Food security, Trade and Domestic Markets: Understanding the Linkages
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Transcript of Food security, Trade and Domestic Markets: Understanding the Linkages
Indira Gandhi Institute of Development Research, Mumbai
Food security, Trade and Domestic Markets: Understanding the Linkages
A. Ganesh-Kumar
Presentation at Young Scholars ProgrammeIGIDR, 22 June 2009
2
Food security
“Food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life”– World Food Summit, 1996
3 implications of the definition Adequate supply for all people Adequate distribution channels for physical access Adequate entitlement for economic access
Problem is multi-level – national / household / intra-household
3
Food security at the household level – The Linkages
Income / entitlement
distribution issues
Domestic supply issues
International trade issues
Low levels of income
High / rising food prices at retail level
Domestic trade issues
Low purchasing power
Low food consumption
Food insecurity / malnourishment and poor health
status
4
Food security at the household level – The Linkages Household level food insecurity
Low levels of household income High and rising retail price of food Problem mainly for poor households
Situation in India 45% suffer stunting (height for age % of children under 5) 47% underweight children (weight for age % of children
under 5)
5
Issues affecting income and price
Income entitlement / distribution issues
Domestic supply issues
International trade issues
Domestic trade issues
6
Distributional issues
3 broad types of households A) Poor asset-less households B) Poor households with low asset base (including land) C) Non-poor (rich) households / large land owners
(A) and (B) are usually food insecure – low income, fully or partially dependent on markets for food
(C) is usually food secure – sufficiently high income and/or food self-sufficient
Taxation / re-distribution policies often ineffective Income transfer programmes (cash transfer / employment
programmes), Consumption subsidies (public distribution, food stamps)
7
Retail price of food
Retail price = Producer price + Transport cost
+ Trader margin + Taxes - Subsidies
High prices due to inadequate supply (= domestic production + imports + stocks) in relation to demand National level food security problem
Inadequate supply is a major problem in developing countries
Often governments focus only at this level Increasing production often preferred Imports only if production growth not feasible / up to desired levels Export bans (net-exporting countries)
8
International trade and food security
Food exporting and food importing countries Food exporter (potential exporter)
Distortions in world trade regime Foreign barriers to export: high import duties, non-tariff barriers
(standards) Unfair competition from developed countries: production and export
subsidies Low prices for farmers – disincentive to increase supply
Agricultural growth less than potential Low farm incomes, agricultural wages
Food importer Subsidized food imports / food aid depresses domestic prices
benefits consumers but disincentive for domestic farmers Restrictive domestic trade policies foreign exchange constraint
low import capacity inadequate food supply high food prices
9
Domestic supply and food security
3 main features of under-developed countries Restrictive government policies on investment, labour, etc. Low asset base of the country / farmers in particular Weak institutional structures (legal, property rights, security, social and
economic barriers to competition in markets)
3 main manifestations of these features Low investment levels Weak infrastructure Low productivity
Mutually reinforcing – vicious trap
Outcome on food security – 3 channels Low economic growth in general widespread poverty Low growth in food production Insufficient food availability High food
prices Weak infrastructure high transport cost high retail price
10
Domestic trade and food security
2 underlying factors Weak institutional structures Restrictive domestic policies
4 manifestations A) Uncompetitive domestic trading services High trade margins B) Inadequate marketing infrastructure C) Barriers to intra-country commodity movement D) State intervention in commodity markets (B), (C) and (D) underdeveloped markets (spatially and across
commodities) Price distortions
Outcome on food security – 2 channels Low farm-gate prices Disincentive for farmers Inadequate food
production High retail prices
11
Thank you
12
Calorie Intake Per Capita Per Day
1950
2000
2050
2100
2150
2200
2250
2300
1972-73 1983 1993-94 1999-00 2004-05
Kca
l
Rural
Urban
Calorie intake less than the official Indian norms: 2400 (Rural) and 2100 (Urban)
Declining over years - sharply in rural areas
Source: National Sample Survey Organisation
13
Protein and Fat Intake Per Capita Per Day (grams)
0
10
20
30
40
50
60
70
1972-73 1983 1993-94 1999-00 2004-05
Gra
ms
Protein-Rural Protein-Urban Fat-Rural Fat-Urban
Protein intake – slight decline in rural; very little change in urban
Fat intake – rise up to 2000, stable since then
Source: National Sample Survey Organisation
14
Nutrition status
Levels are below norm for bottom 70% of rural population Rise in calorie intake for Bottom 30% Decline in calorie intake for rest of rural population since mid-
1970s
Average per capita calorie intake - Rural
0
500
1000
1500
2000
2500
3000
3500
Bottom 30% Middle 40% Top 30% All groups
Source: Radhakrishna (2005)
kca
l /
da
y
1972-73
1977-78
1993-94
1999-2000
15
Nutrition status (contd.)
Bottom 30%: Levels below norm; rose in early 1970s, stable subsequently;
Middle 40%: More or less stagnant around the norm Top 30%: Fluctuating above norm
Average per capita calorie intake - Urban
0
500
1000
1500
2000
2500
3000
3500
Bottom 30% Middle 40% Top 30% All groups
Source: Radhakrishna (2005)
kca
l /
da
y
1972-73
1977-78
1993-94
1999-2000
16
Annual Compound Growth Rate in Per Capita Real Expenditure, Rural (%)
-3
-2
-1
0
1
2
3
I II I II I II I II
Cereals Non-cereals Total food Total expenditure
Bottom 30% Middle 40% Top 30% All classes
Source: Radhakrishna et al (2005). Note: Period I - 1970-1989; Period II - 1990-2001.
17
Annual Compound Growth Rate in Per Capita Real Expenditure, Urban (%)
-2
-1
0
1
2
3
4
I II I II I II I II
Cereals Non-cereals Total food Total expenditure
Bottom 30% Middle 40% Top 30% All classes
Source: Radhakrishna et al (2005). Note: Period I - 1970-1989; Period II - 1990-2001.
18
Changing consumption pattern
Substantial diversification in consumption pattern From food to non-food items
Within food, from cereals to non-cereal food
Within cereals from coarse to fine cereals
Per capita cereals consumption in India has been on a declining trend during the last three decades
Reflects larger availability of non-cereal food items, growing income levels and changing consumer preferences