the impact of global and local realities on food security in...
TRANSCRIPT
by
HD van Schalkwyk
24 October 2013
The Impact of global and local
realities on Food Security in SA
Contents
• Introduction
• Contextualisation of food security
• The Global realities
• The situation in South Africa
• Availability of food in South Africa
• Productivity of SA agriculture
• Affordability – Food prices
• SA commodity outlook
• Important trends (Terms of trade)
• Rationale for Agriculture
• Policy
• R&D issues to consider
• Conclusion
Introduction
• South Africa is unlikely to feature at the top of the
agenda at any international dialogue on food security.
• The country is a net exporter of agricultural commodities.
• The country has a high per capita income, even for an
emerging economy.
• There are no tight foreign-exchange constraints.
• The country is not landlocked.
Food ought to be available and accessible in South
Africa at all times.
Introduction
• The confusing reality is that despite all the favourable
indicators and South Africa’s national "food-secure"
status, between 14% and 52% of the households,
depending on the source, are regarded as food insecure.
• Statistics suggest that food insecurity is most severe in
rural areas, where an estimated 85% of South Africa’s
poor reside.
• Rural agricultural development has been prioritized by
government as a way of eradicating poverty and
ensuring food security.
Introduction
Contextualisation of food security
• What is food security?
– "all people, at all times, have physical, social and
economic access to sufficient, safe and nutritious
food which meets their dietary needs and food
preferences for an active and healthy life" (FAO).
5
Ecology
Social Economy
Nutrition
Affordability
Availability
Sustainable
systems
required
Contextualisation of food security
• Cognisance must be taken of:
– Strong linkage between food security and poverty.
– Food self-sufficiency versus food security versus
sustainability of agricultural value chains.
– Global vs national vs regional vs household.
6
The global realities …..
• Population, income growth and the changing consumer base
• The uncertain international trade environment
• Changing power position in the global economy, – China
– Brazil
– India
• Climate change
• Energy availability
• The global economic problems
• Etc….
7
0
5
10
19
50
19
62
19
74
19
86
19
98
20
10
20
22
20
34
20
46
Billio
ns
World Population
U.S Census Bureau (International Data Base), 2010
4 %
2 %
0 %
30 %
6 % 1 %
5 %
34 %
9 %
9 %
http://www.cru.uea.ac.uk/cru/info/warming/
Source: Nakícenovic, Grübler and McDonald, 1998
Impact of the global realities ……
Realities
Strength of fundamentals
Affects supply and
demand
Impact on prices
Affects food security
• Increase in area dedicated for growing crops for biofuels;
• The growth of the world population;
• Economic development and income distribution in highly populated countries;
• Stronger governmental programmes;
• Migration and urbanisation;
• The impact of oil prices on agricultural inputs and the distribution cost of food;
• Exchange rate variability and in particular the devaluation of the US Dollar;
• Production shortages as a result of adverse climate and financial conditions, water and climate change impacts; and
• Investment funds operating in agricultural commodity markets.
The fundamentals (strength) …..
For example, the demand for grain for use in intensive livestock production can increase to more than 50% of total grain production.
Source: Keyzer et al., 2005.
Source: http://www.grida.no/publications/rr/food-crisis/page/3559.aspx
Change in the composition of diets and
nutritional value and availability
Food availability in developing
countries will need to increase almost
60% by 2030 and to double by
2050, equivalent to a 42% and 70%
growth in global food production,
respectively.
And this is just addressing
availability issues
Millennium Development Goals
• Goal 1: Eradicate extreme poverty and hunger by
reducing the % of people living on less than $1.25 a day
Region 1990 1999 2005 2008 2010 2015
East Asia and Pacific 56.2 35.6 16.8 14.3 12.5 5.5
Europe and Central
Asia
1.9 3.8 1.3 0.5 0.07 0.4
Latin America and the
Caribbean
12.2 11.9 8.7 6.5 5.5 4.9
Middle East and North
Africa
5.8 5.0 3.5 2.7 2.4 2.6
South Asia 53.8 45.1 39.4 36 31 23.2
South, West, East and
Central Africa
56.5 58 52.3 49.2 48.5 42.3
Total 43.1 34.1 25 22.7 20.6 15.5
Africa’s slower poverty reduction is due to
its lower economic growth elasticity of poverty than in the other the regions.
