overcoming the world food and agriculture crisis through policy change and science

Overcoming the World Food and

Agriculture Crisis through

Policy Change and Science

Joachim von BraunInternational Food Policy Research Institute

Trust for Advancement of Agricultural Sciences,

4th Foundation Day Lecture

New Delhi, March 6, 2009

Joachim von Braun, IFPRI, March 2009

Overview

1. The food and financial crises

2. India’s agri-food policy

3. The role of innovations

4. Needed global policy action


Globalization of agriculture and food

systems

Definition:

Integration across national borders of production, processing, marketing, retailing, and

consumption of agriculture and food items

Source: von Braun and Diaz-Bonilla 2008.


Broad patterns of consensus on

innovations

1. Technological innovations in agriculture are critical

for growth and crisis prevention

2. Science alone cannot change world food situation;

institutional innovations and change must facilitate

access to and use of technology

3. But lack of consensus on best design of institutional

arrangements

4. Institutional innovation is lagging behind science

and technology innovation


Food price spike, 2007-08

0

25

50

75

100

125

0

200

400

600

800

US

$/b

arre

lU

S$

/to

n

Corn

Wheat

Rice

Oil (right scale)

Price spike

Source: Data from FAO 2009 and IMF 2009.

Prices fell partly because of

financial crisis and recession


Food driving up overall inflation

Bangladesh India, wholesale

Pakistan

Source: Data from government statistics.

-3

0

3

6

Jan-05 Jan-06 Jan-07 Jan-08

Overall

Food

-3

0

3

6


OverallFood

-3

0

3

6


Overall

Food

------- ---------

--------


India State Hunger Index (ISHI) by severity

Source: Menon et al. 2008.

- 12 of 17 states:

“alarming”

- Madhya Pradesh:

“extremely alarming”

Joachim von Braun, IFPRI, November 2008


High levels of hunger (2008 GHI vs. 1990 GHI)

0

10

20

30

40

GHI 1990

GHI 2008

GHI 1990

GHI 2008

GHI 1990

GHI 2008

Sub-Saharan Africa South Asia India

Under-five mortality rate

Proportion of undernourished

Proportion of undernourished

Source: von Grebmer et al. 2008.

India ranks 66th out of 88 countries in the GHI


Food protests and food prices

0

5

10

15

20

25

0

100

200

300

400

500

600

700

800Jul-

07

Aug

-07

Sep

-07

Oct-

07

Nov-0

7

Dec-0

7

Jan

-08

Feb

-08

Mar-

08

Ap

r-08

May-0

8

Jun

-08

Jul-

08

Aug

-08

Sep

-08

Oct-

08

# o

f riotsU

S$/t

on

Maize

Wheat

Rice

Riots (right)

Source: J. von Braun based on data from FAO 2009 and news reports.


125

150

175

200

225

250

275

0

50

100

150

200

250

2005 2010 2015 2020

Millio

n

US

$/t

on

Non-recession

Same-investment

Low-investment

Maize price

(left )

Malnourished children (right)

Source: von Braun, Rosegrant, IFPRI IMPACT, Oct. 2008.

Recession scenarios with and without

agric. investment action

16 mln more malnourished children

with recession and low investment


Low agricultural productivity growth in

developing countries

%

East Asia 2.7

South Asia 1.0

East Africa 0.4

West Africa 1.6

Southern Africa 1.3

Latin America 2.7

North Africa & West Asia 1.4

All regions 2.1

Annual total factor productivity growth, 1992-2003

Source: von Braun et al. 2008.


Output response forthcoming, but not from

low-income countries

Growth of cereal output in 2007-08:

11%: developed

0.9%: developing

1.6%: developing, excl. Brazil, China, India

Plans for investment scaled down as capital

becomes more scarce and expensive

Source: FAO 2008.


Recent initiatives for Foreign Direct

Investment in agriculture (G-2-G)

Source: Data from GRAIN 2008. Note: Thicker lines reflect investments >100,000 ha; for some thinner lines, data on investment size is not available.


Overview






Quick and comprehensive response to

food crisis

• Increased investment in agric. and social

protection by 24%, irrigation by 80% in 2008

• Set up National Food Security Mission, 2007

• Expanded subsidies on crude oil, fertilizers,

and food

• Scaled up safety net programs such as PDS

and NREGS


Areas for attention

• Grain stocks at 35 mil. tons (10 mil. above

norm) and increasing

- Release stocks in a timely manner and

consider new institutional arrangements

• Rising costs of PDS and NREGS

- Revise targeting mechanisms, coverage, and

cost-effectiveness

• Export bans and suspension of grain futures

trading

- Curb new protectionist trends


Can small farm agriculture mitigate the

economic recession?

India China Ethiopia Tanzania

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1970

-71

1981

-82

1991

-92

2002

-03

1980

1990

1999

1977

1989

-92

2001

-02

1995

2002

-03

Hectares Average farm sizes in selected countries

Sources: Fan and Chan-Kang 2003, FAO Agricultural World

Census and Indiastat.


Overview






What innovations?

• Organizations incl. in agricultural research,

extension, education, input supplies, marketing, and

collective action

• Technologies along the whole food value chain

• Institutions incl. laws, regulations, traditions,

customs, beliefs, norms

• Public policies for promoting agriculture


Roles of institutions in strengthening

food markets

1. Reduce transaction costs

2. Manage risk

3. Build social capital

4. Enable collective action

5. Restore missing markets

Particularly important for commodities

produced, bought, and sold by smallholders


Examples of institutional innovations

• Public-private partnerships

• Farm cooperatives

• Contract farming

• Social networks for adoption of innovations

All of these have been successful in specific

contexts, but none is a universal solution

Institutional innovations should be inclusive of

smallholders and disadvantaged groups


Overview






Priorities for action

1. Promote pro-poor agriculture growth

2. Facilitate open trade and reduce market

volatility

3. Expand social protection and child

nutrition action

Action needed for all 3


1.a Actions for agricultural productivity

• Access to finance (e.g. rural banks and micro-finance)

• Expansion of risk management (e.g. crop insurance)

• Access to inputs (e.g. quality seeds, fertilizer, feed, veterinary drugs)

• Access to services, extension

• Investment in rural infrastructure (rural roads, electrification, water and irrigation)


1.b For long-term agric. growthDouble agric. R&D to impact poverty

CGIAR investment to rise from US$0.5 to US$1.0

billion as part of this expansion

Source: von Braun, Fan, et al. 2008.

R&D allocation

(mil. 2005 $)

in # of

poor (mil.)

2008-2020

+ Agr. output

growth (% pts.)

2008-20202008* 2013

S Asia 908 3,111 -124.6 2.4

Developing

World 4,975 9,951 -282.1 1.1


2. Reduce food market volatility

• An internationally held emergency reserve

• International coordinated grain reserves

scheme (with Indian participation)

• A virtual global reserve against price spikes

- Institutional arrangement at int’l level with

engagement of commodity exchanges

- Implemented by G8+5 and other large grain

exporting countries

Source: von Braun and Torero 2008.


3. Support pro-poor food and nutrition

interventions

Protective actions e.g.:

• Cash transfers

• Employment-based food security programs

Preventive actions e.g.:

• School feeding

• Early childhood nutrition programs

Focus on children, women, and poorest


Policy, technology and institutional change

• Policy failure: no sufficient focus on

R&D and no strategy for institutional

innovations

• Policy neglect: isolated R&D focus and

no strategy for institutional innovations

• Policy for success: R&D acceleration

with institutional innovations

overcoming the world food and agriculture crisis through policy change and science

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