The food security debate in a shifting market environment
Developments in agricultural markets during the past several years have been by all accounts exceptional.
Price spikes or troughs, associated with excess price volatility, have been features of agricultural markets also witnessed in the past. But the exceptional characteristic of recent years has been that all these factors moved in the same direction, thus compounding their effect on the increase in agricultural prices. Agricultural price developments since the mid-2000 have been characterised by a confluence of factors that led agricultural and food prices to move in parallel with the prices of other commodities and, more importantly, to stay at a higher level than their historical past, even after declining.
This paper focuses on the multiple factors market developments and attempts to place them in the broader context and perspective of the food security debate. And although convergence on the causes remains elusive, no other single variable better reflects food security concerns than prices – in terms of their exceptionally high levels, their volatility and their co-movement. The macroeconomic environment, climate, trade, energy, the food chain or other factors affecting demand, such as population and income growth, especially in emerging economies, all play a role in the level of food prices. These factors are analysed, the most important market drivers contributing to recent price moves are identified, and policy responses addressing food security concerns are assessed.
Food security, development and value chains: incompatible concepts?
Over the last 20 years there has been a growing popularity of growth strategies of countries that rely on foreign direct investment and the benefits of participating in global value chains. I will argue that this enthusiasm can be misplaced, especially for developing countries, and especially in agriculture. Indeed, without the requisite absorptive capacity, knowledge infrastructure and existing competitiveness in knowledge-intensive sectors, ‘forcing’ greater participation in GVCs is likely to cause crowding-out of domestic actors in developing countries.
Agro-food Global Value Chains, food security & sustainable development: preliminary reflections from Bolivia & Kenya
This paper explores the impact on food security in developing countries of multinational corporations and the global value chains within which they operate. The paper uses the concept of ‘food systems’ and their interaction (Colonna et al, 2013) to explore interactions between food production/consumption processes at global, national and local levels. The paper discusses early-stage research in two developing country regions where very rapid growth of export-oriented agriculture over the past 25 years has disrupted existing food-producing activities and rural social relations, impacting upon food security at the local and national levels. The two areas are: the Santa Cruz province in eastern Bolivia, now dominated by soybean production which has largely replaced subsistence faming; and the Laikipia Plateau/Mount Kenya region in central Kenya, which has become a major producer for fruit and vegetables and flower exports, but is also important for domestic production of grains and meat. In both regions, foreign corporations are present in multiple stages of the value chains, and interact with each other as well as with large and small domestic farmers, and the paper explores the implications for food security of these value chain dynamics
Family farming and innovation for food security and better nutrition
The presentation focuses on how to promote innovation among family farms to achieve sustainable food security and poverty alleviation. Family farms are key to ensuring long-term global food security. The presentation will present the challenges of defining and measuring family farming and farms. It turns out that, on the basis of the definition proposed, more than nine out of ten farms in the world are family farms, but they are very diverse in terms of size and other characteristics. Family farms are not necessarily small. However, the database developed at FAO shows that small and medium-sized family farms occupy large shares of land and contribute a substantial portion of food production in low-and middle-income countries. Given the importance of family farming to food security, natural resource preservation and poverty reduction, promoting innovation in family farming should be a priority for policy makers. The broad participation and involvement of family farmers – including smallholders, women and disadvantaged or marginalized groups – will be essential. There is a need to design an agricultural innovation system that recognizes the importance of family farms and supports these farmers in innovating and achieving sustainable productivity increases. However family farms are very diverse in terms of many characteristics such as size, production patterns, agro-ecological and socio-economic conditions, household composition. They face different needs and challenges which calls for tailored policies and targeted reforms for different types of family farms. The presentation (based largely on the State of Food and Agriculture 2014) focuses on promoting agricultural innovation among family farms as a central part of an agriculture-based poverty alleviation strategy. At the same time it recognizes the need for additional options for many families on small farms, who must be able to rely on other sources of income to supplement, and sometimes replace, the income deriving from farming.