Millennium Development Goals
• Goal 2: Achieve universal primary education
• African countries continue to progress on primary school enrolment
• Aggregate net primary school enrolment rose from 64% in 2000 to
87% in 2010 in the 29 countries with available data
• Excluding North Africa, enrolment rose markedly, from 58% to 76%,
an annual increase of 1.5%, considerable given the continent’s high
population growth
• While low completion rates are due partly to poor quality education,
late entry into schools; gender, location and income also play a role.
Millennium Development Goals
• Goal 3: Promote gender equality and empower
women
• Goal 4: Reduce child mortality
Millennium Development Goals
• Goal 5: Improve maternal health
– Despite some progress in the maternal mortality ratio
from 1990–2010 with a 42% reduction from 745
deaths per 100,000 live births to 429 deaths, Africa
still has the world’s largest burden of maternal deaths
with 56% of the global burden in 2010.
– Africa accounts for the 10 countries with the highest
ratios.
– South Africa was named as one 10 countries in Africa
that made no progress in terms of maternal health
since 1990
Millennium Development Goals
• Goal 6: Combat HIV/Aids, malaria and other
diseases – Southern Africa and Central Africa remain the regions most
severely affected by HIV/AIDS, with nearly 1 in 10 adults living
with HIV
– An important aspect of reducing infections is eliminating them
among children by 2015.
– Africa has seen substantial progress in reducing prevalence,
incidence and death associated with malaria and, to a lesser
degree, tuberculosis (TB)
– But Africa’s malaria burden is still enormous.
– The continent accounted for about 81 per cent of the estimated
216 million malaria episodes in 2010 and about 91 per cent of
the 655,000 malaria deaths
Millennium Development Goals
Millennium Development Goals
• Goal 7: Ensure environmental stability – Africa is making progress on Goal 7, but achieving environmental
sustainability remains a challenge overall
– Globally, the indicator on sustainable access to water has been met,
with the 88 per cent target surpassed by a percentage point. But while
the world as a whole is on track, Africa is not
– Much of Southern, East, Central and West Africa is off track to meet the
improved sanitation facility target
• Goal 8: Develop a global partnership for
development
– Establishing a global partnership for development is
critical for realizing the MDGs.
– Specifically, providing official development assistance
to developing countries is an important source of
finance for the MDG interventions, and thus their
progress.
– However, as Europe continues to struggle with its sovereign debt
crisis and inflation rates increase, official development
assistance to developing countries has fallen.
– Greece, Ireland, Portugal and Spain accounted for the sharpest
reductions in real terms.
Millennium Development Goals
What is the situation
back home?
Food security in South Africa
• SA food secure at the national level
• However, results pertaining to household food
security show a different situation. – Deep levels of food insecurity exist in rural areas with 85% of rural
households unable to afford even the ‘below average dietary
energy costs’ (Jacobs, 2009).
– Hunger scale proxy show that in 2007 12.2% of children and
10.6% of adults experienced hunger (Aliber, 2009).
