Bhavani Shankar, SOAS Expert consultation on trade and nutrition 15-16 November 2016, FAO Headquarters, Rome http://www.fao.org/economic/est/est-events-new/tradenutrition/en/

1. Influence of agricultural, trade and food
policies on diets
Bhavani Shankar

2. This presentation
• Overview of dietary implications of agri-food policies not explicitly
targeted at nutrition.
• Agricultural policy, trade policy and consumer policy.
• Focus mostly on LMICs.
• Particularly important or interesting aspects – not comprehensive.

3. Conceptual framework

4. Price policies systematic review

6. Agri-food policy and diets: Nature of
available evidence
• Preponderance of analysis of trends, anecdotal evidence.
• Surprising relative lack of research involving economists.
• Some conventional wisdom does not stand up to closer scrutiny.

7. Ag. Policy: Producer support and diets
• Public health narrative: Producer support in high income countries
led to worsening diets and health outcomes.
• Closer examination by economists finds little support for this:
oSupport usually acted as a tax on consumers.
oIn any case, price transmission and impact on final consumers low.
oThus policy reform may have actually worsened diets slightly.
• Support levels in LMICs have historically been much lower and
there is little evidence on dietary impacts.

8. Ag. Policy: Ag. investments & diets
Do green revolution investments and other rural public expenditures
improve diets?
• Headey and Hoddinott (2016):
o Rice yield growth in Bangladesh associated with earlier introduction of
complementary child feeding and child weight gain.
o But rice yield growth has done little for dietary diversity.
• Tak and Shankar (ongoing):
oMarket infrastructure and production diversity (but not road
infrastructure) improve dietary diversity in India.
o Work ongoing on associations between rural public expenditures (agri.
R&D, infrastructure expenditures, irrigation expenditures, etc. and dietary
diversity).

9. Trade Policy: Trade liberalization & diets
What has been the impact of GATT/WTO/RTAs induced liberalization
on diets?
• Modelling efforts have seldom focused explicitly on consumption
and diets.
• Apart from raising incomes, liberalization tends to raise commodity
prices.
• Modest commodity price increases + low price elasticities + low
transmission suggest minor effects on diets.
However…

10. Trade policy: Food availability and multinationals
Thesis: liberalization has facilitated FDI particularly in ultra-processed food (UPF)
UPF and multinationals:
• Economies of scale
• Branding and marketing
• High margins
Baker et al (2015): Apart from lowering tariff and non-tariff barriers, trade
agreements reduce the “policy space” – freedom, scope and instruments to
introduce health-oriented domestic food policy.

11. Trade policy: Food availability and
multinationals
• Stuckler et al. (2012):
oMain determinants of UPF sales, such as income and urbanisation, are less
important in countries with high penetration of multinationals.
oHaving a trade agreement with the US is associated with a 63% higher soft
drink consumption per capita.
• Observations on literature:
oIndividual commodity rather than whole diet perspective, mostly.
oMuch less attention to trade and healthy food intake, eg. fruit and veg.
oInvolvement of economists still low!

12. Trade liberalization & habit formation: Let
them not eat cake?!
Atkin (2013):
• Too often trade theory assumes identical preferences.
• But tastes in autarky correlated to local endowments.
• Habit formation: tastes change slowly.

13. Trade liberalization & habit formation: Let
them not eat cake?! (contd.)
• Liberalization raises relative prices of these preferred local foods.
• Since preferences sticky, preferred food more expensive and
consumption gains from trade reduced in short run.
• Long run: food tastes adapt and consumption gains from
liberalization finally achieved.
• Food price crisis:
oStandard model: Transfer income from exporters, allow consumers to
substitute into relatively cheap foods.
oHabit formation: A bit more sympathy for export bans as a way of reducing
hunger among the poor!

14. Consumer policy: food subsidies
Jensen and Miller:
• Do staple subsidies necessarily improve nutrition?
• Wealth and substitution effects of subsidies.
• Where wealth effect is large and ‘non-nutritional attributes’ are
preferred, subsidies need not improve nutrition.
• RCT with food vouchers for staples (rice and wheat flour) in two
provinces of China
• Results: no evidence of improved nutrition as a result of subsidy.
• In one province, households reduced all items in main meal (rice,
tofu, spinach, oil) to increase fish consumption.

15. Consumer policy: India’s Public Distribution
System
• India’s PDS is world’s largest food policy – subsidised rice and wheat to
0.5 billion people per year.
• Massive inefficiencies  increased targeting from 1997, but targeting
poor in practice.
• 2000s - some states have embarked on a ‘new PDS’ – more inclusive and
more generous subsidies.
• Kishore & Chakrabarti (2015): rice price subsidy increased rice
consumption, but also pulses, vegetables, oil (but not meat/eggs/dairy).
• Rahman (2015): Comparing targeted versus new universal programme,
universal PDS improves nutrient intakes across the board compared to
targeted.
• Positive implications for quasi-universal PDS plans under India’s new
National Food Security act.