Much of the recent discourse around CAP reform emphasises that European agriculture has an important role to play in the future in contributing to global food security. This concern has been driven by the growing awareness of the challenge of increasing global food production in a sustainable way, which in turn was underlined by the impact of the two recent food price spikes (2007-08 and 2010-11) on global hunger.
Estimates by the U.N. Food and Agriculture Organization (FAO), the U.S. Department of Agriculture (USDA), and the World Bank concluded that between 75 million and 160 million people were thrown into hunger or poverty as a result of the 2007/08 global food crisis. One response to this finding is that it apparently contradicts the conventional wisdom that low global food prices (for example, brought about by high OECD agricultural protection) were responsible for increasing hunger and poverty in developing countries in previous years (see the paper by Jo Swinnen for a discussion of this issue).
Now, a recent paper by Derek Headey at the International Food Policy Research Institute (see the summary on Dani Rodrik’s blog and the response by Martin and Zaman from the World Bank) questions whether the international organisations have correctly diagnosed the trend in the numbers of food insecure in recent years. According to his figures, there has been a massive decrease in the numbers of food insecure during the years of the food crisis. What explains this startling disparity?
Essentially, the numbers from the international organisation are simulations based on ceteris paribus assumptions, that is, they calculate the effect of higher food prices holding everything else constant. But as Headey points out, lots of other things were happening in the world economy in those years, including rapid economic growth in developing countries and much higher input costs, which in turn were partly responsible for the higher food prices. According to his data (which are based on self-reported responses to a Gallup World Poll survey question administered in around 150 countries over a period of years asking whether families had experienced situations in the previous 12 months where they did not have enough money to purchase the food that the family needed), the impact of higher economic growth greatly outweighed the impact of higher food and input prices, leading to a significant decline in the numbers undernourished.
His conclusion comes with some important caveats. First, data from the survey responses suggests that the methodology used by the FAO as the world’s hunger ‘scorekeeper’ underestimates the total numbers undernourished, particularly in Africa. Thus, hunger may be an even bigger problem than described in the FAO numbers. Second, there is no guarantee that the favourable evolution in the numbers undernourished during the years coinciding with the 2007-08 price spike will be repeated during subsequent spikes when food price inflation might be higher than it actually was in the earlier period. And third, while the numbers undernourished may have fallen between 2005 and 2008, they would have fallen by even more if food prices had not spiked. Thus the global food price spike did hurt, and measures to offset the impact of severe price spikes on the very poorest are indeed warranted.
Latest posts by Alan Matthews
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- Further note on EU farm income trends - March 31st, 2016