Creating a nutritious home for Creating a nutritious home for allall

THE FOOD CRISES:THE FOOD CRISES:BACKGROUND & THE WAY FORWARDBACKGROUND & THE WAY FORWARD

Dirk Troskie Dirk Troskie Specialist: Agricultural EconomicsSpecialist: Agricultural EconomicsWestern Cape Dept. of AgricultureWestern Cape Dept. of Agriculture

0%

5%

10%

15%

20%

25%

30%

35%

GHS2002 GHS2003 GHS2004 GHS2005 GHS2006

Always Often Sometimes Seldom

% OF HOUSEHOLDS THAT REPORTS % OF HOUSEHOLDS THAT REPORTS CHILDREN GOING HUNGRY DURING THE CHILDREN GOING HUNGRY DURING THE

PAST YEARPAST YEAR

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

AGRICULTURAL GDP PER PERSON IN AGRICULTURAL GDP PER PERSON IN AGRICULTURE (2004)AGRICULTURE (2004)

TRANSFERS / CAPITA TRANSFERS / CAPITA (Constant 2000 Rand)(Constant 2000 Rand)

500

600

700

800

900

1000

1100

1200

1300

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

(R/c

ap

ita

)

Transfers

Departement Landbou | Department of Agriculture | Isebe Lezolimo

Source: vd Berg (2007)

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

FOOD PRODUCTION & POPULATION GROWTHFOOD PRODUCTION & POPULATION GROWTH

50

60

70

80

90

100

110

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Ind

ex

10

15

20

25

30

35

40

45

50

Po

pu

lati

on

(m

illio

ns

)

Index of food production (Volume) Total population

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: Abstract (2008)

GROWTH OF AGRICULTURAL GROWTH OF AGRICULTURAL PRODUCTION PER CAPITA (1994 – 2004)PRODUCTION PER CAPITA (1994 – 2004)

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

AGRICULTURAL IMPORTS & EXPORTSAGRICULTURAL IMPORTS & EXPORTS(Nominal values)(Nominal values)

0

5

10

15

20

25

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

(R B

illio

n)

Imports Exports Exports-Imports

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: Abstract (2008)

EXPORTS OF WINEEXPORTS OF WINE

0

50

100

150

200

250

300

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Year

Vo

lum

e (m

il l

itre

s)

0

5

10

15

20

25

30

35

40

45

50

%

Export volume Export as % of harvest

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: SAWIS (2008)

WESTERN CAPE EXPORTSWESTERN CAPE EXPORTS2001 - 20032001 - 2003

Departement Landbou | Department of Agriculture | Isebe Lezolimo

PRODUCTPRODUCT VALUE % of TOTAL

CUMUL-ATIVE

%

% CHANGE

Fruit R5,186 19,4% 19,4% 75%

Wine, beer & spirits R3,333 12,5% 31,9% 58%

Fish R2,311 8,7% 40,6% 28,5%

Processed food R1,684 6,3% 46,9% -2,4%

Wood & products R0,429 1,6% 48,5% 75%

Hides, skins, leather R0,371 1,4% 49,9% -15,7

Meat R0,227 0,9% 50,8% -12,5%

R13,541 50,8%

Source: Quantec (2008)

CONCENTRATION RATIO OF CONCENTRATION RATIO OF AGRICULTURAL EXPORTS (2002 – 2004)AGRICULTURAL EXPORTS (2002 – 2004)

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

4.4. SA shows growth in the net value of exportsSA shows growth in the net value of exports

NET TRADE IN FOOD (2002 – 2004)NET TRADE IN FOOD (2002 – 2004)

SHARE OF FOOD IN TOTAL IMPORTS SHARE OF FOOD IN TOTAL IMPORTS (2002 – 2004)(2002 – 2004)

SHARE OF AGRICULTURAL EXPORTS IN SHARE OF AGRICULTURAL EXPORTS IN TOTAL EXPORTS (2002 – 2004)TOTAL EXPORTS (2002 – 2004)

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

4.4. SA shows growth in the net value of exportsSA shows growth in the net value of exports

5.5. Yet, SA is a deficit exporter of caloriesYet, SA is a deficit exporter of calories

FAPRI % BFAP BASELINE PRICES:FAPRI % BFAP BASELINE PRICES:Wheat & BarleyWheat & Barley

Departement Landbou | Department of Agriculture | Isebe Lezolimo

Cereal Prices

50

80

110

140

170

200

230U

S $

/to

n

Yellow maize, US No.2, fob, GulfWheat US No2 HRW fob (ord) Gulf Sorghum, US No.2, fob, Gulf

Source: BFAP (2007)

