Food Policy in Disarray

Food Policy in Disarray: The Challenges and Priorities Per Pinstrup-AndersenInternational Food Policy Research Institute November 21, 2011

Understanding and Improving Food Policy What?

Understanding and Improving Food Policy What? How?

Understanding and Improving Food Policy What? How? Who (Pol. Econ.)?

Understanding and Improving Food Policy What? How? Who (Pol. Econ.)? A comprehensive systems approach

Understanding and Improving Food Policy What? How? Who (Pol. Econ.)? A comprehensive systems approach Multisectoral/multidisciplinary

Understanding and Improving Food Policy What? How? Who (Pol. Econ.)? A comprehensive systems approach Multisectoral/multidisciplinary A dynamic behavioral food system

A Dynamic Behavioral Food System Change in behavior of:  ConsumersFood System  Producers Food System(Time period 1) (Time period 2)  Market agents  Government  Resource owners  NGOs Incentives Regulations Knowledge

Five Food Crises1. International food price increase and volatility

Five Food Crises1. International food price increase and volatility2. Starvation in the Horn of Eastern Africa

Five Food Crises1. International food price increase and volatility2. Starvation in the Horn of Eastern Africa3. Hunger, nutrient deficiencies and death among millions of children

Five Food Crises1. International food price increase and volatility2. Starvation in the Horn of Eastern Africa3. Hunger, nutrient deficiencies and death among millions of children4. Overweight, obesity, chronic diseases and death among millions of children and adults

Five Food Crises1. International food price increase and volatility2. Starvation in the Horn of Eastern Africa3. Hunger, nutrient deficiencies and death among millions of children4. Overweight, obesity, chronic diseases and death among millions of children and adults5. The earth’s future productive capacity

The Unholy Trinity and the Jokers The Trinity: Governments News Media Speculators The Jokers: The Weather Energy prices

Real Food Price Index 1961-2000Source: FAO

Behavior of Government, News Media and Speculators Little policy action Little media attention (except 1995-96) No speculator interest

FAO Food Price IndexJanuary 2000-January 2007 Source: FAO

Behavior of Government, News Media, and Speculators (1) Neither governments, nor the media, got the message

Behavior of Government, News Media, and Speculators (1) Neither governments, nor the media, got the message Export restrictions towards the end

Behavior of Government, News Media, and Speculators (1) Neither governments, nor the media, got the message Export restrictions towards the end Extreme weather events

Volatility in Weather Patterns IrregularDrought Flooding Rainfall Strong Winds Patterns Production Volatility

Production VolatilitySupply Responses SpeculationGovernment Policy Government PoliciesMarket Information Energy Prices Demand Changes Price Volatility

FAO Food Price IndexJanuary 2007-July 2008 Source: FAO

Behavior of Government, News Media, and Speculators (2) Short-term government interventions

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response Food riots

Behavior of Government, News Media, and Speculators (2) Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response Food riots Moral hazards

FAO Food Price IndexJune 2008 – June 2009 Source: FAO

Behavior of Government, News Media, and Speculators (3) Silence Delayed media response

FAO Food Price Index October 2010-October 2011 (2002-2004 =- 100) Food Price Index 250 240 230 220 210 200 Food Price Index 190 180 Oct-10 Jan-11 Apr-11 Oct-11 Jul-11Source: FAO, www.fao.org/worldfoodsiutation/wfs-home/foodpricesindex/en

Behavior of Government, News Media and Speculators Renewed apocalypse talk by media Nervous speculators Confusion among governments Waiting for the next extreme weather event

What are the Most Important Policy Challenges?

A Focus on the Smallholder? Source: World Economic Forum, Realizing a New Vision for Agriculture: A roadmap for Stakeholders, 2010.

What are the Most Important Policy Challenges (1)? Outside the farm

Why Outside the Farm? Low total supply elasticity (old story)

Why Outside the Farm? Low total supply elasticity (old story) Large yield gaps (old story)

Why Outside the Farm? Low total supply elasticity (old story) Large yield gaps (old story) Successful farm-focused project (reduced yield gaps, increased incomes)  Sasakawa, One Acre Fund, Millennium Villages, etc.  Underutilized potential gains from existing technology  Temporal removal of external constraints  Gains not sustainable when project exits

Why Outside the Farm? (Cont.) Demand constraints?

