1. Monday, May, 10, 2010 FFE Programs Using Locally Grown Foods in Sub-Saharan Africa: Potentials and Constraints Akhter Ahmed International Food Policy Research Institute Presentation for the “Food for Education Experts Seminar: Reviewing the Evidence” World Food Programme, Rome 8-9 May 2006

2. Page 2 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Storyline Background and rationale for using locally grown foods for FFE Analytical framework Data, assumptions, and parameters Results Conclusions

3. Page 3 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Background The Hunger Task Force of the UN Millennium Project promotes FFE programs based on locally grown food as a key policy tool to achieve MDGs related to hunger reduction, universal primary education, and poverty reduction. The recently established New Partnership for Africa’s Development (NEPAD) has embraced this idea and created the Locally Grown School- Feeding Program (LGSFP) in partnership with WFP, UNICEF, and FAO.

4. Page 4 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Rationale The logic behind using locally produced food (as opposed to imported foods) for FFE is not only that such foods are likely to be culturally more acceptable, but also to: stimulate demand for local agricultural produce increase agricultural growth create jobs

5. Page 5 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Analytical Framework Used a mathematical model to examine the potential impact of using locally produced food for FFE on o Food production o Food prices o Distribution of gains (or losses) between consumers and producers (changes in consumer surplus and producers’ cash income) The model is within the Marshallian framework of partial equilibrium analysis The analytical framework explicitly recognizes the semi- subsistence nature of the agricultural economy in developing countries o A large share of staple food production is consumed by producers themselves

6. Page 6 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Effects of Changes in Maize Demand and Supply in a Semi-Subsistence Ag Economy Quantity of maize Price of maize Dh P1 P0 P2 HQ0Q1 Q2 S0 S1 Dm Dn D1 D0 E C F B A G 0

7. Page 7 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Analytical Framework Let D represent the demand function. If Q is total maize output and H is farmers’ home consumed quantity, then changes in consumer surplus is given by

8. Page 8 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Analytical Framework Let S denote the maize supply function. Then, change in cost of production (∆C1) with the FFE demand is given by ∆C1

9. Page 9 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Data, Assumptions, and Parameters This analysis compares the estimated outcomes of the demand created by the use of locally produced maize for FFE (without and with technological change in agriculture) to the base case of no FFE Two sets of analysis: (1) for the entire Sub-Saharan Africa (45 countries); (2) for 9 selected countries where NEPAD/HTF proposed to start FFE: Ethiopia, Ghana, Kenya, Malawi, Mali, Mozambique, Nigeria, Senegal, and Zambia. As NEPAD/Hunger Task Force aims, the analysis assumed 50 million children to be included in FFE in SSA, and 1 million children in the 9 countries. o Analysis included the food for schooling (FFS) component of FFE for take-home maize rations to students from poor households only (half of the children in SFP are included in FFS)

10. Page 10 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Data, Assumptions, and Parameters (cont’d) Considered 2003 as the baseline for analysis In 2003, total maize production in SSA was 36.82 million metric tons, and in the countries, 16.18 mmt. Non-food use of maize in SSA: 20% in 2003 (FAO) Maize price varies widely across SSA countries. Therefore used the 2003 average international maize price of $105 per metric ton Assumed 40% of total maize production as baseline marketable surplus o Marketable surplus ranges from 20% of total maize production in Tanzania to 60% in Zimbabwe (FAO)

11. Page 11 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Data, Assumptions, and Parameters (cont’d) A daily meal provided to children in school feeding program contains 623 kilocalories (kcal) of energy per child per day, of which cereals provide 570 kcal; and vegetable oil, 53 kcal. This daily ration is provided to school children for 200 days per academic year (WFP). Assumed 570 kcal per child per day will come from maize. Maize grains contain 342 kcal per 100 grams of grain. For whole maize flour with 96 per cent rate of extraction, 100 grams of maize flour contains 355 kcal.

12. Page 12 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Data, Assumptions, and Parameters (cont’d) Based on the above data and assumptions, the use of locally grown food is expected to create additional demands of 2.0 million metric tons of maize for school feeding, 5.4 mmt for FFS take- home rations only, and 7.4 mmt FFE (that is, school feeding plus FFS take-home rations) for the entire Sub-Saharan Africa. For the 9 countries: 40 thousand metric tons for SFP, 1.08 mmt for FFS.

13. Page 13 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Data, Assumptions, and Parameters (cont’d) Estimates of price elasticities of demand and supply of maize in Sub-Saharan Africa are available from the IMPACT model of IFPRI (Rosegrant et al. 2001). The IMPACT model suggests the average price elasticity of demand of –0.73, and the average price elasticity of supply of 0.36 (area elasticity of 0.19 and yield elasticity of 0.17) for maize in Sub- Saharan Africa. These values are used for the analysis.

14. Page 14 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Change in Maize Price

15. Page 15 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Change in Maize Production

16. Page 16 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Change in Consumer Surplus from Maize Consumption

17. Page 17 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Change in Maize Production Cost

18. Page 18 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Change in Producers’ Cash Income from Maize Production

19. Page 19 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results: Scenario with FFE Demand-Induced Technological Change in Maize Production

20. Page 20 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Results for the 9 countries Based on the data and assumptions, the effects of FFE alone would be minimal, but expected to be substantial with FFE-induced technological change in maize production:

21. Page 21 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Conclusions A rightward shift in aggregate demand curve for maize due to additional demand generated by FFE programs would raise the equilibrium price of maize. Responding to the higher price, the farmers would produce more, and both consumers and producers would benefit from the increased production. However, the magnitude of effects would depend on the extent of demand created by FFE, and whether the Locally Grown School Feeding Program (LGSFP) initiative is successful in inducing farmers to adopt modern technology in maize production.

22. Page 22 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Conclusions (cont’d) However, if the supply side remains constrained and food prices rise due to local purchases for the FFE programs, then consumers and food deficit farmers can become worse off. Under such a scenario, farmers may even take potentially detrimental actions such as keeping children out of school in order to help with farm work, defeating the very purpose of the food for education programs.