– Hunger scale index show that 51.6% of population experienced
hunger and 33% are at risk of hunger (Labadarios et al., 2008)
21
Distribution of household consumption expenditure by
main expenditure groups, 2005/06
22
0
2000
4000
6000
8000
10000
12000
14000
Hou
sing
, wat
er,
elec
tric
ity, g
as
and
othe
r fu
els
Tra
nspo
rt
Foo
d an
d no
n-
alco
holic
beve
rage
s
Mis
cella
neou
s
good
s an
d
serv
ices
Fur
nish
ings
,
hous
ehol
d
equi
pmen
t and
Clo
thin
g an
d
foot
wea
r
Rec
reat
ion
and
cultu
re
Com
mun
icat
ion
Edu
catio
n
Res
taur
ants
and
hote
ls
Hea
lth
Alc
ohol
ic
beve
rage
s an
d
toba
cco
Oth
er
uncl
assi
fied
expe
nses
Ran
d
Rand per household (12-month period)
Source: StatsSA, 2008
Percentage distribution of annual household
consumption expenditure by main expenditure group
and type of settlement
23
Source: StatsSA, 2008
0
5
10
15
20
25
30
Hou
sin
g,
wate
r, e
lectr
icity,
ga
s a
nd
oth
er
fue
ls
Tra
nspo
rt
Fo
od
and
no
n-a
lcoh
olic
be
ve
rag
es
Mis
ce
llan
eo
us g
oo
ds a
nd s
erv
ice
s
Fu
rnis
hin
gs, h
ouse
ho
ld e
quip
me
nt
and
ro
utin
e m
ain
ten
ance
of
the
hou
se
Clo
thin
g a
nd
fo
otw
ea
r
Recre
atio
n a
nd
cu
ltu
re
Com
mu
nic
ation
Ed
uca
tio
n
Resta
ura
nts
an
d h
ote
ls
Hea
lth
Alc
oh
olic
beve
rag
es a
nd
to
ba
cco
Oth
er
un
cla
ssifie
d e
xp
ense
s
Perc
en
tag
e
Urban Rural Total
24
0
5
10
15
20
25
30
35
Lower 2 3 4 5 6 7 8 9 Upper
Income deciles Total
Perc
enta
ge
Housing, water, electricity, gas and other fuels
Transport
Food and non-alcoholic beverages
Miscellaneous goods and servicesFurnishings, household equipment and routine maintenance of the house
Clothing and footwear
Recreation and culture
Communication
Source: Stats SA, 2008.
Expenditure patterns
Source: NAMC Food Price Monitor
SA expenditure on food
25.0
27.0
29.0
31.0
33.0
35.0
37.0
Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
The cost of a basic food basket expressed as a share of the average monthly income of the poorest 30 % of the population
29 %
36.4 %
2.0
2.2
2.4
2.6
2.8
3.0
Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11
The cost of a basic food basket expressed as a share of the average monthly income of the wealthiest 30 % of the population
2.3 %
2.9 %
Availability ….
National Food Self-Sufficiency Index (National Food Security)
Source: DAFF
• Major grain crops
– Hectares down – but yields up – productivity up
• Potential exists to increase domestic supply
– All sub-sectors
• Area potential
– SA constrained ….
– But ….
Availability (Some comments)...
• Arable land capable of sustaining intensive to moderately well adapted cultivation amounts to about 12.6% of South Africa’s land
– Of this, only 2% (2 446 million hectares) is prime agricultural land
– A further 11% can be added
With constrained resources SA is
doing well on the production front
..?!?..
Production productivity: Maize
28
Source: Jooste, 2012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000197
0/7
1
197
2/7
3
197
4/7
5
197
6/7
7
197
8/7
9
198
0/8
1
198
2/8
3
198
4/8
5
198
6/8
7
198
8/8
9
199
0/9
1
199
2/9
3
199
4/9
5
199
6/9
7
199
8/9
9
200
0/0
1
200
2/0
3
200
4/0
5
200
6/0
7
200
8/0
9
To
n/h
a
1 0
00 h
a a
nd
1 0
00 t
on
Area planted Total production Yield Linear (Area planted)
Production productivity: Wheat
cont….
29
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
ton
/ha
10
00
ha
and
10
00
to
n
Area planted Total production Yield Linear (Area planted)
Source: Jooste, 2012
Production productivity: Soybeans cont….
