WHAT DRIVES CHANGES IN FOOD SECURITY AND WHAT DOES THIS IMPLY FOR AGRICULTURAL AND FOOD POLICY?

The article is written by Peter Warr, Head of Arndt-Corden Department of Economics, John Crawford Professor of Agricultural Economics, and Director of Poverty Research Centre at Australian National University. The orginal article is published as a ReSAKSS-Asia working paper. 

Food security is a particular concern for Asia. The first reason is the sheer size of Asia’s undernourishment problem. According to a recent FAO report, of the 868 million people estimated to be undernourished in the world, 564 million, or 65 percent of the total, reside in countries of Asia (FAO 2012). Undernourished people constitute 14 percent of the population of Asia. The problem is particularly alarming with regard to children. Among several Asian countries the incidence of childhood stunting exceeds 40 percent.

A second reason is the dependence of much of Asia on a single crop. Rice is the staple food of the majority of Asia’s poor and accounts for a large proportion of their household budgets. The global market for rice is also particularly thin, making international price volatility more pronounced than for most other staple foods.  This explains why Asian countries were so greatly alarmed by the huge increases in the price of rice during the 2007- 2008 food price crises.

A central policy question for Asia and other food-insecure regions of the world is how to respond to the threat posed by food insecurity. In particular, is it more effective to promote improvements in agricultural productivity or to pursue price interventions aimed at promoting food self-sufficiency at a national level? In this paper Peter Warr presents some recent evidence on undernourishment and some other dimensions of food security in Asia and elsewhere that are relevant for this question.

He finds that growth of agriculture is overwhelmingly more important than growth of industry or services in reducing undernourishment and that growth of agriculture and lower food prices are strongly associated with both reductions in undernourishment and reductions in poverty incidence. The results also indicate that an increase in food availability is the most significant determinant of a reduction in undernourishment.

What are needed are means of raising agricultural output without raising food prices. Two policy strategies are available and both are currently in use within Asia and elsewhere. The first is investment in the infrastructure and knowledge required to raise agricultural productivity. The second is policy interventions designed to raise agricultural product prices. In food importing countries increasing prices is frequently associated with a policy drive for food self-sufficiency. Both policies are capable of increasing agricultural output but the first does so without raising food prices. The second uses increased food prices as its central instrument.

Agricultural protection aimed at achieving food self-sufficiency is often described as a policy for improving food security. It is not that. It delivers benefits to many food insecure people who are net sellers of food. But these numbers are far exceeded by the number of food insecure people who are net buyers of food and who will be more food insecure by increased food prices.

The policy implication is that food security can be improved by raising agricultural productivity through investments in infrastructure and research, supplemented by food safety nets to assist those unable to benefit from market-based economic development. Agricultural protection should be avoided because it produces a net increase in food insecurity.