Download Assessment of the World Food Security Situation

Telling The Two Transformations Tale:
Emerging Challenges to Poverty
Reduction
Kostas Stamoulis
Prabhu Pingali
Ellen McCullough
Agricultural and Development Economics Division (ESA)
FAO, Rome
Objectives and Structure
• Poverty Focus
• Describe fundamental changes in food systems
• Identify the forces which drive those changes and
the role of trade
• Underline the importance of heterogeneity
• What are emerging challenges for poverty
reduction ?
Transformation and Food
System Changes
• Transformation process: The process in which the
share of agriculture declines in favour of other
sectors
• Changes in Food Systems : the changes in the
organization of food markets at all levels as a result
of changes in demand patterns and technology
Agricultural Transformation:
a global phenomenon
80
Low
Income
70
60
High Human Development
Medium Human Development
Low Human Development
Lower
Middle
Income
Upper Middle
Income
High Income
50
Share of
Agriculture
(% GDP)
40
30
20
10
0
-1,000
4,000
9,000
14,000
19,000
24,000
29,000
34,000
39,000
GDP (US$ per Capita)
Source : Pingali ( 2006)
44,000
49,000
54,000
Transformation Process
Agricultural Share on GDP and Income per capita
0
.2
.4
.6
.8
(1961-2002)
4
6
8
10
log(1995 US$)
agriculture/GDP
fitted value whole sample
Source: W DI 2003
Source : Bravo, Ortega and Lederman (2004)
agriculture/GDP*lac
fitted value lac
12
The Changing Food System
Individuals
Inputs
Primary
production
Enterprises
Processing
and
packaging
Transport
Distribution
and retail
Services
Governed by Institutions:
Rules and regulations
Markets (Contracts)
Consumption
Food Systems Changes:
Driving Forces
• Rising incomes
– Diet diversification out of staples (Engels Law, Bennett Law)
• Demographic Shifts
– Urbanization
– Rising food prepaper’s opportunity cost
• Technology
– Transportation and food handling
– Chain management (logistics )
• “Globalization”
– Foreign direct investment (in retail and production)
– Trade liberalization
The “other face “ of globalization
FAO: State of Food Insecurity, 2004
◄
The Emergence of Large Retail
◄
New Rules for a New Game
• Centralization of procurement
– Squeezing of supplier lists
• Shift from spot markets to specialized wholesalers
to guarantee q and q
– New intermediaries and logistics
• Contract farming
– Preference for limited transactions
• Rise of private standards
– Quality, safety not common for internal trade
The contribution of International
trade
• Trade links and interactions have not been
explored in a systematic way
• Trade has not been the primary mover
– Stable shares of imports in total consumption of
dev.ing countries
– Small relative to sales of processed by subsidiaries
– Meat, F and V trade shares in total consumption
unchanged in a 20 years
• The Reardon “U “ hypothesis of the role of trade
Relative Importance of Trade, 1960-2005
(Share of imports and exports in domestic food supply)
1
0.8
Cereals
Fruits
Vegetables
0.6
0.4
World
0.2
Africa
Asia
0
South
America
-0.2
-0.4
-0.6
-0.8
-1
1960
1970
1980
1990
2000
1960
1970
1980
1990
2000
1960
1970
1980
1990
2000
source:
FAOSTAT 2006
The “ U “ hypothesis
Share of Imports of processed products originating in the region
0.9
0.8
0.7
0.5
Argentina
0.4
Brazil
0.3
0.2
0.1
0
19
86
19
87
19
88
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
Share
0.6
Years
Transforming Food Systems :
Challenges for Rural Poverty
Reduction
• Rapid spread of the “chain” model
expected in future
• Competition for market share is at the
chain level ( margins)
• Standards, quality and stability not just for
exports
• More generalized impacts than on small
farmers
Food System Transformation:
Country-level heterogeneity
Traditional
Agriculture
Modernizing
Agriculture
Industrialized
Agriculture
Share of Ag
in GDP
>30%
10%-30%
<10%
Share of Ag
labor in total
>50%
15-50%
<15%
Market
Orientation
Subsistence
National
International
Output
Mix
Food Staples
Food Staples
+ high value
Highly
differentiated
Scale
Economies
Not Important
May be Important
Important
Transformation Process: Country Classifications
0
URBANIZED
Economies
20
CAT 2
40
Low Income
Lower-Middle Income
Rural
Population
(% of total)
CAT 1
Upper-Middle Income
High Income
60
80
100
0
10
20
30
40
Share of Agriculture in GDP (%)
50
60
70
Agricultural transformation:
Heterogeneity across production systems
• Increasing scales of production
• Reversal of the farm size productivity
relationship
• Declining competitiveness of marginal
lands
• Increasing risk of biodiversity loss and
environmental sustainability
Ne
pa
l1
Vi
99
et
na
6
m
19
98
ha
na
19
G
92
ha
na
19
M
al
aw 9 8
i2
00
4
Ec
ua
do
r1
Ec
99
ua
4
do
r
Ec
19
ua
95
do
G
r1
ua
99
te
m
8
a
la
Ni
ca
20
ra
00
gu
Pa a 20
na
01
m
Pa a 19
na
97
m
a
20
03
G
Al
ba
ni
a
20
Bo
02
sn
ia
Bu
20
01
lg
ar
ia
Bu
19
lg
95
ar
ia
20
01
Rural Non Farm Income Shares
100%
90%
80%
70%
60%
50%
RNF
Farm
40%
30%
20%
10%
0%
Crops
Livestock
Ag. wage
ha
na
ha
na
19
92
RNF wage
RNF self-employment
Transfers
ep
al
19
Vi
96
et
na
m
19
98
N
Ec
ua
do
r1
Ec
99
ua
4
do
r1
Ec
99
ua
5
do
G
r1
ua
99
te
8
m
al
a
N
20
ic
ar
00
ag
ua
20
Pa
01
na
m
a
19
Pa
97
na
m
a
20
03
19
M
98
al
aw
i2
00
4
G
G
20
Bo
02
sn
ia
20
Bu
01
lg
ar
ia
19
Bu
95
lg
ar
ia
20
01
Al
ba
ni
a
Rural Income Generating
Activities ( cont)
Figure 6: RIGA income shares
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other
Conclusions
• Rapid transformations change the balance
of concerns between domestic factors and
international trade.
• Heterogeneity of impacts and focus
• Commodity focus: narrow
• Agriculture focus : narrow
• Up-stream and downstream activities
Conclusions ( cont)
• Under-researched aspects, hard to capture
in global models
• Several policy “prescriptions” overlap
• Balance of awareness much lower.. until
today.
Thank you
• http://www.fao.org/es/esa/ejade/vol_1/vol_1
_2/cover_en.htm
Food System Transformation:
Household Level Heterogeneity
• Access to assets, credit
• Management skills (source of rents)
• Access to services, such as appropriate
production and marketing extension and
technology
• Institutions
• Pluriactivity and Diversification