Food Price Transmission and Economic Development

In this paper we challenge the conventional wisdom that the world’s poorest countries are also the most vulnerable to spikes in international food prices. We derive an inverted U-shaped relationship between food price transmission and the development level of a country from a theoretical model. This prediction is subsequently tested in two sets of regressions where economic development is approximated by per capita income and where we control for a number of other potential determinants of food price transmission. The first set of regressions is based on estimated transmission elasticities and the second on actual domestic food price changes during spikes in international food prices. In both sets of regressions we find strong evidence of the existence of an inverted U-shaped relation between food price transmission and income. Thus, food prices in middle income (rather than in low income) countries respond the strongest to changes in international food prices, implying that the poor in these countries are the most exposed to spikes in food prices. We also show that the factors explaining the variation in the estimated transmission elasticities can explain the variation in domestic food price changes during spikes in international food prices equally well.     

The right to food in the context of large-scale land investment in Ethiopia

Abstract

Since the global food crises of 2007, smallholder farmers, pastoralists, indigenous peoples and other rural groups in many developing countries have seen their access to land, water and forest resources being threatened and reduced due to the acquisition of those resources by other actors – acquisitions that may have been promoted by state policies. Taking up the case of Ethiopia, this article aims to explore the implications of large-scale agricultural investments for local food security and the right to food. The article argues that in the context of the recent and ongoing large-scale agricultural investments driven primarily by the state, the interpretation and realisation of the right to food becomes a politically contested issue and that such investments run counter to implementing the state’s obligation to protect local people’s access to and procurement of adequate food. It argues that the large-scale agricultural investments both condition and pervert the realisation of food security.     

The Effect of Food Price Changes on Child Labour: Evidence from Uganda

Most people in developing countries spend up to 60 per cent of their income on food, even though the majority of them are farmers. Hence, a change in food prices affects both their revenue as well as expenditure, and it may thereby affect their labour market decisions. Using the Uganda National Panel Survey and monthly regional food prices, this paper examines the effect of changes in food prices on child labour. The empirical evidence shows that an increase in food prices is linked to an increase in the probability and the intensity of child labour. We find the effect of food price increases to be smaller among landowning households, which is consistent with the view that landowning households can better compensate for price shocks. The empirical results suggest that periodic shocks in food prices may have longer lasting effects on economic development in developing countries through the channel of child labour.     

The Heterogeneous Effects of a Food Price Crisis on Child School Enrolment and Labour: Evidence from Pakistan

Using a panel survey, this paper investigates how food price increases in Pakistan in 2008–2010 affect children’s school enrolment and labour. The causal identification relies on the geographical variations in food (wheat) price. The results show that the negative impacts of food price increase on school enrolment differ by gender, economic status and the presence of siblings. The negative effects on school do not directly correspond to the increase in child labour because the transition from being idle to labour activity or from school to being idle is significant, particularly among poor girls. The results also show that children in households with access to agricultural lands are not affected by higher food prices. The analyses reveal a more dynamic picture of the impact of food price increase on child status and contribute to broader policy discussion to mitigate the impact of crises on child education.     

Who will make the ‘best’ use of Africa’s land? Lessons from Zimbabwe

Conflict over African land – between smallholders and large industrial farmers and between domestic farmers and global agribusinesses – raises key questions about who will make the best use of African land and which farmers do most to decrease poverty and produce more food, industrial inputs and exports. Zimbabwe has already gone through two major changes in land occupation, and thus provides an important test of what is the ‘best’ use of the land. Three measures of ‘best’ use have been cited in Zimbabwe: reward for military victory, poverty reduction and agricultural production. Initial evidence indicates that commercial smallholder production is a better use of the land than larger, more mechanised farming.     

African Green Revolution,food sovereignty and constrained livelihood choice in Mozambique

This article examines the complicated food security agendas of the African Green Revolution and the food sovereignty models in Mozambique. Drawing on fieldwork conducted by the author in Mozambique in 2014 and 2015, the paper analyses how smallholder farmers engage with these two agrarian models. Whereas the literature frequently presents the African Green Revolution and the food sovereignty in oppositional frames, this paper finds that farmers in Mozambique utilize some of the tools that these models offer in complementary rather than competing ways. One such area is the use of commercial hybrid seeds and herbicides by some farmers associated with food sovereignty, an approach that runs counter to food sovereignty’s principles of agroecology. In Mozambique, farmers’ “lived experience” of food sovereignty is more a strategic response to their limited livelihood options, using whatever tools are available to them, rather than a resistance to power.     

