The food security synthesis report Andre Croppenstedt, FAO

Background/Approach Project focuses on food security at both, the macro and the micro level

Macro level For countries were food import dependence is crucial, a major shortfall in agricultural production may result in critical imbalances in the caloric availability of staple foods.

Macro level Moreover, countries that rely on international markets for the purchase of staple foods may face significant price fluctuations and shortage of foreign currency with which to purchase food imports.

Macro level In this context, food security is regarded as a shorter-medium term issue of food supply management and import dependence.

Macro level FS modules set out to: 1.Examine the social benefits of increased domestic production 2.Measure the variability of domestic consumption 3.Study the role of foreign exchange constraints 4.Analyze the role of relevant policies in reducing food imports.

Countries selected are quite diverse Agricultural trade is particularly important for: Countries highly dependent on agricultural exports Low-income food-deficit countries

Micro level 5. Focus on the importance of the source of income on nutritional status as well as on determinants of different measures of under-nutrition.

For a food producing import-competing activity there may be external economies associated with a lower dependence on imported food. This implies that there are social benefits which are not accrued by producers and thus are not taken into account in their private cost calculations. 1 The benefits of increased domestic production

Net social benefit of a subsidy of cereal prices of 10 and 40 % is 19.4 and 311 million Birr, resp. Latter figure is about 50% of the value of imported food in 2000/01. Would a subsidy be fiscally sustainable? 1 The benefits of increased domestic production Results for Ethiopia

2 Measuring the variability of national consumption A simple approach to measuring food security at the national level is to use historical data to examine the probability of apparent consumption falling below some critical level – here taken to be 95% of the trend level of consumption.

2 Measuring the variability of national consumption The probability of consumption falling below 95% of trend varies considerably across countries (and in some case across time). Perhaps as a consequence, the country reports place different levels of emphasis on this issue.

2 Measuring the variability of national consumption Ethiopia, for eg., has a relatively low probability of falling below the critical value, but given very low levels of consumption, a narrow export base dominated by coffee and thus exposed to substantial price fluctuations, as well as frequent adverse climatic shocks, the issue is of much concern.

2 Measuring the variability of national consumption On the other hand, in Ghana, which faces relatively high consumption variability, this does not appear to be an important issue given the relatively high per-capita availability of calories and export revenues which cover food imports several times.

2 Measuring the variability of national consumption The only other country study, apart from Ethiopia, where consumption variability is treated more prominently is the Dominican Republic. This small island developing economy is relatively vulnerable to climatic and trade shocks.

Foreign exchange constraints are important, to varying degrees, in every country. However, only a few of the countries studied saw food import dependence as a key issue with regard to food security per se. 3 The role of foreign exchange constraints

Foreign exchange constraints are particularly binding for Ethiopia which relies heavily on imports and food aid to bridge frequently occurring shortfalls in domestic supply. Food imports averaged 172 million US$ in the period, or 44 percent of exports (less debt repayment).

3 The role of foreign exchange constraints The Ethiopian study emphasizes the rising trend of food aid as the most important indicator of the precarious food security situation of the country. The country experienced 8 droughts between and the prop. of the pop. affected by drought has risen from about 8 to 16 % between 1975 and 2003.

3 The role of foreign exchange constraints The Dominican Republic report views increased dependence on food imports as a concern given the country’s heavy dependence on exports to finance imports and its vulnerability to external shocks.

3 The role of foreign exchange constraints Food import dependence is also given considerable coverage in the Indonesian report. In particular the countries efforts at increasing self-sufficiency and stability in rice availability is highlighted.

4 Policies that reduced food imports 4 Policies that reduced food imports Rice in Indonesia Since the early years of independence, achieving self-sufficiency in rice has been a major policy objective.

4 Policies that reduced food imports 4 Policies that reduced food imports Rice in Indonesia Policies that helped achieve self- sufficiency by 1984 included: the development and adoption of modern technology; the encouragement of active farmer participation; the provision of farm inputs at the proper time; price incentives for farmers. Substantial investments were also made in physical infrastructure and institutional development.

4 Policies that reduced food imports 4 Policies that reduced food imports Rice in Indonesia Indonesian rice supply programs (and their impact on rice prices) contributed to economic growth. Over 25 years ( ) the stabilization programs raised per- capita GDP by about 11 %.

4 Policies that reduced food imports 4 Policies that reduced food imports Rice in India India before the Green Revolution faced massive food shortages and depended heavily on food imports and aid. Increases in food production were mainly achieved by the use of high-yielding varieties of rice and wheat, accompanied by an expansion in the area under irrigation. Today the challenge facing India is one of tackling grain surpluses.

4 Policies that reduced food imports 4 Policies that reduced food imports Rice in India Government policies and programs: substantial resources were allocated to agricultural research, development and extension services, subsidies on fertilizer, irrigation and power, a system of minimum support prices to farmers, procurement and storage, and this wide-ranging support played an important role in achieving self-sufficiency in food grains.

5 Household food security Evidence from South Africa (case study) indicates that agriculture provided a small but important buffer against poverty for some households. Agricultural activities appear to have positive and significant nutritional benefits for households which are operating above subsistence level.

5 Household food security The Dominican Republic study finds that household which depend on agricultural income are less likely to have a diversified diet and that diversification of household income yields positive effects in terms of nutritional intake. It is found that more isolated households have less income diversification.

Concluding comments