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Food Markets and Nutrition in the Developing World: Results from ARENA II


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Derek Headey, Robel Alemu, Will Martin, David Stifel, and
Sofia Vielma
Food Markets and Nutrition in the Developing World: Results from ARENA II
MAR 18, 2019 - 12:15 PM TO 01:45 PM EDT

Published in: Government & Nonprofit
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Food Markets and Nutrition in the Developing World: Results from ARENA II

  1. 1. FOOD MARKETS & NUTRITION IN THE DEVELOPING WORLD Results from ARENA II With support from The Bill and Melinda Gates Foundation and the CGIAR Research Program on “Agriculture for Nutrition and Health” (A4NH)
  2. 2. Why are we here today? • Justified interest in leveraging agri-food systems for nutrition • Bad diets #1 risk factor in the global burden of disease • Why do agri-food systems play a special role? • Incomes & aggregate spending on food • Safety of foods • Availability of foods (especially rural areas) • Affordability of foods (especially perishable foods) • Most previous research focuses on farmers eating what they grow • But surveys show that poor rural people heavily rely on markets • Especially true for nutrient-dense non-staples
  3. 3. Research questions Major research objective of ARENA-II is to understand the linkages between markets, diets and nutrition outcomes Ultimate policy objective: improve diets & child feeding practices We pose four questions: 1. How affordable/available are nutritious foods & nutritious diets? 2. Why does food affordability & availability vary so much? 3. Are consumption patterns driven by affordability & availability? 4. What can we do to improve affordability of nutritious foods? • Agriculture for own-consumption? • Diversify local or national food production? • Fix (multiple) value chains? • International trade?
  4. 4. Who is going to answer these questions? Robel Alemu Steve Block Will Masters John Hoddinot David Stifel Kalle Hirvonen Channing Arndt Kwaw Andam Sofia Delano Andy Jones David Laborde Will Martin Faaiqa Hartley Dietary determinists (penny pinchers) The Market Fundamentalists Dairy dudes Fish Folks Eggonomists Yan Bai
  5. 5. How are we going to diagnose markets? Demographic Health Surveys • 60 countries • Data on diets for 300K kids aged 6-23m Economic & Agricultural Surveys • PSNP Nutrition Survey Ethiopia • Household survey linked to detailed market survey • Prices, availability, size, frequency and infrastructure of rural markets • Ghana Living Standards Survey Consumer Price Surveys • International Comparison Program (ICP) • 180 countries • 2011 survey • Price of hundreds of different foods • Standardized! • Cost of non-staple calories relative to staple calories Economywide Simulation Models • Ghana CGE model links households & macroeconomy • Conduct policy experiments • Allows spillovers • Distributional implications The studies today exploit the entire ARENA toolkit ….
  6. 6. Some common threads… • These studies forensically diagnose markets in developing countries, mostly by looking at prices and supply-side constraints • They build on some key findings from ARENA-I: 1. Animal-sourced foods (ASFs) strongly linked to child growth: nutrient-density means they’re ideal for small stomachs 2. In LDCs, perishable nutritious foods are very expensive sources of calories relative to starchy staples 3. Markets are important, but some markets work very badly, particularly in rural areas: e.g. dairy in Ethiopia & Bangladesh
  7. 7. Calorie price ratios (CPRs): ASF relative to starchy staple calories 7.7 8.8 7.7 11.7 12.6 15.1 22.6 0.0 10.0 20.0 30.0 HICs ECA LAC MENA E. Asia S. Asia SS Africa Eggs 14.1 18.3 15.1 12.9 8.8 25.1 13.8 0.0 10.0 20.0 30.0 HICs ECA LAC MENA E. Asia S. Asia SS Africa Fish 5.5 5.9 5.7 9.6 13.0 8.4 23.6 0.0 10.0 20.0 30.0 HICs ECA LAC MENA E. Asia S. Asia SS Africa Fresh cow's milk 9.8 7.4 7.3 10.9 9.3 17.5 17.2 0.0 10.0 20.0 30.0 HICs ECA LAC MENA E. Asia S. Asia SS Africa Poultry meat Many of these studies seek to Understand why these pricing patterns exist, and what can be done to change them
  8. 8. Study 1 Eggs before chickens? Poultry, poverty and nutrition in sub-Saharan Africa
  9. 9. WHAT’S THE POULTRY PROBLEM? • Africa in the midst of a “Livestock Revolution”: ASF consumption↑ • But unlike other regions, coastal Africa imports much of its ASFs • Is this economic problem also a nutritional problem? -30 -20 -10 0 10 20 30 Eggs Poultry Milk Fish Change in ASF calories: Ghana 1993-2013 Domestic Imports Poultry meat: heavily imported • Exploded since mid 1990s • Imports bans and tariffs • Africa broilers uncompetitive Eggs: no blue-ocean imports • Naturally protected • Super expensive, no growth • But HIGHLY NUTRITIOUS!!!