BIOFUELS IN THE USBIOFUELS IN THE US

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: OECD/FAO Outlook (2007)

ANIMAL PRODUCTSANIMAL PRODUCTSIndex of nominal pricesIndex of nominal prices

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: OECD/FAO Outlook (2007)

PER CAPITA CONSUMPTION OF MEATPER CAPITA CONSUMPTION OF MEAT

23

23.5

24

24.5

25

25.5

26

26.5

27

27.5

28

2001 -2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NO

N-O

EC

D (

kg

/ca

pit

a)

60

61

62

63

64

65

66

67

68

69

70

OE

CD

(k

g/c

ap

ita

)

Non-OECD OECD

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: OECD/FAO Outlook (2007)

WORLD CLOSING STOCKSWORLD CLOSING STOCKS

85

90

95

100

105

2001 -2005

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Mill

ion

To

nn

es

(R

ice

)

160

165

170

175

180

185

190

195

Mill

ion

To

nn

es

(W

he

at)

Rice Wheat

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: OECD/FAO Outlook (2007)

WORLD POPULATIONWORLD POPULATION

1

2

3

4

5

6

7

8

9

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Po

pu

lati

on

(B

illio

ns

)

World

Departement Landbou | Department of Agriculture | Isebe Lezolimo

POPULATION ON CONTINENTSPOPULATION ON CONTINENTS

0

1000

2000

3000

4000

5000

6000

1750 1800 1850 1900 1950 2000 2050

Po

pu

lati

on

(M

illio

ns

)

Africa Asia Europe

Departement Landbou | Department of Agriculture | Isebe Lezolimo

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

4.4. SA shows growth in the net value of exportsSA shows growth in the net value of exports

5.5. Yet, SA is a deficit exporter of caloriesYet, SA is a deficit exporter of calories

6.6. We are experiencing a trend-breakWe are experiencing a trend-break

IMPACT ON THE MOST VULNERABLE: LSM1IMPACT ON THE MOST VULNERABLE: LSM1(Inflation = 6%; Food Inflation = 12%)(Inflation = 6%; Food Inflation = 12%)

-55

-5

45

95

145

195

245

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Ind

ex

Income Food expenditure Balance

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: Own Calculations based on LSM Data (2007)

% HH EXPENDITURE ON FOOD% HH EXPENDITURE ON FOOD

Departement Landbou | Department of Agriculture | Isebe Lezolimo

0%

5%

10%

15%

20%

25%

30%

35%

EC FS Gau KZN Mpu WC NC NP NW Ave

White Black Total

Source: Troskie (2001)

RURAL POPULATION IN TOTAL RURAL POPULATION IN TOTAL POPULATION (2004)POPULATION (2004)

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

4.4. SA shows growth in the net value of exportsSA shows growth in the net value of exports

5.5. Yet, SA is a deficit exporter of caloriesYet, SA is a deficit exporter of calories

6.6. We are experiencing a trend-breakWe are experiencing a trend-break

7.7. We need to protect the most vulnerableWe need to protect the most vulnerable

8.8. Certain countries are preventing exports:Certain countries are preventing exports:

a)a) Impact on WTO negotiationsImpact on WTO negotiations

b)b) Export instabilityExport instability

THE WAY FORWARDTHE WAY FORWARD

Feed the hungryFeed the hungryFood aidFood aid

Food for TomorrowFood for TomorrowIncome generation programmesIncome generation programmes

Address research & knowledge Address research & knowledge gapsgaps

Scale down trade distorting Scale down trade distorting subsidiessubsidies

Special focus on AfricaSpecial focus on Africa

UN DECLARATIONUN DECLARATION

Departement Landbou | Department of Agriculture | Isebe Lezolimo

Feed the hungryFeed the hungryFood gardensFood gardens

Food stampsFood stamps

Consumer subsidies (BIG)Consumer subsidies (BIG)

Emergency feeding schemesEmergency feeding schemes

Food from research farmsFood from research farms

Food for TomorrowFood for TomorrowResearchResearch

ExtensionExtension

TrainingTraining

PROPOSED WESTERN CAPE DEPT. OF PROPOSED WESTERN CAPE DEPT. OF AGRICULTURE RESPONSEAGRICULTURE RESPONSE

Departement Landbou | Department of Agriculture | Isebe Lezolimo

COMMERCIAL VEGETABLECOMMERCIAL VEGETABLEPRODUCTIONPRODUCTION

Departement Landbou | Department of Agriculture | Isebe Lezolimo

0

10

20

30

40

50

60

70

80

Potat

oes

Beetro

ot

Carro

t

Caulif

lower

Cabag

e

Onions

Tomat

oes

Avera

ge

Yie

ld (

T/h

a)

