large enough, and economies of specialisation

emerge in the midstream and downstream segments, there is a proliferation of midstream micro and small

sized enterprises in wholesale and processing, as well as upstream in input supply (Reardon calls this “quiet

revolution” in the food system).

• There is a growth of rural-to-rural and urban-to-rural supply chains which relates to an emerging rural middle

class. According the FAO (2017), the transition of the agricultural sector has given rise to rural towns and small

urban centres, which are part of rural socio-economic development. Hence, rural purchases of food are now

substantial.

• Most of the jobs in the initial transformational phase of food systems are in rural areas and are linked to

agriculture, either directly in production links – input supply, processing, transport and storage – or indirectly

through the consumption demands for locally-produced goods and services by farmers with incomes to spend.

• Most of the rural non-farm jobs are made up of services, rather than manufacturing. The dominance of

services increases with economic growth and closer rural–urban links, because when urban factories – or

importers – can readily sell their products to rural populations, some local artisan manufacturing may not be

able to compete.

• The main constraint to a vibrant processing sector is the low production and productivity, high cost, and poor quality of local raw materials.

• Many rural non-farm businesses use little capital, are labour-intensive, operate at micro-scale and may be seasonal as well, taking place in the slack seasons for farming.

• The majority of urban food service jobs are vendors in small shops, street markets, hawkers or food stalls and street food. These mostly informal activities are central to the urban food marketing system, providing the bulk of the urban food supply.

Lessons fro interventions:

• The literature suggests that what is needed to increase better absorption in non-farm employment in the food system is continued investment in productivity growth, infrastructure, access to finance, and higher education.

• The transformation of rural labour markets entails investment in rural skills development beyond agriculture. However, capacity development in rural areas does rarely focus on non-farm employment (Briones, 2018).

• Gender sensitive interventions related to commercialisation and inclusive value chain approaches are also important (Dancer & Hossain, 2018). Policies and investments that tackle gender specific constraints and promote non-farm employment in food systems could have a particularly large impact on women’s economic activities and food economy development (Allen et al., 2018).

Furthermore, the same interventions as for the extreme poor also benefit other groups to reduce job insecurities and low wages in food systems, and stimulate safety nets and social protection.

(2)

Context 4: Food systems and the large scale

commercial, export oriented agrifood business

Although the Learning Journey did not have a focus on large scale commercial, export oriented agrifood business, some points have been made on the issue:

• As food systems shift more towards a “modern” system the chain is usually spatially long and relates to the rise of supermarkets. Supermarkets buy increasingly directly from processors, and urban wholesalers directly from farmers, changing the nature of food distribution.

• Private standards are emerging, and use of contracts is common. Capital intensification is common to avoid paying higher wages in the economy. More quality and safety control are demanded by the food industry.

• This shifts the market from more informal or semi-informal food markets to formal food markets. It also results in a shift towards more waged labour and a shift from small-scale to large-scale through economies of scale.

• Large-scale commercial agrifood businesses are part of international value chains, relying on imports (e.g. inputs) and mainly focussing on export markets and domestic urban markets. Supermarkets and the food industry ignore the specific demands of the urban and rural poor.

• Large-scale agriculture increases monoculture, uses more natural resources (e.g. water), and is more capital-intensive and less labour-intensive.

02/08/201926

0

10

20

30

40

50

60

70

80

LICS MICS US

% Agriculture % Services %Manufacturing

Food systems and the economic transformation:

indicative Employment in AgriFood Sectors (1)

Food systems and the economic transformation:

indicative Employment in AgriFood Sectors (2)

• In the early stages of economic development, agriculture is the dominant source of livelihood and jobs - this is still found in lower income countries today.

• Consequently, there has been a tendency for development thinking and research to focus mainly on agriculture rather than the entire food system.

• As economies develop, it is well understood that the employment rate in agriculture falls as people move to manufacturing and service sectors.

• However, as Brooks (2018) shows, absolute employment in agriculture will continue to increase during this transition in sub-Saharan Africa and some parts of Asia.

• The total amount of jobs in the food economy will increase gradually, but not significantly, reduces as a percentage of total jobs as economies develop from Low Income Countries to Middle Income Countries. The main shift is a reduction in agriculture jobs and an increase in food processing and food services jobs.

• High Income countries have low employment rate in the food economy.

New players in the food system

Policies should take more attention to these new players.

• Urban domestic investors in agriculture (see figures on following slides).

• Small-scale urban and rural entrepreneurs in the (informal and formal) food economy which relate to the “quiet revolution” as mentioned by Reardon.

• In particular in the later phase of the transitional food systems, foreign corporations in input (e.g. seeds, fertilisers) and output sectors (e.g. retail, processing) increase influence on the food market.

Who is Investing in Agriculture?

Who is investing in Agriculture (2)

Source:Lowder, Carisma and Skoet, 2012 – FAO Report

Policy is critical for changing food systems

1. To determine the focus areas;

2. For a comprehensive systemic approach (linkages);

3. For a tailor-made policy mix for each different actor.

Getting the Policy Mix Right

Stepping Up

Hanging-In

Moving-out

Policies to support small-scale

farmers to be commercial and

competitive

Policies to help farmers trade-up

or move out

Social protection to help those in

poverty

Policies to create decent jobs

and provide skills

Social protection to help those in

poverty

What scale of change over what period makes sense ?

Policy Mix:Living

income

Stepping In Policies to support smaller-scale

commercial farming

Dimensions of Food System Transformation for

DFID

Those with good

market opportunities

Those with

constrained market

opportunities

Extreme poor /

marginalized /

conflict affected

Overall economic

development

Inclusive market

development

Social protection and

humanitarian

Production

Processing

and distribution

Consumption

Wh

o

Numbers

and features

of Poverty

Health

Income and Jobs

Climate and

Environment

Food Systems Outcomes

Prosperity and

Security

Implications for DFID

• LJ shows food systems are critical to DFID goals but to date such a framing has not been

prominent in DFID

• Food systems remain the largest employer of people in DFID priority countries – optimizing

the inclusive economic potential is essential

• In LIC very large numbers of people survive on very marginal incomes from farming but

produce only a small amount of total food requirements - this challenges the existing

narrative on role of smallholder farmers and underscores the need for transition strategies

• Food system issues in areas of conflict and crises are likely to be come increasingly

important

• National food and agriculture policies and investments are not well aligned to cope with and

tackle future food systems risks

• In Africa, demographic changes (doubling of population and urbanization) combined with

climate change and poor nutrition has the potential for disastrous food system outcomes,

particularly if there is limited growth beyond the food and agriculture sectors

• The links between climate and food systems are profound

• The future of food systems underscores the importance for DFID of looking beyond a 4-5

year development horizon

02/08/201934

Implications for DFID policy? (2)

- UK Government’s strategy on achieving SDGs;

- DFID’s Conceptual Framework on Agriculture (2015);

- Nutrition policy/strategy;

- Economic Development policy/strategy;

- Private and Public Investment policy/strategy;

- Climate change policy/strategy;

- Humanitarian aid;

- Livelihood policy/strategy;

- DFID’s Prosperity Fund (2016-2021).