  10. 10. Eggs are expensive, so the poor don’t eat them 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Eggs Fish Meat Dairy ASFs in the past 24 hours by wealth quintile: Ghanaian children 12-23 months Poorest Poorer Middle Richer Richest Kids most at risk of stunting
  11. 11. Why is African poultry unproductive? • Poultry is the most commonly owned livestock in Africa • But almost all low input-low output scavenging systems Albania Azerbaijan Burundi Benin Burkina Faso Bangladesh Bulgaria Belize Brazil Canada Cote d'Ivoire Cameroon DRC Comoros Cyprus Czech Rep Denmark Egypt SpainEstonia Ethiopia FinlandFrance Gabon UK Ghana Gambia Greece Guatemala Honduras Croatia Hungary Indonesia India IrelandIraq Iceland Italy Jordan Kenya Cambodia South Korea Sri Lanka Lesotho Lithuania Luxembourg Latvia Morocco Madagascar Mexico Mali Malta Myanmar Montenegro Mozambique Mauritania Malawi Malaysia Namibia Niger Nigeria Norway Peru Philippines PolandPortugal Romania Rwanda Senegal Slovakia SloveniaSweden Chad Togo Thailand Tunisia Tanzania Uganda Ukraine USA Viet Nam Yemen South Africa Zimbabwe 05 101520 Relativeeggprice(ratiotocerealprice) 0 20 40 60 80 100 Share of chickens in intensive systems (%) Linear fit: coef = -0.08 [CI -0.10-0.07]; R-sq = 0.60 • HUGE economies of scale from commercialization • Commercial sectors mostly cater to urban areas • Egg prices very high in rural areas • Rural children don’t eat eggs F1. Egg prices & share of chickens in intensive systems Albania Armenia Azerbaijan Bangladesh Burkina Faso Benin Burundi DRCCongo, Rep.CIV Cameroon DR DR Egypt Egypt Ethiopia Gabon Ghana Guinea Guyana Honduras Honduras Haiti Haiti India KH5 KM6 Kyrgzstan LB5 LB6 Lesotho MDG Mali Malawi MZNigeria Nigeria Niger NamibiaNamibia NepalNepal Pakistan Rwanda Sierre Leone Sierre Leone Senegal SZ TJ Timor-Leste Uganda Uganda Yemen ZambiaZambia ZIM 0 .2.4.6 Eggconsumption(shareofkids) 0 .25 .5 .75 1 Chicken ownership (share of HHs) Negative link between egg intake & chicken ownership!