Increasing agricultural productivity in a green growth context
Green growth – the pursuit of economic growth and development, while sustaining the natural assets base that provide the resources and environmental services on which our well-being relies – has recently become an overarching policy objective in several countries and economic sectors are being scrutinised for the extent to which they offer growth potential that is environmentally benign and socially beneficial.
The agricultural sector faces challenges in adapting to an economic environment oriented towards green growth. With projected demand expected to grow, agriculture has to continue to increase productivity, economise on the use of increasingly scarce resources and adapt to climate change. At the same time, it needs to be able to contribute to improving environmental quality.
Central to examining green growth in agriculture is the inclusion of environmental externalities in growth accounting. Agricultural production affects natural resources and influences eco-systems and biodiversity. Many of these environmental effects exhibit the characteristics of negative or positive externalities or public goods, for which private markets do not exist or are poorly functioning. These effects are usually neglected in traditional growth accounting frameworks or in estimations of common indicators of economic performance, such as total factor productivity (TFP). By omitting these developments, traditional TFP – which is often interpreted as a measure of economic efficiency and competitiveness – may be biased and lead to incorrect policy conclusions. Some of these problems can be addressed by developing a measure of TFP that is adjusted for the use of natural resources and other environmental services. The presentation will provide a brief overview of the OECD framework to monitor progress towards green growth in agriculture, with an emphasis on the challenges faced in incorporating environmentally related variables to measure traditional TFP for agriculture.
Multinational organization structure, sustainability in the host environment and impact on food security
Multinational Enterprises (MNEs) have grown into complex organizations, adopting multifaceted organizational structures which clearly depart from strict hierarchies. Scholars have been referring to heterarchies and network hierarchies in order to depict the evolution of the internal to the MNE environment. At the same time the way an MNE is organized internally conditions its interaction with the external local, regional and global environment resulting in local, regional and global production systems governed by global value chains (GVCs). Contemporary analysis on Food Security empathizes the impact of GVCs and MNEs in investment and this paper investigates how the various organizational structures of MNEs define the nature of GVCs and affect critical aspects of sustainable investment in food security such as innovation and the inclusion of small medium enterprises (SMEs).
Financial flows and investment needs for agricultural development and economic transformation in low income countries
The purpose of this paper is to review the various financial tools that have been utilized in a variety of settings in the agricultural sectors of low-income countries, and to identify opportunities for expansion of innovative financial tool ideas that have been piloted in some countries. The effort will be to identify situations and settings where some types of financial institutions are more likely to be successful than others, and to identify gaps in financing needs. The paper will commence by describing the rural smallholder setting and its particularities, will discuss risk management and mitigations strategies and the different kinds of need for financial services, will review the structure and performance of a variety of informal institutions in rural finance in different contexts and finally the outreach of formal financial institutions, as well as intermediary institutions will be reviewed. Finally, the paper will attempt to indicate from the reviewed literature lessons and good practices, as well as gaps in the provision of financial and risk management services.
Agriculture sector strategy, agricultural policy and investments opportunities in Egypt.
Historically, Egypt’s economy has been based on agriculture: agriculture contributes 14% of GDP, represents 20% of total commodity exports, while about 57% of the total population live in rural areas, and almost 23% of total labour force is working in agriculture. Self-sufficiency has been a stated policy objective: Over the past twenty-five years, the agriculture sector succeeded in controlling food gap, and complete self-sufficiency was achieved in vegetables, fruits, rice, maize, fresh milk, eggs, and fish; self-sufficiency in wheat reached about 58%; self-sufficiency in red meat reached about 75%; self-sufficiency in sugar reached about 70%. Agriculture faces the following challenges: degraded land and land Fragmentation; water scarcity; securing energy for agricultural development; developing and building up the institutional technical capacity in agriculture.
