Food security:

Historical drivers

 

From 1970 to 1995


The drivers that may explain the evolution of the number of undernourished over time have been the object of numerous analyses and publications during recent decades. In a report published in 2000, FAO acknowledges the importance of economic growth in hunger reduction, estimating that progress made in Asia during the 70s was essentially due to a fast growth of GDP. To substantiate this statement, FAO quotes some expert estimates according to which an increase of GDP per caput by more than 3% would allow a significant improvement of the standard of living and a reduction of poverty which, in turn, would result in a reduction in food insecurity. In the same report, FAO emphasises the impact of the green revolution in Asia, the strong increase in food production it entailed and its consequences on job creation and increase of local consumption.


One can indeed consider that the generally positive developments observed during the 70s, particularly in Asia and despite successive economic crises, can largely be attributed to advances in  technology initiated during the 60s as well as to the considerable investments made in agricultural research and infrastructure, particularly irrigation. In some countries, progress also stemmed from considerable advances in the process of land reform.


Peter Timmer stresses how much the food security strategies adopted in Asia contrasted with the processes of economic liberalism then being promoted by the international financing institutions. It is indeed by imposing trade restrictions and protecting the domestic market with the view to stabilising prices, especially the price of rice which is the staple commodity in Asia, that these countries were able to increase their production and enhance the food security of their population. A high savings rate,  strong capital productivity and huge investments in human capital were the ingredients of rapid growth in Asia. In the case of China,- and later Viet Nam - institutional reform was also essential (see the box on China).


The Case of China


China is a remarkable example of success in the struggle against poverty and food insecurity. .


The amounts of food available per person have grown from less than 1700 kcal in 1960 to 2570 kcal per day in 1995, largely because of an increase of food production but also because of the “one child” policy which slowed population growth.


The Chinese experience demonstrates the importance of technological developments combined with better incentives, institutional reform, rural economic development and other policies that have made it possible to increase food availability. The introduction of fast growing varieties allowed an increase in the intensity of cropping, thus contributing to increased land productivity. Hybrid rice, for which Chinese scientists have been the pioneers in the 70s, increased yields and had spread to close to half the rice-grown area as early as in 1990. Economic and institutional reforms have given a big push forward to agriculture. The post-reform GDP doubled, with much of the growth attributable to the expansion of the rural economy, resulting in an extraordinary reduction in absolute poverty in China between 1978 and 1985.


(based on : FAO, Poverty Alleviation and Food Security in Asia: Lessons and Challenges, FAO Regional Office for Asia and the Pacific,  Bangkok, 1999)



Note: Today (2013), China continues to support its agriculture strongly (according to the OECD, China’s total annual support to agriculture is estimated at $143 billion - equal to that of the US - of which $118 billion is in the form of producer support) and the level of consumption of fertiliser is one of the highest in the world (217kg N/ha to be compared to 102kg/ha N in France, according to FAO). The record use of chemicals and the boom in intensive livestock production have created environmental hazards and high health risks.

























However, despite these developments, Asia remains the region with the most hungry people [read] and the green revolution and its emphasis on irrigation and purchased chemical inputs has by-passed most small-scale farmers [read]. Instead, most of the benefits have accrued to a minority of large-scale farmers and have contributed to spread an agricultural model that is fragile and detrimental to the environment  [read].


Africa saw its number of hungry increase during the 70s. This period was characterised by some political instability and by the difficulties met by the then recently independent states in managing their economies, largely because of lack of capacity and resources. Pan-territorial and pan-temporal prices adopted by countries with the objective of ensuring greater economic equality turned out to be very costly for national budgets and failed to offer incentives for expanding production: agriculture was highly taxed. Cereal production fell during much of this period and average agricultural growth was less than 3% in most countries, which was below the level of population growth and insufficient to make agriculture an engine for growth. The degradation of the economic situation finally led during the 80s to international financing institutions taking virtual control over the economy of many African countries.


In Latin America overall, the 70s were a decade of relatively strong growth. In contrast, the 80s were a difficult period characterised by negative growth of GDP per caput, particularly between 1981 and 1983, and between 1989 and 1991. This period saw an increase of the percentage of the population in a situation of poverty from 40.5% in 1980 to 48.3% in 1990. Simultaneously, there was a steep increase in the number of undernourished. This succession of good and bad years may explain the relative stability of the number of hungry over the period.