30
0.0
0.4
0.8
1.2
1.6
2.0
2.4
100
200
300
400
500
6001
97
5/7
6
19
77
/78
19
79
/80
19
81
/82
19
83
/84
19
85
/86
19
87
/88
19
89
/90
19
91
/92
19
93
/94
19
95
/96
19
97
/98
19
99
/00
20
01
/02
20
03
/04
20
05
/06
20
07
/08
20
09
/10
ton
/ha
1 0
00
ha
and
1 0
00
to
n
Area planted Total production Yield Expon. (Total production)
Source: Own calculations based on data from DAFF, 2011
Production productivity: Sunflower cont….
31
0.0
0.3
0.6
0.9
1.2
1.5
1.8
200
400
600
800
1 000
1 200
1 400197
5/7
6
197
7/7
8
197
9/8
0
198
1/8
2
198
3/8
4
198
5/8
6
198
7/8
8
198
9/9
0
199
1/9
2
199
3/9
4
199
5/9
6
199
7/9
8
199
9/0
0
200
1/0
2
200
3/0
4
200
5/0
6
200
7/0
8
ton
/ha
1 0
00 t
on
an
d 1
000 h
a
Area planted Total production Yield Linear (Yield)
Source: Own calculations based on data from DAFF, 2011
Production productivity: Beef cont….
32 Source: Own calculations based on data from DAFF, 2011
150
170
190
210
230
250
270
290
310
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
19
70
/71
197
2/7
3
197
4/7
5
197
6/7
7
197
8/7
9
198
0/8
1
198
2/8
3
198
4/8
5
198
6/8
7
198
8/8
9
199
0/9
1
199
2/9
3
199
4/9
5
19
96
/97
199
8/9
9
200
0/0
1
200
2/0
3
200
4/0
5
200
6/0
7
200
8/0
9
Kg
/un
it
Pro
du
cti
on
an
d
sla
ug
hte
rin
gs
Millio
ns
Number slaughter Total production
Kg/unit 2 per. Mov. Avg. (Total production)
0
100
200
300
400
500
600
700
47
/48
49
/50
51
/52
53
/54
55
/56
57
/58
59
/60
61
/62
63/6
4
65
/66
67
/68
69
/70
71/7
2
73
/74
75
/76
77
/78
79
/80
81
/82
83
/84
85
/86
87
/88
89
/90
91
/92
93
/94
95
/96
97
/98
99
/00
01
/02
03
/04
05
/06
07
/08
09
/10
Percentage
Year
Output
TFP
Input
Source: Liebenberg, 2011
Period Output Input TFP Labour Land Fertilizer
1947 –1971 3.43 2.66 0.77 2.79 3.36 -2.33
1971 – 1989 3.28 -0.71 3.99 4.77 3.50 3.01
1989 – 2010 1.47 1.11 0.36 4.31 1.53 1.78
2000 – 2010 3.32 0.89 2.43 7.56 3.26 0.54
1947 – 2010 2.81 1.19 1.62 4.00 2.87 0.64
South African Agriculture, Output,
Input & TFP Indices -1948 to 2010
Affordability : Food prices
The impact of high food prices at a country level includes, amongst others, the following:
• Social unrest and food riots.
• "Panic buying” by some net importing countries to secure adequate supplies and build domestic stocks of major cereals.
• Widening current account deficits for net importing countries.
• Threat to macroeconomic stability and overall growth, especially of low-income, net-importing countries.
• More food-insecure households and hence increased pressure on governments to expand their social welfare programmes.
FOOD PRICES – COUNTRY LEVEL
At the household level the consequences include, amongst others, the following:
• Substitution of more expensive sources of protein and other nutrient-rich foods
for low-cost high-energy foods to maintain a minimum level of productivity.
• Compromise on health care, education and other non-food household
expenditures.
• Selling off assets, e.g. livestock.
• Increased reliance on social programmes.
• Eat fewer and less nutritious meals per day.