  12. 12. But commercial poultry also uncompetitive! Feed ingredient costs in Ghana compared with international prices, 2016 (US$/ton) Ghana feed mills prices International FOB price Ghana premium (%) Yellow maize 268.79 159.9 68.10% Fishmeal 1128.79 1566 -27.92% Soybean 500.00 382.04 30.88% Wheat bran 103.41 NA NA Total feed costa 380.16 328.948 15.57% • Feed costs are 60-70% of the broiler and layer production costs • Feed costs are 15.57% higher than international costs • Problem inputs are maize and soybeans
  13. 13. Main results (CGE economywide model) Feed improvement: • Egg prices 9% ↓ • Egg consumption↑ • Total household consumption↑ 0% 5% 10% 15% 20% Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5 Q1 Q2 Q3 Q4 Q5 Rural farm Rural non-farm Urban Growth in household egg consumption • We model two alternative policy paths to 2025: 1. Import ban (Nigerian approach) 2. Feed improvement (maize productivity growth) • Import ban useless: no poverty or nutrition benefits
  14. 14. Key Takeaways 1. More economywide research for growth, poverty & nutrition: 1. Understand competitiveness issues 2. Understand growth-poverty-nutrition tradeoffs & macro spillovers 2. Understand & address high cost of feed 1. A cross-cutting constraint for poultry meat, eggs, fish? 2. Can Africa raise area and productivity of maize & soybeans 3. Behavioral change on eggs 1. Major improvement in maize yields only reduces egg price by ~10% 2. Baseline egg consumption low, though rises with income 3. National egg campaigns; targeted efforts for poorer parents
  15. 15. Dairy markets and child nutrition in the developing world Study 2
  16. 16. What’s the problem? • Dairy products highly effective delivering nutrients • High amino acid scores & insulin-like growth factor • Dense in calories, fat and calcium and micronutrients • Tasty, palatable and familiar to young children • But low levels of dairy consumption • Great variability across countries • Low consumption in most of Africa and much of Asia • High prices in these regions • Why is dairy so expensive? • Dairy powder is tradable (why don’t prices equalize across countries?) • Countries can import dairy powder • Consumers or factories can reconstitute it
  17. 17. How do we analyze the problem? • ICP calorie price ratios to compare relative dairy prices • Cross-country regressions to explain child dairy consumption: income, prices, parental education, refrigeration, water quality • Differences b/w farmgate & consumer prices (processing margins), and consumer prices & international prices (trade margins) • Reform options: Differences by type of dairy country: • Dairy strategies for high potential producers? • Dairy strategies for low potential producers?
  18. 18. Influences on dairy consumption? Children taking dairy Low Incomes? High prices? Piped water? % $ PPP CPRs % Central Africa 15.7 1,670 21.9 26.8 West Africa 25.0 3,766 21.4 19.6 Southern Africa 18.0 1,814 9.5 27.2 Eastern Africa 34.4 1,685 23.3 28.9 South-East Asia 19.2 3,725 12.8 11.0 South Asia 52.7 4,357 8.5 34.6 M East & N. Africa 70.9 8,139 7.9 74.2 E. Europe & C. Asia 67.1 9,587 6.1 71.7 Latin America 58.2 12,451 5.6 68.7
  19. 19. Child dairy consumption: Double log regressions from 58 DHS countries (1) (2) GDP per capita 0.473*** 0.241** Fresh milk price -0.435*** -0.334*** Cattle ownership 0.063 9+ yrs maternal educ. -0.071 Health access 0.023 Piped water 0.175* Refrigerator 0.188** Obs 58 58 R-squared 0.636 0.721 Price differences explain ~20% of difference between high & low dairy countries Piped water & refrigeration significant even after controlling for GDP per capita Income, prices and implicit prices matter…
