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

1. Policy-Makers Responses to Food Price
Crises: Results from a 14-Country
Political Economy Study
Per Pinstrup-Andersen
IFPRI
May 2, 2013

2. 14 Participating Countries (Bangladesh, Brazil, China, Egypt, Ethiopia, India, Kenya,
Malawi, Mozambique, Nigeria, Senegal, South Africa, Vietnam, Zambia)
European Union
United States
Collaborating Institutions: Cornell University,
UNU-WIDER, and University of Copenhagen
Bill & Melinda Gates Foundation

3. Project OverviewProject Overview
Food Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend
and Volatility
Policy Response
Impact
Domestic
Price-Related
Factors
Policy
Process
Political
Economy

4. Project OverviewProject Overview
Food Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend
and Volatility
Policy Response
Impact
Domestic
Price-Related
Factors
Policy
Process
Political
Economy

5. Food Price Over TimeFood Price Over Time

6. Wheat Weekly Price MinusWheat Weekly Price Minus
12-Month Moving Average12-Month Moving Average

7. Project OverviewProject Overview
Food Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend
and Volatility
Policy Response
Impact
Domestic
Price-Related
Factors
Policy
Process
Political
Economy

8. Wheat Prices in the World Market,
South Africa and Bangladesh, 2005-2012
Source: Baltzer (2013)

9. Rice Prices in the World Market,
China and India, 2005-2012
Source: Baltzer (2013)

10. Maize Prices in the World Market,
Malawi and Zambia, 2005-2012
Source: Baltzer (2013)

11. Increase in the Domestic Food
Price as a Percent of the Increase
in World Prices, June 2007-2008
Source: Minot, N. 2010. Transmission of World Food Price Changes to
African Markets and its Effect on Household Welfare. Paper presented at
the Comesa policy seminar, 25-26 January, Maputo, Mozambique.

12. Estimates and Projections of UndernourishedEstimates and Projections of Undernourished
People Worldwide, 1990-2015People Worldwide, 1990-2015
Source: 2012 Global Food Policy Report, IFPRI.

13. Real Food Price Indices in the EU and
the World Market 2005-2012 (2005=100)
Source: Swinnen, Knops, and Herck (2013)

14. Cereal Prices in the EU andCereal Prices in the EU and
World Market 2005-2012World Market 2005-2012
Source: Swinnen, Knops, and Herck (2013)

15. Coefficients of Variation for Selected
Food Price Indices (2005-2012)
Source: Swinnen, Knops, and Herck (2013)

16. U.S. Ethanol and Maize Prices, 2004-2006
Source: Rausser and de Gorter (2013)
MaizeEthanol

17. U.S. Maize and Ethanol Prices, 2007-2012
Source: Rausser and de Gorter (2013)
Maize price Ethanol price

18. Project OverviewProject Overview
Food Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend
and Volatility
Policy Response
Impact
Domestic
Price-Related
Factors
Policy
Process
Political
Economy

19. The Policy Response (1)The Policy Response (1)
1. Slow down domestic food price increases
and 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 and
Implementation Issues (1)Implementation Issues (1)
1. Ad hoc, delayed action
2. High fiscal costs
 Revenue losses
 Export bans
 Import tariffs
 Elimination of VAT
 Program costs
1. Interference with price signal

22. Process andProcess and
Implementation Issues (2)Implementation Issues (2)
4. Poor targeting (intentional or not)
 Transfers, safety nets
 Food and fertilizer subsidies
4. Corruption
5. Cross-border trading
6. Selective enforcement of export bans
7. Untimely government procurement

23. Project OverviewProject Overview
Food Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend
and Volatility
Policy Response
Impact
Domestic
Price-Related
Factors
Policy
Process
Political
Economy

24. Political Economy Lessons (1)Political Economy Lessons (1)
1. Protecting government legitimacy
2. Pursuing domestic policies irrespective of
international consequences
3. Unitary government decision-making is
unusual
4. Repeating past or expanding current
policies
5. Relative power of stakeholder group varied

25. Political Economy Lessons (2)Political Economy Lessons (2)
6. Increasing urban bias
7. Smallholders versus larger farms
8. Mutual mistrust between government and
the private sector
9. Foreign agencies had little influence

26. Lessons for Development AssistanceLessons for Development Assistance
1. Do not assume unitary government
decision-making process
2. Expect strong urban bias
3. Expect strong bias in favor of large-scale
farming
4. Rhetoric and priority action may differ wrt
smallholders
5. Mutual mistrust between public and private
sector may be an important hindrance to
broad-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