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Food Policy Challenges and Opportunities 2011 and Beyond Per Pinstrup-Andersen The Willard W. Cochrane Lecture in Public Policy, University of Minnesota September 30, 2011 What Food Crisis? 1. 2. 3. 4. 5. International food price increase and volatility? Starvation in the Horn of Eastern Africa? Hunger, nutrient deficiencies and death among millions of children? Overweight, obesity, chronic diseases and death among millions of children and adults? The earth’s future productive capacity? Source: FAO, http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/ International Maize Prices Source: FAO, http://www.fao.org/giews/pricetool2/ International Rice Prices Source: FAO, http://www.fao.org/giews/pricetool2/ International Rice Prices versus Rice Prices in Delhi, India Source: FAO, http://www.fao.org/giews/pricetool2/ International Maize Prices versus Maize Prices in Niger Source: FAO, http://www.fao.org/giews/pricetool2/ Maize Weekly Price Minus 12-Month Moving Average 100 80 60 40 20 0 -20 -40 -60 -80 Rice Weekly Price Minus 12-Month Moving Average 350 300 250 200 150 100 50 0 -50 -100 -150 Wheat Weekly Price Minus 12-Month Moving Average 150 100 50 0 -50 -100 1998 1999 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Volatility in Weather Patterns Drought Flooding Irregular Rainfall Patterns Production Volatility Strong Winds Production Volatility Supply Responses Speculation Government Policy Government Policies Market Information Energy Prices Demand Changes Price Volatility Policy Response to Food Price Increases Maintaining government legitimacy Emphasis on Short-term measures Price controls, export bans, lifting import tariffs, rationing, food distribution Emphasis on short-term transfers to urban lower middle class Continued neglect of the rural poor Expanding food production Renewed interest in national self-sufficiency Reserve stocks, acquisition or control of land across borders The Effects of Export Restrictions on Rice Prices Source: Derek D. Headley, “Rethinking the Global Food Crisis: The Role of Trade Shocks,” International Food Policy Research Institute Discussion Paper 0958, March 2010. Stock of Rice, Maize, and Wheat in Percent of Use in China, 2005-2011 (%) % 50 45 40 35 30 25 20 15 10 5 0 43.7 41.1 37.4 28.9 29 37.2 30.2 % 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Source: USDA, World Agricultural Supply and Demand Projections, Several Years. India – Grain Stock 2005/06 – 20011 Million Tons 70 65 54 60 50 40 Estimate 25 30 20 Rice Wheat 15 10 0 2005/06 2007/08 2009/10 2011 Approaches to Managing Food Price Volatility Prevent Cope Private Storage Transportation Insurance Hedging & Futures Markets Public Buffer Stocks Import/Export Controls Financial Market Regulation Safety Nets Transfers Source: Timmer, P. 2011. Managing Price Volatility: Approaches at the Global, National, and Household Levels. Stanford Symposium Series on Global Food Policy and Food Security in the 21st Century, Center on Food Security and the Environment, Stanford University. What do we want from the food system? Food Security and good nutrition Efficient and Sustainable Resource Use Reasonable incomes for farmers Reasonable prices for consumers Meeting Non-food Demands Support of general economic growth Food Policy Challenges Widespread and increasing hunger and malnutrition The Triple Burden of Malnutrition 1. Energy and protein deficiencies: Hunger 2. Specific nutrient deficiencies: Hidden Hunger 3. Excessive net energy intake: Overweight & Obesity Progress Towards Meeting the WFS Goal Globally 1100 1000 1020 842 923 Millions 900 848 800 925 863 Data 700 91-04 600 WFS 500 421 400 Source: FAO 2006 Progress Towards Meeting the MDG Globally 25% 20% 20% 18% 16% 15% 18% 17% 16% 17% 10% 5% 2010 2009 2008 2005-07 2000-02 1995-97 1990-92 0% Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Population Growth Rate 3 2.5 2 1.5 1 0.5 0 CIS E. Asia LAC Source: UNICEF 2006 Dev'ing Avg S. Asia W/C Africa E/S Africa Source: PRB, 2007 Annual Average Population Growth Rate, % 2.5 2 1.5 1950-2000 2000-2050 2050-2100 1 0.5 0 World More Developed Regions Less Developed Regions Under-Five Mortality Rate (per thousand) 300 250 200 1950 2000 2050 2100 150 100 50 0 World More Developed Regions Less Developed Regions Change in the Contribution of Each Food Group to Energy Intake 1980-2005 Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Liters of Water per Kilogram of Product Source: Waterfootprint ( https://waterfootprint.org) accessed May 15, 2009; Gleick 2008 Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Climate change Greenhouse Gas Emissions per Kilogram of Food Item Source: Williams, Audsley, and Sandars 2006. Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Climate change Falling productivity growth rates, large losses Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Climate change Falling productivity growth rates, large losses Poor rural infrastructure Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Climate change Falling productivity growth rates, large losses Poor rural infrastructure Poorly functioning markets Projected Growth in African Food Systems, 2010-2050 Consumption Distribution Packaging Processing Marketing Farming Inputs Growth multiple: 2050 value/2010 value 6X 3X 9X Source: Haggblade, Steven. 2011. Modernizing African agribusiness: Reflections for the future. Journal of Agribusiness in Developing and Emerging Economies 1(1): 10-30. Food Policy Challenges Widespread and increasing hunger and malnutrition Population growth, diet transition and biofuel Lack of government commitment, policy failure Increasing water scarcity and soil degradation Climate change Falling productivity growth rates, large losses Poor rural infrastructure Poorly functioning markets Food price volatility Food Policy Opportunities Attention of policy-makers to food crisis Application of modern science Expanding investment in public goods Internalizing environmental costs into private costs Improving policies and institutions Suggested Priority 1 Large-scale investments in rural infrastructure, domestic markets and Human Resources Feeder roads Appropriate institutions Farmer associations Public sector institutions (contract enforcement, weights and measures, etc.) Market information Water management infrastructure Primary education, health care and improved sanitation Suggested Priority 2 A doubling of public investment in agricultural research and technology Improved water management to enhance use efficiency Increased sustainable land and labor productivity and reduced production risks Biotic and abiotic stresses: drought tolerance, resistance to insects and diseases Sustainable production methods, biodiversity protection Mitigation of impact of climate change and adaptation to changes that will occur Suggested Priority 3 Enhanced policy incentives for the private sector to invest in sustainable agriculture Savings and credit institutions for farmers Risk management tools for farmers and traders (for market and production risks) Public goods investments Strengthen the purchasing power of small-holders Establish competitive funds for technology development Assure incentives for private sector innovation Suggested Priority 4 Remove international trade distortions (both import and export restrictions) Regulation of Land Grabbing Clarity on water and land tenure Full Costing Pursue multiple-win solutions Environmental Kuznets Curve Hypothetical Relationships Between Income and Deforestation/Soil Mining Hypothetical Relationships Between Income and Deforestation/Soil Mining Concluding Questions Can future generations be well fed? Concluding Questions Can future generations be well fed? Is environmental degradation necessary to meet future food needs? Concluding Questions Can future generations be well fed? Is environmental degradation necessary to meet future food needs? Is the food price increase since 2005 the beginning of a long-term trend of increasing food prices? Concluding Questions Can future generations be well fed? Is environmental degradation necessary to meet future food needs? Is the food price increase since 2005 the beginning of a long-term trend of increasing food prices? Will biomass be an important source of energy? Concluding Questions Can future generations be well fed? Is environmental degradation necessary to meet future food needs? Is the food price increase since 2005 the beginning of a long-term trend of increasing food prices? Will biomass be an important source of energy? Will everybody get access to the food they need?