Why Outside the Farm? (Cont.) Demand constraints? Large post harvest losses

Why Outside the Farm? (Cont.) Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest activities

Why Outside the Farm? (Cont.) Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest activities Insufficient research allocated to the post harvest portion of the food system

Why Outside the Farm? (Cont.) Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest activities Insufficient research allocated to the post harvest portion of the food system Adverse trade policies

What are the Most Important Policy Challenges (1)? Outside the farm Specific policy interventions context specific  Likely to include:  Infrastructure investments  Institutional innovation  Input and output market development  Pre- and post harvest focused research  Facilitation of small-scale agri-business

What are the Most Important Policy Challenges (2)? Sustainable intensification

Environmental Kuznets Curve

What are the Most Important Policy Challenges (2)? Sustainable intensification  Multiple wins

Hypothetical Relationships BetweenIncome and Deforestation/Soil Mining

What are the Most Important Policy Challenges (2)? Sustainable intensification  Multiple wins  Full costing (natural resources and climate change)

Hypothetical Relationships BetweenIncome and Deforestation/Soil Mining

What are the Most Important Policy Challenges (2)? Sustainable intensification  Multiple wins  Full costing (natural resources and climate change)  International institutional innovation

What are the Most Important Policy Challenges (2)? Sustainable intensification  Multiple wins  Full costing (natural resources and climate change)  International institutional innovation Achieving nutrition and health goals through the food system  Identifying pathways, win-wins and trade-offs  Pursuing diversity in production and consumption

What are the Most Important Policy Challenges (2)? (Cont.) Strengthening international institutions  Concentration, competition and anti-trust rules  Land grabbing  Enhancing price transmission  Clarifying and enforcing trade rules

What are the Most Important Policy Challenges (2)? (Cont.) Strengthening international institutions  Concentration, competition and anti-trust rules  Land grabbing  Enhancing price transmission  Clarifying and enforcing trade rules Learning to live with food price volatility

Maize Weekly Price Minus 12-Month Moving Average100 80 60 40 20 0-20-40-60-80

Rice Weekly Price Minus 12-Month Moving Average350300250200150100 50 0 -50-100-150

Wheat Weekly Price Minus 12-Month Moving Average150100 50 0 -50-100 1998 1999 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

What are the Most Important Policy Challenges (2)? Strengthening international institutions  Concentration, competition and anti-trust rules  Land grabbing  Enhancing price transmission  Clarifying and enforcing trade rules Learning to live with food price volatility Learning to live with higher real food prices?

What are the Most Important Policy Challenges (2)? Strengthening international institutions  Concentration, competition and anti-trust rules  Land grabbing  Enhancing price transmission  Clarifying and enforcing trade rules Learning to live with food price volatility Learning to live with higher real food prices? Projections or predictions?

World Price Increases for Selected Crops Under Various Scenarios, 2010-2050 (Percent Change from 2010) Source: IFPRI, Food Security and Climate Change, 2010, http://www.ifpri.org/sites/default/files/publications/ib66.pdf

Real Food Price Changes Predicted Over the Next 20 Years (%)200180160140120100 2030 Baseline 80 2030 Climate Change 60 40 20 0 Livestock Wheat Paddy Rice Maize Source: Growing a Better Future: Food Justice in a Resource-Constrained World, 2011, Oxfam

Real Food Prices Need Not Increase Moral hazard

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps

Reducing Yield Gaps Removing off-farm constraints  Infrastructure  Institutions

Reducing Yield Gaps Removing off-farm constraints  Infrastructure  Institutions Risk management

Reducing Yield Gaps Removing off-farm constraints  Infrastructure  Institutions Risk management Property rights

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs End biofuel mandates and subsidies

Real Food Prices Need Not Increase Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs End biofuel mandates and subsidies Take appropriate policy action

RhetoricDeclarationsPlans ActionTargets

Food Policy in Disarray

by International Food Policy Research Institute (IFPRI)

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Food Policy in Disarray Presentation Transcript