The Influence of Technical Progress on Agricultural Production
Influence of agricultural trade and food policies on diets
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Transcript of Influence of agricultural trade and food policies on diets
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.
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.