To face those challenges, the Ministry of Agriculture and Land Reclamation (MALR) formulated a Strategy for Sustainable Agricultural Development up to 2030, with strategic objectives: increase productivity per units of both land and water; sustain the use of natural agricultural resources; increase water-use efficiency in agriculture via improved and modern field irrigation systems; maintaining and protecting the agricultural land to improve the degradation of soil fertility. Furthermore, the strategy addresses issues related to development of livestock, poultry and fisheries.
The strategic vision is: to achieve a comprehensive economic and social development based on a dynamic agricultural sector capable of sustained and rapid growth, while paying a special attention to helping the underprivileged social groups and reducing of rural poverty. The mission is modernizing Egyptian agriculture based on to achieve food security and improving the livelihood of the rural inhabitants , through the efficient use of development resources and the utilization of the geopolitical and environmental advantages , and the advantages of the different agricultural regions.
The investment opportunities supporting this vision are the following: the first phase investment opportunities include a 1 million feddan (about 1 million acres or 0.42 million hectares) of land reclamation programme – private investment land; the second phase includes an additional 3 million feddan (about 3 million acres or 1.26 million has) of new lands, development of agro-industrial parks and marine aquaculture investments.
Agriculture in Tunisia, facing the new challenges of global competition
On 14th December 2011, The Council of the European Union adopted negotiating directives for a Deep and Comprehensive Free Trade Agreements (DCFTAs) with Egypt, Jordan, Morocco and Tunisia. Indeed, the DCFTAs aims at reducing non-tariff barriers which limited trade flows with the Mediterranean partners countries, enhancing market access opportunities especially through the liberalization of agriculture and services to improve the investment conditions. The role of trade in the global economy has rapidly grown due to the reduction of tariffs and non-tariffs measures on many categories of goods especially agricultural and agro-food products as well as due to the economic reforms undertaken by many countries of which we find Tunisia. The latter has gradually integrated into the EU market by adopting legislation closer to EU legislation in trade-related areas. This integration has several impacts on the agricultural sector performance i.e. exports, competiveness, farmers’ conditions and consumer purchasing power. In this sense, it is worth assessing the impact of DCFTAs on Tunisian agro-food exports to the EU and the neighboring countries of the Arab Maghreb Union (AMU). The present study focuses on assessing the competiveness of Tunisian exports by using the index of revealed comparative advantage (RCA) and the index of intra-industry trade (IIT). Our main findings reveal strong evidence that a serious loss of competiveness has occurred at least for the main product used in the analysis; however, the agro-food trade becomes increasingly intra-industry.
What does Oxfam see as the challenges in food security? Behind the Brands
Almost 900 million people go to bed hungry every night. The vast majority of these people are small-scale farmers and agricultural workers who are engaged in the production of food. At the same time, agriculture is producing more than enough food for all of us, and much is wasted. Recognising that the food system is broken, Oxfam launched the Behind the Brands campaign in February 2013. The campaign seeks to influence the world’s ten biggest food and beverage companies to improve their policies and practices across seven themes. At the core of the campaign is a scorecard tool which includes an extensive set of questions used to score and rank companies across the seven themes. Oxfam aims to create a “race to the top” encouraging the Big 10 to improve their policies – and it’s working. The themes of water, land, gender, smallholder farmers, climate change, transparency and agricultural workers are all relevant to food security. For example, discrimination against women can undermine access to land and training and therefore their ability to produce food. In particular, the smallholder farmer theme examines what the biggest companies say they are doing to support food producers. In this theme, Oxfam explores whether companies are aware of the key role small-scale producers play in food security, whether they know who is in their supply chains and the impacts of their operations, whether they have made relevant commitments, and whether they are guiding their own suppliers in promoting improved conditions for smallholders. The results show a big difference between leading companies and the laggards. In general, companies score better in questions relating to their awareness of issues than questions relating to their commitments to addressing these issues across their supply chains.