  20. 20. Child dairy consumption & dairy prices SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSASSA SSA SSA SSA SSA SSA SSA SSA SSA SAS SAS SAS SAS EAPEAP MNA MNA MNA LAC LAC LAC LAC LAC LAC LAC ECA ECA ECA ECA ECA 0 20406080 100 0 10 20 30 40 Dairy calorie price ratio (relative to starchy staples) In many SSA countries prices are far too high for the average parent
  21. 21. Price differences across different dairy types NIGERIA ETHIOPIA KENYA INDIA VIETNAM Dairy potential Low High High High Low Child dairy (%) 27.5% 33.5% 55.4% 54.5% 64.0% Calorie Price Ratios Non-perishable (tradable) milk Powdered milk 13.4 42.4 15.8 18.8 14.2 Perishable (non-tradable) pasteurized milk Milk, full fat 16.9 15.1 12.6 11.3 11.3 Unpasteurized milk Cow's milk NA NA NA 9.4 NA Buffalo milk NA NA NA 6.9 NA Relatively cheap 80% imported Informal milk markets still important
  22. 22. Irrational dairy trade strategies? Low income Lower Middle Upper middle High income Global Milk protection (%) 24.7 13.2 56.6 12.2 29.8 Dairy potential Milk import share (%) Milk protection Milk Margins Rwanda Good 2.3 -42.2 162.6 Kenya Good 1.0 -54.0 137 Senegal Medium 53.2 35.6 104 Chad Medium 3.5 98.2 34.8 Gambia Low 108.5 24.0 86.6 Cote d'Ivoire Low 86.0 -87.7 231.1 Dairy is a significantly protected sector … on average Good dairy potential ≠ Protection & Poor potential = Protection
  23. 23. Key takeaways Huge scope to raise dairy consumption, and large nutritional benefits Policy options 1. Raising incomes important 2. Improve access to safe water and refrigeration 3. Nutritional knowledge, especially in countries with poor dairy traditions: • Experiences of dairy transformation exemplars: Thailand, Vietnam • School feeding programs, promotion campaigns, behavioral change 4. Reduce relative prices of “fresh milk” • Successful strategies need to be tailored to comparative advantage • High potential: raise productivity, solve value chain issues (e.g. India) • Low potential: Use imports for domestic reconstitution (e.g. Thailand) • Further research needed, particularly on dairy success stories
  24. 24. The Importance of Fish for Child Nutrition in Sub-Saharan Africa Study 3
  25. 25. What’s the problem? • The fish problem is very different to the egg, meat & dairy problems • MANY, MANY children in Africa (and) Asia consume fish! • Fish problem: we know little about something that happens a lot: 1. How widespread is fish consumption in Africa? 2. How affordable is fish in Africa? 3. How do fish markets work, particularly trade? 4. Is there scope to improve production & consumption? • And then some questions we still need to answer: 1. Do children actually consume significant amounts of fish? 2. What types of fish are consumed? 3. What are the nutritional properties of different fish species and preparation methods? • How can Africa better leverage the potential of fish for nutrition?
  26. 26. How do we analyze this problem? • DHS: Child fish consumption patterns • FAO: national food balance sheets and trade • International Comparison Program: price data on fish • Fish markets in Africa: literature review • Nutrient content of fish: FAO, West African sources But major knowledge/data gaps: • Surveys do a poor job of recording species & preparation methods • Very few fish value chain or trade studies in Africa • Very few individual dietary intake surveys in Africa
  27. 27. Nutrient profile of 35 fish products Energy (kcal) Protein (g) Fat (g) Calcium (mg) Iron (mg) Zinc (mg) Vitamin A (ug RE) Median 103 18.6 3 28 0.8 0.6 11 Min 68 10.6 0.5 9 0.1 0.2 0 Max 368 79.8 13 1700 3.1 5.2 49 25th centile 84 17.1 1.2 17 0.5 0.4 6 75th centile 119 19.7 5.1 51 1.1 1 18 Major takeaways: • Calorie- and protein-dense • Fatty acids: Omega-3s mostly in fatty saltwater fish • Calcium: Huge variation in species and preparation; potentially very high when eaten with bones, and dried • Iron, zinc: Good amounts • Vitamin A: large variation, but often high • BUT … dried fish eaten in very small quantities = small nutrients!
