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Agricultural support measures of advanced countries and food insecurity in developing countries

Research Paper No. 2006/141

Michael Herrmann

November 2006

SARPN acknowledges UNU-WIDER as the source of this document: http://www.wider.unu.edu/
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Introduction

‘There were 815 million people hungry in the developing world in 2002—nine million less than in 1990. Yet in the worst-affected regions—Sub-Saharan Africa and Southern Asia—the number of hungry people has increased by tens of millions’ (UN 2005: 8; similar Pingali and Stringer 2003; FAO 2004). Undernourishment and malnutrition continue to cause premature death and to impede the ability of humans to live up to their potentials and make full use of their capabilities (Sen 1999; Nussbaum 1993). The challenge to ensure appropriate nutrition and combat hunger is both a core objective of development and an indispensable prerequisite for it (Benson 2004).

To combat food insecurity and ensure a sufficient food supply is both a moral imperative and an economic necessity. Given the importance of food security, it may be argued that food is a strategic good and that the supply of food should not be left to market forces, but should rather be ensured by the public sector.1 In countries that do not have the appropriate mix of and/or the appropriate endowments with factors of production, the decision to attain food self-sufficiency would necessitate relatively farreaching market interventions. While there may be sound political reasons why countries should attempt to ensure food self-sufficiency, there are compelling economic reasons for why countries should specialize according to their comparative advantage. One’s principle position on this issue will influence one’s approach to assess it; the guiding questions, the analysis itself and the conclusions. Without judging whether the political reason or the economic reason is more powerful, this paper assumes an economic rather than a political approach to the challenge of food security. Thus, it treats food like any other product and assumes that food security can potentially be ensured through market mechanisms.

This paper focuses on the world’s poorest countries, namely the least developed countries (LDCs).2 Almost all of these countries are located in the regions that are most affected by food insecurity, namely Sub-Saharan Africa and South Asia. The LDCs are strongly affected by food insecurity, but the LDCs are also characterized by a generalized level of extreme poverty.3 According to poverty estimates based on national accounts the LDCs are already the major locus of extreme poverty in the world, but even according to poverty estimates based on household surveys, the LDCs are estimated to suffer from an absolute increase of extreme poverty in the coming years. By 2015, the target year for the reduction of extreme poverty by half, the LDCs will be, according to both types of poverty estimates, the major locus of extreme poverty in the world. At the turn of the millennium about 50 per cent of the population in these countries were already living in extreme poverty (UNCTAD 2002). Extreme poverty and food insecurity are closely related, as the very poor are least able to take precautions against food insecurity and are therefore the first to be confronted by it. The FAO, which collects data for about 227 countries,4 has recorded 61 developing countries that experienced an acute food crisis during the seven-year period of 1998-2004 (see Table 1). The LDCs were affected more often than other developing countries: of the 61 countries facing food crises 29 were LDCs, and 11 of these had suffered from food crises each year over the seven-year period. Of the other 32 countries only four experienced acute food crises each year over the corresponding period.

While acknowledging that food crises in LDCs have many potential causes, this paper argues that food dilemma in the LDCs is closely related to distortions of the global agricultural markets, which can be attributed to agricultural support policies of advanced countries. Agricultural support measures as defined here include both subsidies and border measures; advanced countries include OECD countries but also advanced non-OECD countries. It is important to extend the analysis beyond OECD countries, as several advanced non-OECD countries also provide considerable support to domestic agriculture.

The paper has four sections. The second section examines the patterns of agricultural specialization and food insecurity, and the third section assesses effects of agricultural support measures on food insecurity. In this context, the paper distinguishes between a trade-centric approach and a development-oriented approach to evaluate agricultural support measures. The fourth section concludes the analysis with a series of policy implications.


Footnotes:
  1. If food is treated as a strategic product, what about water, clothing, medicine or oil? Could the same argument not be made for all these products?
  2. The LDCs are a group of developing countries that the United Nations has identified as least developed, owing to low income per capita, weak human resources and fragile economies. At present the group of LDCs includes a total of 50 developing economies.
  3. In accordance with international standards, extreme poverty is measured by a poverty line of one dollar per person per day in 1985 PPP.
  4. The term ‘countries’ as used here includes other territories. The use of this term is not intended to question the legal status of any country, territory, city or area, or its authorities, or its frontiers or boundaries.


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