Food Price Volatility and Vulnerability in the Global South: considering the global economic context

Abstract

Most official analyses of the recent food price crisis have focused on the market fundamentals of supply and demand for food as key explanatory factors. As a result, most of the policy recommendations emanating from the major international institutions include measures to boost supply and temper demand. In this paper I argue that international macroeconomic factors played a key role in fostering both price volatility and vulnerability, and as such they need to be recognised. With respect to the recent price volatility, the weak US dollar and speculation on agricultural commodities futures markets greatly influenced agricultural prices. With respect to price vulnerability, global economic forces played an important role in dampening production incentives in the world's poorest countries over the past 30 years, leading to a situation of food import dependence. Policy responses to the food crisis must consider the role of these broader international macroeconomic forces—both in the immediate context and their longer term impact.     

Supply response reconsidered: Cocoa in Western Nigeria, 1909–44

This essay uses time‐series data on cocoa plantings in Western Nigeria to re‐examine some popular conclusions about the price responsiveness of farmers in underdeveloped economies. Annual variations in the rate of planting were found to be more closely related to farmers’ income from cocoa sales than to current price. Qualitative evidence suggests that longer‐term trends in cocoa plantings were also influenced by changing opportunity costs and by the institutional structure of rural factor markets. These results cast some doubt on commonly accepted capital stock adjustment models of investment in tree crops, which assume that farmers rely heavily on forecasting future price trends when deciding how much to plant. Given the uncertainty of future crop prices, it seems more likely that farmers plant more trees when they can afford to do so, so long as opportunity costs are not prohibitive.     

Transforming Staple Food Value Chains in Africa: The Case of Teff in Ethiopia

We study changes in the last decade in the teff value chain, Ethiopia’s most important staple food crop by area and value. Upstream, there is increasing adoption of modern inputs and new varieties – especially by those farmers living close to cities – leading to higher land productivity. Mid- and downstream, we find improved processing costs and increasing willingness-to-pay for convenience and quality, as illustrated by the emergence of one-stop retail shops and the rise of more expensive teff varieties. Because of the large numbers of teff producers and consumers, this transformation has important implications on the country’s food security.     

Some management objectives of the peasant farmer: An analysis of risk aversion in the choice of cropping pattern,Surat district,India

The basis of peasant farmers’ decision‐making is a critical factor in the formation of agricultural policy in developing countries. If farmers operate efficiently, implying that profits are maximised, then incomes can only be increased by introducing improved methods of production; if farmers do not act efficiently, it may be desirable to reallocate resources within traditional agriculture. Similarly, predictions of farmers’ responses to price changes and thus the impact on aggregate production and employment¹ are based on assumptions regarding farmers’ management objectives.

The primary aim of this paper is to examine empirically the cropping patterns chosen by a group of peasant farmers in Surat District, India, using a simple model of risk aversion. The data show that the observed behaviour corresponds very closely to the hypothesis that farmers allocate land to different crops by striking some balance between the competing criteria of (a) increasing income and (b) decreasing risk measured by income variability. The actual definition of risk is, in this case, the mean absolute deviation of income around its mean level. Secondly, the contrasting importance of risk and credit between irrigated and unirrigated farms is illustrated, and finally, some policy implications are discussed briefly.     

Land Tenure Systems and Their Impacts on Agricultural Investments and Productivity in Uganda

This article provides an empirical analysis of the impact of different tenure systems (mailo, customary, and public land) on agricultural investment and productivity in central Uganda. A major hypothesis tested is that land investments and practices may have both economic and tenure security implications. The results indicate that coffee planting is used by farmers to enhance tenure security, while fallowing is practised to a greater extent by farmers on more secure holdings. This supports the notion that farmers consider tenure implications when making investments and that different tenure systems do not inhibit the promotion of tree-planting investment. Tenure had no impact on the productivity of crop farming.     

War by other means: the ltte's strategy of institutionalising power sharing in the context of transition from war to peace—a response to Muttukrishna Sarvananthan

Abstract

This paper analyses the Indian government's policy response to the Trade-related Intellectual Property Rights Agreement (trips) and examines the implications of this response for food security and farmers. trips has become one of the most controversial agreements of the wto. This is because of its wide and far-reaching mandate and its complex socioeconomic implications. It is argued that the changes made to the Indian Patents Act in response to trips will compromise the food sector and the rights of small farmers by conferring strong rights on upstream agents who produce proprietary agricultural inputs using biotechnology. Not only are these agents able to exert monopoly price control over agricultural inputs for 20 years, they also have the right to determine the conditions under which farmers and researchers use patented processes and products. The paper outlines policy options available to the Indian government to tighten the scope of patentability in the food sector.     

