Food Policy in Disarray: The Challenges and Priorities

Per Pinstrup-Andersen

International Food Policy Research Institute

November 21, 2011

Understanding and Improving Food Policy

What?

Understanding and Improving Food Policy

What? How?

Understanding and Improving Food Policy

What? How? Who (Pol. Econ.)?

Understanding and Improving Food Policy

What? How? Who (Pol. Econ.)? A comprehensive systems approach

Understanding and Improving Food Policy

What? How? Who (Pol. Econ.)? A comprehensive systems approach Multisectoral/multidisciplinary

Understanding and Improving Food Policy

What? How? Who (Pol. Econ.)? A comprehensive systems approach Multisectoral/multidisciplinary A dynamic behavioral food system

A Dynamic Behavioral Food System

Change in behavior of:

Consumers

Producers

Market agents

Government

Resource owners

NGOs

Incentives

Regulations

Knowledge

Food System (Time period 1)

Food System (Time period 2)

Five Food Crises

1. International food price increase and volatility

Five Food Crises

1. International food price increase and volatility

2. Starvation in the Horn of Eastern Africa

Five Food Crises

1. International food price increase and volatility

2. Starvation in the Horn of Eastern Africa

3. Hunger, nutrient deficiencies and death among millions of children

Five Food Crises

1. International food price increase and volatility

2. Starvation in the Horn of Eastern Africa

3. Hunger, nutrient deficiencies and death among millions of children

4. Overweight, obesity, chronic diseases and death among millions of children and adults

Five Food Crises

1. International food price increase and volatility

2. Starvation in the Horn of Eastern Africa

3. Hunger, nutrient deficiencies and death among millions of children

4. Overweight, obesity, chronic diseases and death among millions of children and adults

5. The earth’s future productive capacity

The Unholy Trinity and the Jokers

The Trinity: Governments

News Media

Speculators

The Jokers: The Weather

Energy prices

Real Food Price Index1961-2000

Source: FAO

Behavior of Government, News Media and Speculators

Little policy action Little media attention (except 1995-96) No speculator interest

FAO Food Price IndexJanuary 2000-January 2007

Source: FAO

Behavior of Government, News Media, and Speculators (1)

Neither governments, nor the media, got the message

Behavior of Government, News Media, and Speculators (1)

Neither governments, nor the media, got the message

Export restrictions towards the end

Behavior of Government, News Media, and Speculators (1)

Neither governments, nor the media, got the message

Export restrictions towards the end Extreme weather events

Volatility in Weather Patterns

Drought Flooding Strong Winds

Production Volatility

Irregular RainfallPatterns

Production Volatility

Supply Responses

Government Policy

Market Information

Speculation

Government Policies

Energy Prices

Demand Changes

Price Volatility

FAO Food Price IndexJanuary 2007-July 2008

Source: FAO

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response Food riots

Behavior of Government, News Media, and Speculators (2)

Short-term government interventions Protection of middle-income urban consumers Export restrictions and reduced import tariffs Focus on national supplies and stock build-up Irrational expectations Exaggerated media response Food riots Moral hazards

FAO Food Price IndexJune 2008 – June 2009

Source: FAO

Behavior of Government, News Media, and Speculators (3)

Silence Delayed media response

FAO Food Price IndexOctober 2010-October 2011

(2002-2004 =- 100)

Oct-10

Jan-

11

Apr-1

1

Jul-1

1

Oct-11

180

190

200

210

220

230

240

250Food Price Index

Food Price Index

Source: FAO, www.fao.org/worldfoodsiutation/wfs-home/foodpricesindex/en

Behavior of Government, News Media and Speculators

Renewed apocalypse talk by media Nervous speculators Confusion among governments Waiting for the next extreme weather event

What are the Most Important Policy Challenges?

A Focus on the Smallholder?

Source: World Economic Forum, Realizing a New Vision for Agriculture: A roadmap for Stakeholders, 2010.

What are the Most Important Policy Challenges (1)?

Outside the farm

Why Outside the Farm?

Low total supply elasticity (old story)

Why Outside the Farm?

Low total supply elasticity (old story) Large yield gaps (old story)

Why Outside the Farm?