FOOD PRICES – HOUSEHOLD LEVEL
International Prices
Source: FAO, 2013
International Prices
Source: FAO, 2013
World grain and oil seed price trends
Source: IMF, 2013
World meat price trends
Source: IMF, 2013
SA maize price trends
Source: BFAP and FAPRI, 2013
SA sorghum price trends
Source: FAPRI and BFAP, 2013
SA wheat price trends
Source: BFAP, 2013
SA beef price trends
Source: ABSA, 2013
SA beef production and consumption trends
Source: FAPRI, 2013
SA poultry price trends
Source: ABSA, 2013
SA poultry production and consumption trends
Source: FAPRI, 2013
SA mutton price trends
Source: ABSA, 2013
Important trends:
Inflation and farming profitability
49
StatsSA, 2012
SA primary agriculture, food manufacture
and retail food price inflation
80
85
90
95
100
105
110
115
120
125
130
Ja
n-0
8
Ma
r-08
Ma
y-0
8
Ju
l-0
8
Sep
-08
No
v-0
8
Ja
n-0
9
Ma
r-09
Ma
y-0
9
Ju
l-0
9
Sep
-09
No
v-0
9
Ja
n-1
0
Ma
r-10
Ma
y-1
0
Ju
l-1
0
Sep
-10
No
v-1
0
Ja
n-1
1
Ma
r-11
Ma
y-1
1
Ju
l-1
1
Sep
-11
No
v-1
1
Ind
ex
(20
08
=1
00
)
Primary agriculture inflation Food manufacturing inflation Food and non-alcoholic beverage inflation
Important cost drivers
• Administered and regulated prices (e.g. Fuel & Oil; Electricity)
• Freight costs
• Fertilizer
Year Price of
electricity
Estimated usage in
GWh
Total estimated cost
2009/10 R336,000 5485.384 R1 843 088 871
2010/11 R415,000 5567.723 R2 314 502 390
2011/12 R523,000 5651.298 R2 955 628 921
2012/13 R658,000 5736.128 R3 777 240 239
0500000
1000000150000020000002500000300000035000004000000
20
04
20
05
20
06
20
07
20
08
20
09
1.2.3.
Capital Cost
Fixed Cost0
1000000
2000000
3000000
4000000
20
04
20
05
20
06
20
07
20
08
20
09
1.2.2.2.
Capital Cost
Fixed Cost
Source: StatsSA, Dept of Labor, Dept of Energy and Eskom, 2012
Trends in regulated/administered input costs:
All stages of the supply chain
Non-food inputs that are used at almost all stages of the food value chain are
inputs such as fuel, electricity, labour and water.
All of these items fall within the category of administered and regulated prices,
and showed the following price trends between 2010 and 2011:
• The regulated minimum wages for primary agriculture increased by 4.5%.
A further wage increase of 9.3% was announced for 2012/13.
• 0.05% sulphur diesel increased by 25.3% in Gauteng and by 25.1% at the
coast.
• Electricity prices increased by 25.8%. In 2009, the total cost of electricity for
the primary agricultural and forestry sectors amounted to approximately R1.8
billion. If the planned electricity costs over the next three years are taken into
account, the cost of electricity is estimated to increase to nearly R3 billion if
electricity usage by the primary agricultural and forestry sector remains at
more or less current levels. A further increase for 2012?
The Terms of Trade for Primary Agric:
Input cost trends
From 2010 to 2010/11
• The farming requisite price index increased by 6.3%
• Machinery and implements 6.7%;
• Fertiliser 11%;
• Animal feed prices 6.2%
• Fuel prices 3.4%.
• The terms of trade at primary agricultural level declined further in the first six months of 2011.