Trust in Government and Subsidy Reform: Evidence from a Survey of Indian Farmers

What accounts for the persistence of inefficient subsidies? What are the obstacles to their reform? We examine the role of trust in government among farmers in explaining support for reforming India’s energy subsidies. The subsidies under study hold back efforts to provide a reliable supply of agricultural power and contribute to the unsustainable extraction of groundwater. This water-energy nexus in rural India represents both a poverty-perpetuating policy equilibrium and a crisis in environmental governance. Informed by interviews and focus groups, we conduct an original survey of 2010 farmers in Bihar, Gujarat, and Rajasthan and analyze this data on the preferences of “vested interests”—those most affected by potential reform—to demonstrate the crucial role of political trust, especially trust in the national government, in predicting farmers’ political support for reforms. Our findings have practical implications for environmental governance and rural development and contribute to understanding the political economy of social policy reform in a developing democracy.     

The Southern African customs union,cereal price policy in South Africa,and food security in Botswana

It is elaborated in this article that external factors may affect food security in developing countries even if these countries are not exposed to price instability in world food markets. This is the case in the Southern African Customs Union where the agricultural price policy in South Africa affects food security in Botswana, Lesotho and Swasiland. It is analysed quantitatively how cereal price policy in South Africa influenced the cereal import sector of Botswana in the period 1969–84. Cereal import prices increased due to Botswana's membership of the customs union, and cereal imports declined. The price increase was accompanied by a price‐stabilising impact.     

Rentier fiscal crisis and regime stability: Business-state relations in the Gulf

Are sectorally dependent states destined to regime instability as a result of chornic fiscal crisis? Literature emphasizing the importance of a country’s sectoral endowment suggests that oil exporters in particular should exhibit similar policy stagnation and regime decay as a result of fiscal crisis. The cases of Kuwait, Qatar, and Bahrain in the 1980s and 1990s demonstrate that fiscal crisis outcomes are not uniform. This article develops the critique that structuralist assumptions about what drives business-state relations during crisis are flawed. Abstract logics typing exogenous price sifts to the character of business-state interaction neglect the historical and instituional grounding of those relations. It is variation in the historical and institutional crafting of business-state relations that best explains how these relations shape reform under crisis and how regime stability is affected.     

Is Russia the Emerging Global ‘Breadbasket’? Re-cultivation,Agroholdings and Grain Production

Expectations of Russia becoming a global ‘breadbasket’ have been nurtured by its rise to the top group of global wheat exporters, the abundance of abandoned land, assumed yield gaps and the apparent ‘success’ of agroholdings. It is argued here that becoming a global breadbasket is hindered by substantial costs of re-cultivating abandoned land, management and financial problems of megafarms and agroholdings, lack of infrastructure for exports and increased domestic demand for feed grains as input for the meat sector. Furthermore, as Russian wheat production is extremely volatile it might increase global price volatility, rather than contributing to global food security.     

Rising Food Prices and Coping Strategies: Household-level Evidence from Afghanistan

This article investigates the impact of rising wheat prices on household food security in Afghanistan. Exploiting a unique nationally-representative household survey, we find evidence of large declines in the real value of per capita food consumption. Smaller price elasticities with respect to calories than with respect to food consumption suggest that households trade off quality for quantity as they move away from nutrient-rich foods such as meat and vegetables toward staple foods. Our work improves upon country-level simulation studies by providing estimates of actual household food security during a price shock in one of the world's poorest, most food-insecure countries.     

Market responsiveness of peasant cultivators: Some evidence from prewar India

This study attempts to analyse the responsiveness of Indian farmers to changes in profitability with reference to non‐food crops, such as groundnuts, cotton, jute and sugarcane, over the period 1900–39. Various types of adjustment and expectations models have been used. The generalized distributed lag models have been formulated and some special forms have been applied to study the behaviour of farmers. Both ordinary least‐squares and two‐stage‐least‐squares estimates have been carried out. In the distributed‐lag analysis, short‐run and long‐run price coefficients and elasticities have been computed and compared with some of the other studies on the subject. The emerging conclusion from this study is that farmer s seem to respond to changes in profitability, expansion of irrigation facilities, varietal improvements and qualitative factors in the case of all the crops.     

Futures for farmers: Hedging participation and the Mexican corn scheme

Administered commodity price schemes in developing countries have proved ineffective in raising farmers' incomes, and price stabilisation through futures markets is increasingly advocated as the alternative policy objective. A potential difficulty is that farmers tend not to hedge extensively, even in developed countries where access to futures markets is long established. Explanations for this reluctance are examined here with context provided by the Mexican hedging programme, which incorporates financial incentives to spur adoption. Applying representative data for corn to a well-known analysis of the hedging decision suggests that limited participation may reflect rational calculation rather than farmer ‘inertia’. A policy implication is that permanent access subsidies are difficult to justify from the national perspective.