  28. 28. 9.4% 25.2% 51.4% 31.7% 27.0% 46.0% 33.3% 59.1% 59.7% 38.8% 54.6% 50.6% 33.7% 17.6% 31.3% 9.1% 9.3% 30.5% 30.5% 20.6% 11.6% 7% 20.0% 40.1% 10.6% 11.5% 11.0% 13.1% 21.2% 17.6% 17.8% 25.9% 11% 8% 14.9% 7% 10.0% 20.2% 30.2% 18.1% 20.0% 31.0% 24.7% 20.2% 19.9% 18.5% 19.7% 8% AFRICAN HIGHLANDS OTHER LANDLOCKED Mali Malawi Zambia COASTAL AFRICA Nigeria Ghana Côte d'Ivoire DRC Cameroon Senegal Fish Dairy Eggs Meat Child fish consumption in Africa (24 hrs) Fish is the most common ASF in 16 of 27 African DHS countries
  29. 29. SSASSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SSA SAS SAS SAS SASSAS EAP EAP MNA MNA MNALACLAC LAC LAC LAC LAC LAC ECA ECA ECA ECA ECA ECA 0 20406080 0 10 20 30 40 50 Fish calorie price ratio (relative to starchy staples) Children are fed fish where it’s cheap And fish is often relatively cheap in sub-Saharan Africa (we likely overestimate prices)
  30. 30. Household wealth quintiles Predictedrecentchildfishconsumption 90% CI kernel-weighted local polynomial smoothing Relationship between wealth & child fish consumption varies by country: sometimes declines with wealth PANEL A: FISH CONSUMPTION AND HOUSEHOLD WEALTH: COUNTRIES WHERE FISH IS COMMON Where fish is common its consumption can decline with wealth PANEL B: FISH CONSUMPTION AND HOUSEHOLD WEALTH: COUNTRIES WHERE FISH IS RARE Predictedrecentchildfishconsumption Household wealth quintiles 90% CI kernel-weighted local polynomial smoothing Where fish is rare (typically expensive), consumption rises steeply with income
  31. 31. Africa is becoming more import-dependent Africa, 46% South-Eastern Asia, 18% Eastern Africa, 23% Central Africa, 40% Western Africa, 64% 0% 10% 20% 30% 40% 50% 60% 70% 1990 1995 2000 2005 2010 SHARE OF IMPORTS IN DOMESTIC SUPPLY QUANTITY, 1990-2013
  32. 32. FORMAL VS INFORMAL TRADE ROUTES IN WESTERN AFRICA FORMAL Formal trade growing, but informal trade is also very important Source: AU-IBAR, 2018 INFORMAL
  33. 33. Takeaways Policy goals • Improve fish supply: • Huge potential for more trade in fresh fish, trade facilitation to reduce informality • Significant potential for growth in African aquaculture? • Improve fish demand: • Combat perception of fish as in inferior good Research needs: • Improvement measurement in surveys, national accounts, price surveys: know little about kids!!! • Assess contribution to diet and nutrition outcomes • Improve evidence base for nutrition-sensitive fish development strategies: micro and macro issues
  34. 34. Rural food markets and child nutrition: Ethiopia Study 4
  35. 35. Do rural markets deliver nutritious foods? Source: Sibhatu & Qaim (2017) • Diets & nutrition outcomes are very poor in rural areas • Improving diets of children  quality not just quantity • How to improve dietary diversity in rural areas? • Change what people grow? • Maybe, but … • Markets are the main source of non-staple foods What’s the problem?
  36. 36. Why does the problem exist? • Many nutritious foods are highly perishable • Poor infrastructure can result in thin/missing markets • Quality of market: Are nutritious foods… • Available? • Affordable? • Safe?
  37. 37. How do we understand the problem? • Combine HH survey data with market survey data for poor areas of Ethiopia • Relate child (6-36 months) dietary diversity to market quality… •Availability: No. of food groups available •Affordability: Calorie Price Ratios i.e. How expensive is it for a parent to feed a child eggs instead of maize?