Source: DAFF and own calculations, 2011
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
1.30
1.35
1.40
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
10/1
1
2005 =
1
Terms of trade
The rationale for agriculture
The negatives
– Decline contribution to GDP
– Labour shedding
– Slow on transformation
– Ineffective land reform
– Exacerbating urbanization
– Declining former homelands
– Environmental sensitivities
– Welfare trap
The positives
– Labour absorption capacity
– Influences human settlement
patterns
– Africa expansion potential
– Little recourse in rural areas
– Can address homeland
questions
– Must assist in land reform
– Regional growth
Policy
• Deregulation and liberalisation were distinctive
features of the agricultural sector of South Africa
during the 1980 - 90s.
• Most important policy initiatives taken
subsequently include:
– Focus on emerging farmers,
– Land reform,
– Institutional restructuring in the public sector,
– Promulgation of new legislation,
– Trade and labour market policy reform.
Policy
• These reforms were intended to:
– Correct the injustices of the past,
– Direct the agricultural sector towards a less capital-
intensive growth path,
– Enhance the sector’s international competitiveness.
And ultimately increase food security for all!
Policy
• An estimated 90% of land reform projects
have failed on an estimated 5.9 million ha.
• Expand irrigation potential through increasing
irrigation efficiency and better water loss
control.
• A further expansion potential of ±3 million ha
of arable land.
• Some of this includes high potential land in
former homelands.
Source: BFAP, 2012
Policy
• Policy changes created a number of pressures on farm profits.
• Farmers adapted to these changes by;
– decreasing their level of input use,
– by increasing output from a constant level of input use,
– or by a combination of these approaches.
• Forced farmers to increase productivity (efficiency) and
resulted in the marginal farmers to exit or differentiate
• This coupled with international competition makes small-
scale farming very difficult
• This makes agricultural R&D crucial
Policy
• Technological development will change the world we
know.
• Political environment in South Africa will continue to be
"messy” bringing with it major challenges
and…potentially lots of opportunities.
• Socio-economic issues in South Africa will continue to
dominate the local political agenda.
• Business in South Africa including agriculture will
continue to have to adapt to new world developments
(trends) while, in many cases, having to deal with a very
different local environment.
• The ability of agriculture to provide the basic
needs for the poor, enables this sector to address
poverty.
• Agriculture is regarded as the most important
sector to ensure food security in SA.
• However, SA’s investment in Agric R&D is
considerably less than in other developing nations.
Policy
Conclusion
• To ensure food security in South Africa, agriculture needs to be
expanded in an efficient and sustainable manner.
• Some opportunities in the agricultural sector include, amongst others,
are:
• Expanding irrigation agriculture, bearing in mind the ever looming water
crisis.
• Bring under-utilized land back into commercial production over time.
• Identify the sectors and regions that have the highest potential for growth
and development and invest time and money in these sectors.
• Support employment development in the up- and downstream industries.
• Find creative combinations between these opportunities.
Conclusion
What about centralized institution(s) with a specific responsibility in a
set (information and research?) agenda?
Combine funds and capacity (secondments?)
Combine decision making and governance.
Set priorities.
Develop a strong voice based on research and facts.
Make use of existing strengths.
Role of current information/research institutions and universities?
Role of practical training – agricultural colleges
Regional and/or national?
More institutions with specific niches?
Cooperation can be more than lip service – We need to start
somewhere
• Food security is multi-dimensional.
• South Africa is not isolated.
• Gearing for food security is not only at national level (National
policy must link to provincial and local government spheres).
IMPLEMENTATION WITHIN THE AMBIT OF
SUSTAINABILITY
• Issues to address
– R&D in the food sector
– Legislation (from Competition Commission to others)
– Green paper (land size)
– Infrastructure
– PPP programmes
– Implementation of policies and strategies
– Competitiveness of agriculture
– Agricultural development
Conclusion
Contact details:
Prof Herman van Schalkwyk
Tel: (018) 299-2601
E-mail: [email protected]
Acknowledgements:
to others for assistance in preparing this presentation:
• André Jooste (NAMC)
• Johnny van der Merwe (NWU)
Thank you