Low total supply elasticity (old story) Large yield gaps (old story) Successful farm-focused project (reduced yield

gaps, increased incomes) Sasakawa, One Acre Fund, Millennium Villages, etc. Underutilized potential gains from existing

technology Temporal removal of external constraints Gains not sustainable when project exits

Why Outside the Farm? (Cont.)

Demand constraints?

Why Outside the Farm? (Cont.)

Demand constraints? Large post harvest losses

Why Outside the Farm? (Cont.)

Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest

activities

Why Outside the Farm? (Cont.)

Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest

activities Insufficient research allocated to the post harvest

portion of the food system

Why Outside the Farm? (Cont.)

Demand constraints? Large post harvest losses Rapidly increasing demand for post harvest

activities Insufficient research allocated to the post harvest

portion of the food system Adverse trade policies

What are the Most Important Policy Challenges (1)?

Outside the farm Specific policy interventions context specific

Likely to include: Infrastructure investments Institutional innovation Input and output market developmentPre- and post harvest focused researchFacilitation of small-scale agri-business

What are the Most Important Policy Challenges (2)?

Sustainable intensification

Environmental Kuznets Curve

What are the Most Important Policy Challenges (2)?

Sustainable intensification Multiple wins

Hypothetical Relationships Between Income and Deforestation/Soil Mining

What are the Most Important Policy Challenges (2)?

Sustainable intensification Multiple wins Full costing (natural resources and climate change)

Hypothetical Relationships Between Income and Deforestation/Soil Mining

What are the Most Important Policy Challenges (2)?

Sustainable intensification Multiple wins Full costing (natural resources and climate change) International institutional innovation

What are the Most Important Policy Challenges (2)?

Sustainable intensification Multiple wins Full costing (natural resources and climate change) International institutional innovation

Achieving nutrition and health goals through the food system Identifying pathways, win-wins and trade-offs Pursuing diversity in production and consumption

What are the Most Important Policy Challenges (2)? (Cont.)

Strengthening international institutions Concentration, competition and anti-trust rules Land grabbing Enhancing price transmission Clarifying and enforcing trade rules

What are the Most Important Policy Challenges (2)? (Cont.)

Strengthening international institutions Concentration, competition and anti-trust rules Land grabbing Enhancing price transmission Clarifying and enforcing trade rules

Learning to live with food price volatility

Maize Weekly Price Minus12-Month Moving Average

1995

-80

-60

-40

-20

0

20

40

60

80

100

Rice Weekly Price Minus12-Month Moving Average

1990

-150

-100

-50

0

50

100

150

200

250

300

350

Wheat Weekly Price Minus12-Month Moving Average

19992001200420062009-100

-50

0

50

100

150

What are the Most Important Policy Challenges (2)?

Strengthening international institutions Concentration, competition and anti-trust rules Land grabbing Enhancing price transmission Clarifying and enforcing trade rules

Learning to live with food price volatility Learning to live with higher real food prices?

What are the Most Important Policy Challenges (2)?

Strengthening international institutions Concentration, competition and anti-trust rules Land grabbing Enhancing price transmission Clarifying and enforcing trade rules

Learning to live with food price volatility Learning to live with higher real food prices? Projections or predictions?

World Price Increases for Selected Crops Under Various Scenarios, 2010-2050

(Percent Change from 2010)

Source: IFPRI, Food Security and Climate Change, 2010, http://www.ifpri.org/sites/default/files/publications/ib66.pdf

Source: Growing a Better Future: Food Justice in a Resource-Constrained World, 2011, Oxfam

Real Food Price Changes Predicted Over the Next 20 Years (%)

Livestock Wheat Paddy Rice Maize0

20

40

60

80

100

120

140

160

180

200

2030 Baseline2030 Climate Change

Real Food Prices Need Not Increase

Moral hazard

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps

Reducing Yield Gaps

Removing off-farm constraints Infrastructure Institutions

Reducing Yield Gaps

Removing off-farm constraints Infrastructure Institutions

Risk management

Reducing Yield Gaps

Removing off-farm constraints Infrastructure Institutions

Risk management Property rights

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs End biofuel mandates and subsidies

Real Food Prices Need Not Increase

Moral hazard Reducing yield gaps Ending stock build-ups Drawing underused land into production Reduce post harvest losses Improve water use efficiency Reduce desalination costs End biofuel mandates and subsidies Take appropriate policy action

RhetoricDeclarationsPlansTargets

Action