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IFPRI Policy Seminar: Policymakers’ Responses to Food Price Crises

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Policy Seminar presentation by Per Pinstrup-Andersen, Cornell University at IFPRI Policy Seminar on "Policymakers’ Responses to Food Price Crises" May 3, 2013

Policy Seminar presentation by Per Pinstrup-Andersen, Cornell University at IFPRI Policy Seminar on "Policymakers’ Responses to Food Price Crises" May 3, 2013

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  • 1. Policy-Makers Responses to Food PriceCrises: Results from a 14-CountryPolitical Economy StudyPer Pinstrup-AndersenIFPRIMay 2, 2013
  • 2. 14 Participating Countries (Bangladesh, Brazil, China, Egypt, Ethiopia, India, Kenya,Malawi, Mozambique, Nigeria, Senegal, South Africa, Vietnam, Zambia)European UnionUnited StatesCollaborating Institutions: Cornell University,UNU-WIDER, and University of CopenhagenBill & Melinda Gates Foundation
  • 3. Project OverviewProject OverviewFood Price Trend and Volatility in the World MarketPrice TransmissionDomestic Price Trendand VolatilityPolicy ResponseImpactDomesticPrice-RelatedFactorsPolicyProcessPoliticalEconomy
  • 4. Project OverviewProject OverviewFood Price Trend and Volatility in the World MarketPrice TransmissionDomestic Price Trendand VolatilityPolicy ResponseImpactDomesticPrice-RelatedFactorsPolicyProcessPoliticalEconomy
  • 5. Food Price Over TimeFood Price Over Time
  • 6. Wheat Weekly Price MinusWheat Weekly Price Minus12-Month Moving Average12-Month Moving Average
  • 7. Project OverviewProject OverviewFood Price Trend and Volatility in the World MarketPrice TransmissionDomestic Price Trendand VolatilityPolicy ResponseImpactDomesticPrice-RelatedFactorsPolicyProcessPoliticalEconomy
  • 8. Wheat Prices in the World Market,South Africa and Bangladesh, 2005-2012Source: Baltzer (2013)
  • 9. Rice Prices in the World Market,China and India, 2005-2012Source: Baltzer (2013)
  • 10. Maize Prices in the World Market,Malawi and Zambia, 2005-2012Source: Baltzer (2013)
  • 11. Increase in the Domestic FoodPrice as a Percent of the Increasein World Prices, June 2007-2008Source: Minot, N. 2010. Transmission of World Food Price Changes toAfrican Markets and its Effect on Household Welfare. Paper presented atthe Comesa policy seminar, 25-26 January, Maputo, Mozambique.
  • 12. Estimates and Projections of UndernourishedEstimates and Projections of UndernourishedPeople Worldwide, 1990-2015People Worldwide, 1990-2015Source: 2012 Global Food Policy Report, IFPRI.
  • 13. Real Food Price Indices in the EU andthe World Market 2005-2012 (2005=100)Source: Swinnen, Knops, and Herck (2013)
  • 14. Cereal Prices in the EU andCereal Prices in the EU andWorld Market 2005-2012World Market 2005-2012Source: Swinnen, Knops, and Herck (2013)
  • 15. Coefficients of Variation for SelectedFood Price Indices (2005-2012)Source: Swinnen, Knops, and Herck (2013)
  • 16. U.S. Ethanol and Maize Prices, 2004-2006Source: Rausser and de Gorter (2013)MaizeEthanol
  • 17. U.S. Maize and Ethanol Prices, 2007-2012Source: Rausser and de Gorter (2013)Maize price Ethanol price
  • 18. Project OverviewProject OverviewFood Price Trend and Volatility in the World MarketPrice TransmissionDomestic Price Trendand VolatilityPolicy ResponseImpactDomesticPrice-RelatedFactorsPolicyProcessPoliticalEconomy
  • 19. The Policy Response (1)The Policy Response (1)1. Slow down domestic food price increasesand volatility Trade policies to reduce price transmission Direct price control Removal of VAT on food Short term supply management Production expansions
  • 20. The Policy Response (2)The Policy Response (2)2. Reduce negative impact on select groups Targeted cash transfers Targeted and untargeted food subsidies Increasing public sector wages
  • 21. Process andProcess andImplementation Issues (1)Implementation Issues (1)1. Ad hoc, delayed action2. High fiscal costs Revenue losses Export bans Import tariffs Elimination of VAT Program costs1. Interference with price signal
  • 22. Process andProcess andImplementation Issues (2)Implementation Issues (2)4. Poor targeting (intentional or not) Transfers, safety nets Food and fertilizer subsidies4. Corruption5. Cross-border trading6. Selective enforcement of export bans7. Untimely government procurement
  • 23. Project OverviewProject OverviewFood Price Trend and Volatility in the World MarketPrice TransmissionDomestic Price Trendand VolatilityPolicy ResponseImpactDomesticPrice-RelatedFactorsPolicyProcessPoliticalEconomy
  • 24. Political Economy Lessons (1)Political Economy Lessons (1)1. Protecting government legitimacy2. Pursuing domestic policies irrespective ofinternational consequences3. Unitary government decision-making isunusual4. Repeating past or expanding currentpolicies5. Relative power of stakeholder group varied
  • 25. Political Economy Lessons (2)Political Economy Lessons (2)6. Increasing urban bias7. Smallholders versus larger farms8. Mutual mistrust between government andthe private sector9. Foreign agencies had little influence
  • 26. Lessons for Development AssistanceLessons for Development Assistance1. Do not assume unitary governmentdecision-making process2. Expect strong urban bias3. Expect strong bias in favor of large-scalefarming4. Rhetoric and priority action may differ wrtsmallholders5. Mutual mistrust between public and privatesector may be an important hindrance tobroad-based economic growth
  • 27. Full papers and research briefs available at:http://www.wider.unu.edu/research/current-programme/en_GB/Political-Economy-of-Food/Research briefs also available at:www.foodpolicy.dyson.cornell.edu

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