Evolution of the number of undernourished (millions)

(1969-2012)



Between1995 and the 2007 food crisis


The high growth in food production, which reached 3% per annum in non-industrial countries, fell to 1% during the 90s. The causes for this slowing of growth are believed to have been the decrease in public expenditure (particularly in research) and investments in agriculture. These coincided with a broad withdrawal of the state from engagement in the agricultural sector as a result of reforms conducted in the framework of the stabilisation and structural adjustment programmes, imposed by international financing institutions. These reforms were simultaneous to a neglect of food production in non-industrial countries, in part because of a downward pressure on prices driven by high agricultural subsidies in OECD countries. Reforms also encouraged increased attention to the production of export commodities, which, because of the fallacy of composition, experienced diminishing world prices, as markets were over-supplied. African countries, in particular, suffered from this slowdown, as they were rigorously applying the recipes given by international financing institutions, and because of their heavy dependence on a limited number of export commodities. Towards the end of the period, agricultural production revived weakly at a rate just above that of population growth, despite improved incentives for production.


The loss of  the green revolution’s momentum was also due, particularly in Asia, to the fact that the most fertile zones had already been exploited and that new types of pests appeared while water and micronutrient shortages started to make a dent in yields. Whereas China was able to reduce its number of undernourished by around 35% between 1990-92 and 2005-07, the same figure remained stable for India, in spite of it becoming largely self-sufficient in food production, illustrating the very different nature of economic growth in both countries.


In Africa, it is interesting to note that much under-nourishment can be directly linked to the conflicts that continued to wage on the continent. At the beginning of the XXIst century, around 60% of the 210 million undernourished Africans lived in countries that had been under conflict recently and had important mineral resources. The disorganisation of the economy, difficulties in communication, displacement of refugees and economic problems resulting from the exploitation of mineral resources (Dutch disease syndrome) are factors that may explain this situation.  


Evolution of total agricultural production (Index 100=1996)

(1970-2009)


      Source : FAOSTAT


Latin America, in contrast, saw a reduction by more than 17% in the number of undernourished between the beginning of the 90s and the middle of the first decade of the XXIst century. This can be explained by a favourable period from an economic point of view, particularly between 2004 and 2007 when the GDP growth rate per inhabitant was greater than 3% annually.


From the middle of the 90s, the awareness of the lack of progress in food security at world level created a series of reactions which ranged from the organisation of several successive World Food Summits to an increase in official development assistance to agriculture and food security. It also included noteworthy changes in the agricultural policy ‘‘recipes’’ (return to favour of subsidies, in the shape of ‘‘smart subsidies’’, emergence of the ‘‘twin track’’ approach which combines development actions and social programmes that are intended to give to the most vulnerable the means to seize opportunities that result from development initiatives, etc.).


Unfortunately, this awareness was mostly evidenced by big speeches and formal commitments that were not followed up by concrete action on the ground. Government expenditure continued to decrease, except maybe in the very latest years of this period, and international assistance to agricultural and rural development remained at a historically low level. At the same time, a growing proportion of international assistance went to emergency support. International assistance to agricultural development fell from around $9 billion annually in 1987 to less than $4 billion in 2002. [read more on support to agriculture] In the case of Africa, the assistance to social sectors increased from 13% of the total in 1979 to 44% in 2007.



The 2007-08 food crisis and the immediate post-crisis period


There is a mass of literature on the food crisis, its drivers and consequences. Reasons explaining the crisis generally include:


  1. Weather-related production shortfalls observed in some large food exporting countries such as Australia and Canada.

  2. Falling global food stock levels that had suffered a progressive reduction of more than 3% percent per year on average since the middle of the 90s, mainly for cereals. This reduction is at least in part due to a change of policies imposed by international financing institutions that asked countries to diminish their publicly held  food stocks because  of the high cost involved in storing food commodities. The level of privately held stocks may also have decline with the growing concentration of the international food trade in the hands of a few very large multinational corporations.

  3. Increasing oil prices that contributed to raising costs of food production because of a higher price of fuel and fertilisers, particularly nitrogen-based fertilisers. The cost of energy started to rise in 2003 (+15% compared to 2002). The strong increase of the cost of energy (37% in 2004, 20% in 2006, 43% in 2007 and 60% in 2008) also had an impact on the cost of transport.