Lessons learnt in planning for National Food Security and Sustainability in an arid country
The presentation will reflect on insights gained in the development of an integrated plan for national food security for an arid country. It will elaborate on the base line characterized by low food system efficiency, water resource depletion and strong food import dependency on the one hand and national development goals in terms of transition to a sustainable, diversified and knowledge based economy on the other. Food security definitions will be critically reviewed to highlight specific aspects of the national food security and sustainability problem. Vulnerabilities and potential consequences from food insecurity will be discussed, before the different dimensions of a sustainable food security system will be explored and potential solutions derived. The focus will be on the systems level with a focus on cross-sector issues and on exploring concrete solutions across the water-energy-food nexus that will enhance food security together with other dimensions of susainable development.
Investment in the Agro-Food Value Chain
This presentation will focus on the Greek food and drink industry and the links with small producers and the international market.
Food security and entrepreneurial activity
Food security means ‘securing adequate food’ and it links production and consumption with the goal of ensuring both an adequate and accessible food supply. In the late twentieth century a focus on localism has emerged and a restructuring of the agricultural sector took place: Large agro-industrial complexes are operating next to local SME’s. However, it is the latter which help the intensification of the agricultural specialization for regions. Locally based solutions are seen as essential for people to become food secure. Within the functioning of knowledge networks entrepreneurship (development of new ideas as well as the link with innovation and the substitution of old methods with new practices) has a vital role to play. The so called ‘Activation of the Endogenous Potential’ implies policies for the increase of entrepreneurial activities, for SME’s in particular, for the increase in productivity especially the human factor and for the development of other initiatives besides entrepreneurial action and these policies can be implemented by: (a) Information dissemination, (b) Cause of Social mobilization and (c) Supply of Capital. That is, through the development of entrepreneurial attitudes and their financial support.
Evaluating price transmission along the Greek food supply chain
The assessment of price transmission along the food supply chain is often used as an indicator of effectiveness and efficiency of the chain as well as of the degree of competition in food processing and distribution. The adjustment of food supply chain to price changes is an important characteristic of the functioning of markets as it reflects the nature, structure and organization of the chain. Additionally, knowledge of the relationship between prices received by farmers and paid by consumers provides information about market efficiency and welfare. Asymmetric price transmission in terms of policy is important for theoretical and policy reasons because its existence is evidence of market failure. This article focuses on the assessment of symmetry or asymmetry of price transmission along the different levels of the Greek food supply chain. The long-run asymmetry of price transmission is examined in the relationship of agricultural producer price – industrial producer price – consumer price. The analysis is based upon time series data of individual prices containing monthly data within the period of January 2000 to December 2014. The empirical results support the presence of cointegrating vectors between prices: (i) agricultural producers-consumer, (ii) agricultural producer-industrial producer, and (iii) industrial producer and consumer. Furthermore, the results suggest that the consumer and industrial price are the driving forces of the market and affects agricultural prices. In the first period the causality runs from consumer prices to farm prices, however, the results for the period 2007/06 -2014/12 highlight the fact that transmission between consumer and agricultural producer prices is bi-directional, in the sense that farm prices are affecting consumer prices but farm prices are also being affected by consumer prices. There is no long-term relationship between industrial and consumer prices during the second period while in the first period the long-term relationship exists and causality runs in one direction, industrial prices are affecting consumer prices. The analysis shows that some relationships between prices on individual levels indicate symmetrical nature, while other relationships are of an asymmetrical nature. In the second period and in contrast with the first period price transmission between farm and consumer prices is asymmetric. Asymmetrical behavior exists between industrial producer prices and consumer prices in the first period.
