Influence of agricultural trade and food policies on diets

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Influence of agricultural, trade and food policies on diets Bhavani Shankar

Transcript of Influence of agricultural trade and food policies on diets

Influence of agricultural, trade and food policies on diets

Bhavani Shankar

This presentation

• Overview of dietary implications of agri-food policies not explicitly targeted at nutrition.

• Agricultural policy, trade policy and consumer policy.

• Focus mostly on LMICs.

• Particularly important or interesting aspects – not comprehensive.

Conceptual framework

Price policies systematic review

Agri-food policy and diets: Nature of available evidence

• Preponderance of analysis of trends, anecdotal evidence.

• Surprising relative lack of research involving economists.

• Some conventional wisdom does not stand up to closer scrutiny.

Ag. Policy: Producer support and diets

• Public health narrative: Producer support in high income countries led to worsening diets and health outcomes.

• Closer examination by economists finds little support for this:oSupport usually acted as a tax on consumers.

o In any case, price transmission and impact on final consumers low.

oThus policy reform may have actually worsened diets slightly.

• Support levels in LMICs have historically been much lower and there is little evidence on dietary impacts.

Ag. Policy: Ag. investments & diets

Do green revolution investments and other rural public expenditures improve diets?

• Headey and Hoddinott (2016): oRice yield growth in Bangladesh associated with earlier introduction of

complementary child feeding and child weight gain.oBut rice yield growth has done little for dietary diversity.

• Tak and Shankar (ongoing):oMarket infrastructure and production diversity (but not road

infrastructure) improve dietary diversity in India.oWork ongoing on associations between rural public expenditures (agri.

R&D, infrastructure expenditures, irrigation expenditures, etc. and dietary diversity).

Trade Policy: Trade liberalization & diets

What has been the impact of GATT/WTO/RTAs induced liberalization on diets?

• Modelling efforts have seldom focused explicitly on consumption and diets.

• Apart from raising incomes, liberalization tends to raise commodity prices.

• Modest commodity price increases + low price elasticities + low transmission suggest minor effects on diets.

However…

Trade policy: Food availability and multinationals

Thesis: liberalization has facilitated FDI particularly in ultra-processed food (UPF)

UPF and multinationals:

• Economies of scale

• Branding and marketing

• High margins

Baker et al (2015): Apart from lowering tariff and non-tariff barriers, trade agreements reduce the “policy space” – freedom, scope and instruments to introduce health-oriented domestic food policy.

Trade policy: Food availability and multinationals• Stuckler et al. (2012):

oMain determinants of UPF sales, such as income and urbanisation, are less important in countries with high penetration of multinationals.

oHaving a trade agreement with the US is associated with a 63% higher soft drink consumption per capita.

• Observations on literature:o Individual commodity rather than whole diet perspective, mostly.

oMuch less attention to trade and healthy food intake, eg. fruit and veg.

o Involvement of economists still low!

Trade liberalization & habit formation: Let them not eat cake?!

Atkin (2013):

• Too often trade theory assumes identical preferences.

• But tastes in autarky correlated to local endowments.

• Habit formation: tastes change slowly.

Trade liberalization & habit formation: Let them not eat cake?! (contd.)• Liberalization raises relative prices of these preferred local foods.

• Since preferences sticky, preferred food more expensive and consumption gains from trade reduced in short run.

• Long run: food tastes adapt and consumption gains from liberalization finally achieved.

• Food price crisis: oStandard model: Transfer income from exporters, allow consumers to

substitute into relatively cheap foods.

oHabit formation: A bit more sympathy for export bans as a way of reducing hunger among the poor!

Consumer policy: food subsidies

Jensen and Miller:

• Do staple subsidies necessarily improve nutrition?

• Wealth and substitution effects of subsidies.

• Where wealth effect is large and ‘non-nutritional attributes’ are preferred, subsidies need not improve nutrition.

• RCT with food vouchers for staples (rice and wheat flour) in two provinces of China

• Results: no evidence of improved nutrition as a result of subsidy.

• In one province, households reduced all items in main meal (rice, tofu, spinach, oil) to increase fish consumption.

Consumer policy: India’s Public Distribution System• India’s PDS is world’s largest food policy – subsidised rice and wheat to

0.5 billion people per year.• Massive inefficiencies increased targeting from 1997, but targeting

poor in practice.• 2000s - some states have embarked on a ‘new PDS’ – more inclusive and

more generous subsidies. • Kishore & Chakrabarti (2015): rice price subsidy increased rice

consumption, but also pulses, vegetables, oil (but not meat/eggs/dairy).• Rahman (2015): Comparing targeted versus new universal programme,

universal PDS improves nutrient intakes across the board compared to targeted.

• Positive implications for quasi-universal PDS plans under India’s new National Food Security act.