0
Value Chains for Nutrition and
Smallholder Income
Maximo Torero
m.torero@cigar.org

Christoph Sänger
SaengerC@ebrd.com
Market failure focus
Goal: making commodities markets function
for the poor at local, regional, and
international markets ...
But
• The Challenge: Income growth and market
development are not sufficient to improve
nutrition and food safety.

• The ...
Income Growth Can Reduce
Child Stunting, But Other Actions Needed

A 10% increase
in GDP/PC
leads to a 6%
reduction in
stu...
Income Growth Can Increase Risks of Overweight and
Obesity
A 10%
increase in
GDP/PC
leads to a 7%
increase in
overweight
a...
Income Doesn’t Lead Diets
Towards Ideal Nutrition
(shares of daily calorie consumption by food groups)
Ideal

US

China

B...
Value Chain Approach
Producer

Supply side

Inputs into production
Food production

Identify production and
market constra...
Key topics we are focusing
• Nutrition and food safety
• Contract farming

• Farmer groups
• Access to finance
• Access to...
Key topics we are focusing
• Nutrition and food safety
• Contract farming

• Farmer groups
• Access to finance
• Access to...
Value chain example: the Vietnamese
dairy sector
• Archetypal for high-value agricultural markets
in DCs
• Domestic demand...
Existing contractual arrangement
i

x 52

x 365

Factors constraining farm productivity:


“Usual suspects”: infrastructu...
Research project and research questions
Research questions:
Does provision of 3rd-party quality assessment…
…make farmers ...
Experimental Design
!
?

i
 Treatment farmers (n=100) receive vouchers for
zero-cost milk testing in independent lab

 B...
Main results
• Independent quality verification leads to higher input
use, more output, slightly higher household welfare
...
Policy implications
• Role for the state in establishing infrastructure for
third-party quality verification?

• More comp...
Health benefits and Agricultural contracts
Experimental evidence from Northern Senegal
• Can health-related incentives be ...
Health benefits and Agricultural contracts
Experimental evidence from Northern Senegal
• Semi-nomadic milk producers, very...
Clear and significant effect on
milk delivery during dry season
Order of magnitude: 10
percentage point (=30%) higher
cont...
Summary
• Addresses market failures to release constraints
faced by smallholders but to enhance benefits
• Although Increa...
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Partnership for Impact Event_Brussels-Torero

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"Partnering for Impact: IFPRI-European Research Collaboration for Improved Food and Nutrition Security" presentation by Maximo Torero, IFPRI, 25 November 2013 in Brussels, Belgium.

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  • How far can income take us?
  • TechnologiesImprovements in production, storage, handling, processing, or marketing to reduce nutritional loss, improve access, or reduce safety risks, eg. Greater seasonal availability for fruitsInformationIncreased demand for improved safety and nutrition through education or improved incentives for different actors in the value chain, eg. Nutrition education with improved vegetable seedsNutritional quality reflected in prices and/or made more affordable, eg., quality certification for locally sourced infant foodsPolicies and InstitutionsNew contractual arrangements create incentives to deliver more nutrient rich foods or to create demand for such foods, eg. Home grown school lunch programs
  • Transcript of "Partnership for Impact Event_Brussels-Torero"