R 0

R 20

R 40

R 60

R 80

R 100

R 120

R 140

R 160

R 180

Th

ou

sa

nd

s

Pro

du

cti

on

Co

st

(R/h

a)

Yield Cost

Source: Combud & own calculations (2008)

SCENARIO 1SCENARIO 1

Departement Landbou | Department of Agriculture | Isebe Lezolimo

PRODUCTPRODUCT YIELD

(T/ha)

COST

(R/ha)

3 Harvest / 1 Ha 117 R 173 107

2 Ha 234 R 346 214

2 Ha on 2 farms 468 R 692 428

Source: Own calculations (2008)

Cost of buying 468 tons of veg. at Epping:R 905 465

SCENARIO 2SCENARIO 2

Departement Landbou | Department of Agriculture | Isebe Lezolimo

PRODUCTPRODUCT YIELD

(T/ha)

COST

(R/ha)

2 Harvest / 1 Ha 78 R115 405

4 Ha 312 R 461 619

4 Ha on 2 farms 624 R 923 238

Source: Own calculations (2008)

Cost of buying 624 tons of veg. at Epping:R 1 207 287

THE NATURE OF TECHNOLOGYTHE NATURE OF TECHNOLOGY

Departement Landbou | Department of Agriculture | Isebe Lezolimo

Pre

ferr

ed

ch

ara

cte

rist

ic

Time/Research input

RATE OF RETURN ON WHEAT RATE OF RETURN ON WHEAT RESEARCHRESEARCH

Departement Landbou | Department of Agriculture | Isebe LezolimoSource: Troskie (2001)

Reference Year Country Period Rate of Return (%)

Ardito-Barletta 1971 Mexico 1943-63 90

Eddleman 1977 USA 1978-85 46

Hertford et al 1977 Colombia 1927-76 11-12

Kislev and Hoffman 1978 Israel 1954-73 125-150

Pray 1980 Bangladesh 1961-77 30-35

Sundquist et al 1981 USA 1977 97

Yrarrazaval et al 1982 Chile 1949-77 21-28

Zentner 1982 Canada 1946-79 30-39

Nagy 1983 Pakistan 1967-81 58

Ambrosi and Cruz 1984 Brazil 1974-90 59-74

Furtan and Ulrich 1985 Canada 1950-83 29

Norton et al 1987 Peru 1981-2000 18-36

Evenson and da Cruz 1989 Brazil 1979-88 110

Byerlee 1990 Pakistan 1978-87 16-27

RESEARCH: IMPACT ON EMPLOYMENTRESEARCH: IMPACT ON EMPLOYMENT

Departement Landbou | Department of Agriculture | Isebe Lezolimo

DOMESTIC PRODUCTIVITY

INCREASE

INTERNATIONAL PRODUCTIVITY

INCREASE

African Colrd/ Asian

African Colrd/

Asian

Factor Demand (Agriculture)

-1.36 -0.68 -1.07 -1.42

Factor Demand (Food)

-0.34 -0.18 -0.51 0.60

Factor Demand (Other)

0.45 0.30 0.07 0.10

Total 0.28 0.19 -0.04 -0.08

Source: Provide (2005)

PRICE ELASTICITYPRICE ELASTICITY

Departement Landbou | Department of Agriculture | Isebe Lezolimo

PRODUCTPRODUCT DEVELOPING DEVELOPED

Demand (Short) -0,4 -0,3

Demand (Long) -1,0 -1,0

Supply (Short) 0,1 – 0,2 0,1

Supply (Long) 0,4 – 1,2 0,8 – 1,0

Source: Bonnen & Schweikhardt (1998)

the endthe end

THE FOOD CRISIS:THE FOOD CRISIS:THE SITUATIONTHE SITUATION

1.1. Fewer experience hunger than anytime in SA history.Fewer experience hunger than anytime in SA history.

2.2. Government interventions play a major role in this regard.Government interventions play a major role in this regard.

3.3. Food production keep track with population growth.Food production keep track with population growth.

4.4. SA shows growth in the net value of exportsSA shows growth in the net value of exports

5.5. Yet, SA is a deficit exporter of caloriesYet, SA is a deficit exporter of calories

6.6. We are experiencing a trend-breakWe are experiencing a trend-break

7.7. We need to protect the most vulnerableWe need to protect the most vulnerable

8.8. Certain countries are preventing exports:Certain countries are preventing exports:

a)a) Impact on WTO negotiationsImpact on WTO negotiations

b)b) Export instabilityExport instability