  4. The very strong increase in demand for agrofuels produced from sugarcane, maize, oilseeds and palm oil, which can be directly linked to the price of oil as well as to ethanol subsidies  in OECD countries, amounting to $11 to 12 billion annually to which subsidies on agricultural products used for producing agrofuels should be added.

  5. The change in structure and level of food demand arising from economic development and increased income in non-industrial and emerging countries, compounded by  population growth and urbanisation.

  6. Speculation on financial and commodity markets which has especially contributed to the short-term volatility of agricultural commodity prices and which sparked price hikes at the peak of the crisis. However the characteristic of speculation is to try and cash quickly its profits, which means that the hikes are generally only short-lived and destabilise markets over relatively short periods of time.      

  7. The instability of currency exchange rates and particularly the weakening of the US dollar which occurred between August 2007 and August 2008.

  8. The decisions made by some exporting countries to restrict their exports with the aim of protecting their consumers, thereby creating panic on regional and global markets.



Source: FAO


Most of the reasons listed here were of a temporary nature in 2007-08, apart from the change in food demand. However they are indicative of underlying factors that are likely to shape the future of world agriculture and food security, namely: (i) the level of investment in rural and agricultural development; (ii) climate change; and (iii) the long term trend of increasing fossil fuel prices. There was hope in 2008,that the crisis which resulted from a conjunction of negative circumstances,  would be easily overcome. The expectation was that, provided  immediate assistance was provided to the most hard hit population groups and the negative trend in investment and support to agriculture was reversed, conditions would return to ‘‘normal’’ even though some food products would see their prices remain higher. FAO, for example, estimated that by 2017: ‘‘compared to the average of the observed prices during the period 2005-2007, the real price of wheat [would increase] by 2 percent; rice by 1 percent; maize by 15 percent; oilseeds by 33 percent; vegetable oils by 51 percent; and sugar by 11 percent’’.


But by the end of 2010, it was clear that all the efforts made by some countries and a few international organisations (the World Bank and its Global Agriculture and Food Security Program - GAFSP, and the European Union’s Food Facility) would not be sufficient, despite the negative impact of the financial crisis of 2008-09 on global food demand, as food markets remained extremely fragile and food prices quite high. This was later confirmed, in 2011, when world food prices experienced new peaks, and even today in late 2013, the FAO food price index remains 40% above what it was 5 years ago. [read more about food crises]


The consequences of soaring food prices have been the subject of controversies regarding their real impact on food security. As soon as the increase of prices was confirmed and  riots occurred in about 25 non-industrial countries, international organisations engaged in a competition to estimate the impact of high food prices on food insecurity and poverty. The President of the World Bank announced that there were 100 million additional poor in low income countries, and the Director-General of FAO stated that there were 50 million more people suffering from hunger. He later gave an estimated figure of 963 million undernourished persons compared to the 923 million that had been estimated in 2007.




J. Swinnen stresses the contradictory aspects of some of the declarations made over time by international organisations and large international NGOs, recalling that these organisations were focussing their communications on the negative impact of soaring food prices on the number of undernourished, in spite of the fact that they had lamented for decades that the decreasing trends in food prices observed since 1970 were one of the fundamental causes of degradation of world food security. Although some improvements in analytical techniques may lead to changes in some of the conclusions reached, in this case the observed contradictions appear to have had more to do with how the results were communicated than with the results themselves. These contradictions could therefore, according to him, be mainly explained by: (i) the main objective of these organisations is to help those people who are in need; (ii) the existence of a bias in favour of urban areas as the media - and consequently international organisations - are more sensitive to urban events such as food riots, than to the silent complaints of rural people; (iii) these organisations have to mobilise resources to be able to act and, as a consequence,  have to continuously communicate the importance of what they do; and (iv) these organisations maintain close links with the media that tend to give priority to ‘‘negative’’ information that is more appealing to the emotions of their audiences.


After this rapid review of drivers of food security from the historical point of view, a complementary conceptual review may be useful to better understand the specific factors that determine food security.




Materne Maetz

(June 2011 - updated in December 2013)

 

Last update:    December 2013

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