    1. 1. Value Chains for Nutrition and Smallholder Income Maximo Torero m.torero@cigar.org Christoph Sänger SaengerC@ebrd.com
    2. 2. Market failure focus Goal: making commodities markets function for the poor at local, regional, and international markets by: • • Releasing constraints to participation Enhancing benefits from participation (better income and nutrition) Major Market Failures: • • • • • • Externalities (+/-) Merit and demerit goods Public goods Information asymmetry Monopoly (monopsony) power Government failure inefficiency and high transaction costs
    3. 3. But • The Challenge: Income growth and market development are not sufficient to improve nutrition and food safety. • The Opportunity: Can value chain research improve market performance but also for nutrition and food safety?
    4. 4. Income Growth Can Reduce Child Stunting, But Other Actions Needed A 10% increase in GDP/PC leads to a 6% reduction in stunting Source: M.T. Ruel and H. Alderman (2013) Nutrition-sensitive interventions and programmes: how can they help to accelerate progress in improving maternal and child nutrition? The Lancet 6736(13): 1-16 (DOI: 10.1016/S0140-6736(13)60843-0).
    5. 5. Income Growth Can Increase Risks of Overweight and Obesity A 10% increase in GDP/PC leads to a 7% increase in overweight and obesity in women Source: M.T. Ruel and H. Alderman (2013) Nutrition-sensitive interventions and programmes: how can they help to accelerate 5 progress in improving maternal and child nutrition? The Lancet 6736(13): 1-16 (DOI: 10.1016/S0140-6736(13)60843-0).
    6. 6. Income Doesn’t Lead Diets Towards Ideal Nutrition (shares of daily calorie consumption by food groups) Ideal US China Bangladesh Starchy Staples 48 31 49 80 Legumes & Nuts 22 5 3 4 Animal & Fish Products 10 14 20 4 9 7 9 2 11 43 19 10 Too many Too many Too few Fruits & Vegetables Fats & Sugars Total Calories 2200 Source for “Ideal” shares: Thompson and Meerman, FAO, 2013
    7. 7. Value Chain Approach Producer Supply side Inputs into production Food production Identify production and market constraints to improved nutrition and safety Food storage and processing Food distribution and transport Food retail and labeling Develop and test solutions Example: Increased seasonal availability of fruit Example: Nutrition education delivered by vegetable seed supplier Consumer Test solutions to improve demand for nutrition and safety along the value chain Characterize diets, market access and constraints to consumption of nutritious, safe foods Demand side
    8. 8. Key topics we are focusing • Nutrition and food safety • Contract farming • Farmer groups • Access to finance • Access to micro-insurance 8
    9. 9. Key topics we are focusing • Nutrition and food safety • Contract farming • Farmer groups • Access to finance • Access to micro-insurance 9
    10. 10. Value chain example: the Vietnamese dairy sector • Archetypal for high-value agricultural markets in DCs • Domestic demand for dairy products grows quickly • Atomistic supplier structure • Buyer holds natural monopsony • Sector is dominated by formerly state-owned Vinamilk
    11. 11. Existing contractual arrangement i x 52 x 365 Factors constraining farm productivity:  “Usual suspects”: infrastructure, access to inputs/credit, skills  But also contractual design and institutions? — Lack of transparency: quality is assessed by the company
    12. 12. Research project and research questions Research questions: Does provision of 3rd-party quality assessment… …make farmers produce more and higher quality milk? …increase welfare levels of farming households and of the dairy processor? Field experiment: • Through collaboration with Vinamilk we could work with 400 contracted dairy farmers in “natural” setting
    13. 13. Experimental Design ! ? i  Treatment farmers (n=100) receive vouchers for zero-cost milk testing in independent lab  B-samples taken & transported to independent laboratory  Vouchers executed whenever farmers challenge the company’s testing results  Company does not know when vouchers are executed  Eliminates opportunistic behavior
    14. 14. Main results • Independent quality verification leads to higher input use, more output, slightly higher household welfare in treatment group compared to control group • Independent quality verification enables the processor to signal its type “fair” • More transparency in the dairy supply chain – Small-scale dairy farmers gain – Processor gains from lower per-unit transaction costs when procuring raw material
    15. 15. Policy implications • Role for the state in establishing infrastructure for third-party quality verification? • More competition among buyers of milk would help – Improve contract terms for small-scale farmers – Race to the top with respect to transparency 15
    16. 16. Health benefits and Agricultural contracts Experimental evidence from Northern Senegal • Can health-related incentives be used to overcome contract enforcement issues with small-scale agriculture suppliers? • Can existing value chain logistics be leveraged to increase health conditions in remote locations?
    17. 17. Health benefits and Agricultural contracts Experimental evidence from Northern Senegal • Semi-nomadic milk producers, very remote location • Milking efforts by women, cash collected by men • Highly unreliable milk supply, particularly in dry season • Extreme level of anemia prevalence for children in the area (82% anemic, 15% severe anemic).
    18. 18. Clear and significant effect on milk delivery during dry season Order of magnitude: 10 percentage point (=30%) higher contract fulfillment in treatment group in early June. -.1 0 .1 .2 Preliminary results Note: Impact parameter estimate for separate impact estimates ran each week. Lowess smoothing function used across estimates. Dahes lines are 95% confidence interval Positive dose-response effect on children’s health (Hemoglobin level) Order of magnitude: 1.25 g/dl Hemoglobin increase for 16 weeks of continuous fortified porridge intake. Note: Generalized propensity score estimate used to deal with endogeneity of treatment intensity. Green and red lines are 95% confidence interval
    19. 19. Summary • Addresses market failures to release constraints faced by smallholders but to enhance benefits • Although Increased calorie production and incomes is not sufficient and no longer seen as ag’s only role • We also need to increase diet diversity and consumption of nutrient rich foods • Is central to identify barriers to greater consumption of nutritious foods • Tests market solutions to provide better nutrition and food safety
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