  38. 38. Main Results Food Groups Consumed by kids 6-36m 1.0 = Average number of non- staple food groups consumed 6% = Percent of children who consumed 4+ food groups 0 20 40 60 80 100 Other fruit & veg VitA-rich fruit & veg Eggs Flesh foods Dairy Legumes & nuts Starchy staples Percent of Children
  39. 39. Main Results LOTS of missing markets: • Dairy only in ~1/2 • Flesh foods in ~1/3rd • 44% of markets sell <4 foods We estimate that going from 3 to 6 food groups sold results in only … 0.24 more food groups Why such a weak linkage? 0 20 40 60 80 100 Other fruit Other veg VitA-rich fruit & veg (oth) Dark green leafy veg Eggs Flesh foods Dairy Nuts Legumes Percent of Markets with Food Group Available March August
  40. 40. Main Results Affordability=major constraint ASFs are SUPER expensive in poor rural areas!!! Price effects on diet are small: Doubling the mean CPR results in only… 0.15 fewer food groups consumed Why? Very poor households, and prices are relatively high in all markets0 5 10 15 20 25 30 35 40 Other fruit Other veg VitA-rich fruit & veg (oth) Dark green leafy veg Eggs Flesh foods Dairy Nuts Legumes Calorie Price Ratios - Affordability March August
  41. 41. Bottomline • Very poor rural households rely heavily on (imperfect) markets • Availability of nutritious foods is quite limited, especially dairy • Affordability of nutritious foods is extremely low • Poor households living in poor food systems • What’s the policy agenda for improving rural markets? • Value chains? Infrastructure? Basic productivity? Demand?
  42. 42. Where are nutritious diets most expensive? Evidence using ICP prices for 744 foods from 164 countries Study 5
  43. 43. What’s the problem? A “complete nutrition” diet may be unaffordable for the poor • Health outcomes depend on overall diets not just specific foods • Must meet all requirements to stay healthy • Poorest of the poor focus on warding off hunger: i.e. calories • But complete nutrition means meeting lots of dietary requirements We pose three questions 1. What is the least costly way an individual in a given food environment can achieve “complete nutrition”? 2. How expensive is the cost of this nutritious diet relative to the cost of just meeting calorie requirements in a “survival diet”? 3. How does the cost of complete nutrition compare to actual food expenditures?
  44. 44. How do we address this problem? Focus on 21 essential nutrients (Dietary Reference Intakes (DRIs)) • Representative woman, 19-30 with median requirements • Use acceptable macronutrient distribution ranges (AMDRs) • Micronutrients above estimated average requirements (EARs), below upper limits (ULs) for healthy life Use ICP food prices and USDA nutrient composition • International Comparison Project (ICP) prices • We include 744 foods (mean of 194 items per country) • Match each food USDA standard reference data • Least-cost diets estimated with linear programming
  45. 45. In poorer countries all food prices are relatively high, compared to earnings and non-food prices Price levels relative to all HH expenditure Why does this problem exist?
  46. 46. • Relative prices determine which foods enter least cost diet Food systems cause systematic variation in prices Foods in least-cost diets by country income level Fruits, nuts, veg, legumes used MORE in poor countries Dairy used less in poor countries
  47. 47. Nutritious diets (CONA) cost >50% of the $1.90 poverty line and twice as expensive as least-cost energy diet (COCA) $1.90/day $0.85/day Nutritious diets are expensive for the poor
  48. 48. CoNA=current spending Nutritious diets are expensive for the poor In poor countries, the nutritious diet often exceeds average food expenditure In richer countries, CoNA is usually below 50% of spending
  49. 49. Key messages Global analysis reveals global patterns • Foods in general are expensive in poor countries • Substitution to lower-cost source of each nutrient helps reduce diet costs, but scope for adjustment is limited • Even the lowest-cost nutritious diet is often unaffordable • Vegetal foods enter more often in poorer countries: ASFs costly! • Diets cheaper in countries with more electricity & less remoteness Policy uses • Think strategically about: • low cost diets & recommended diets • affordable foods that “complete” the diet: demand promotion • nutrient-dense foods currently unaffordable: supply promotion
  50. 50. Key messages Discussant: Jessica Fanzo Questions from the floor and online