Rural/Urban Impacts of Alternative Common Agricultural Policy Options: A Dynamic Recursive CGE Approach
This paper uses a dynamic recursive CGE model approach to assess rural-urban impacts of three alternative CAP scenarios. The analysis is specific to six EU NUTS 3 regions, which are heterogeneous in terms of economic diversification, remoteness and rurality. Two of the scenarios redistribute funding within Pillar 2 of the CAP, either towards the agricultural sector (Scenario 1) or to other rural sectors (Scenario 2), while Scenario 3 considers a 30% reduction of Pillar 1 support. Results show that small aggregate regional impacts mask more significant adjustments at the sectoral and sub-regional level. Further, the combination of economic structure and rural development policy mix within a region mediates the direction and magnitude of policy effects. An “agricultural” rural development policy benefits rural economic activity in agriculturally-dependent rural economies, while a “diversification” approach benefits already diversified rural areas. Also, the analysis shows that coupled farm support may be constraining rural economic activity in some areas. Finally, results confirm previous findings indicating that CAP policy measures trigger a trade-off between agricultural and rural economic activity gains.
Consumer Behaviour towards Organic Ready-to-Eat Meals: a case of Quality Innovation
This paper reviews the literature on alternative convenience and ready-to-eat choices analysing at the same time findings from consumer behaviour and manufacturing/retailing perspective. As consumers’ interest in low-cost, easy prepared and healthier food choices has gradually increased, so has the number of research articles. This review provides a synopsis of 60 pertinent peer-review publications stood on an online search carried out using precise and related to organic ready-to-eat meals search terms. Hence, an overview of the most important outcomes and trends in this area has been presented, compared and summarised. Results reveal that consumers show an increased interest and willingness to purchase such products holding generally positive views. Several research gaps were pinpointed, mainly in the field of investigating specific personal and social norms as well as in the regulation and information provision area. Policy making implications and recommendations are also discussed in conjunction with future research opportunities.
Innovative agro-food value chain finance in Greece
This paper will present the experience of Piraeus Bank in innovative agro-food value chain financing starting with an answer to what are the elements that could differentiate an agro-finance model and make it considered as innovative. Before some years we would try to search the answer in the combination of the parameters of a loan, such as the duration, the grace period, the repayment schedule etc. In our opinion, nowadays, the answer should be identified in more complex solutions related to the total effect of the finance not only to the borrower but also to the whole value chain that he participates and even the local economy. As an example, Contract Farming Financial Plan that is offered by Piraeus bank (PB) aims at coordinating and supporting contractual partnerships between Primary Agricultural Units and Commercial / Processing Enterprises in a closed-controlled financial eco-system. More specifically, Contract Farming is the first banking program in Greece that contributes to the rationalization of agricultural production by matching primary production with demand, and financing both sides at the right time, with customized tools. Moreover, it boosts the modernization of the transactional cycle, embracing the whole production–supply chain and undertaking payments’ administration. Through this program, PB supports the vital for Greek economy agricultural sector and contributes to the economic and social development.
Rural micro-finance and social risk management for food security
This paper presents an evaluation of the economic and social impacts of microfinance on rural households’ food security. The dialectics on microfinance is not new, however, the traditional focus has been on poverty alleviation more so than on managing social risk. Consideration is given to what might be a new modernity in enabling a shift from pure consumption values to productivity and welfare risk-bearing. Many regions face significant environmental and economic uncertainty impacting not on only on food access but on food value. Access to financing services is not always as it seems. Food value creation demands consideration of pre-existing social risks and the creation of social worth impacting the expected effects of micro-financing.
The Impact of Credit Crunch on Agriculture Investment in Europe
It has been frequently quoted in the literature the detrimental role of financial meltdown in 2008 on the world economy. Yet, to date, there has been little analysis of the impact of credit crunch on agriculture. This paper offers insights over the constraints imposed by the financial meltdown on agriculture production and income. We employ a data set at country level of EU from 2005 to 2014. The methodology is a dynamic threshold panel analysis. Results show that there have been some underlying structural thresholds in agriculture, though with some lags, that has been still affecting production and income. As policy implication, an in light of the reform of CAP, one would propose to raise private investment in agriculture through the credit channel of the ongoing quantitative easing of the ECB.