pingali-transformation of food systems

8/14/2019 Pingali-Transformation of Food Systems

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Transformation of food systems in the

developing world: Implications forresearch and policy

Prabhu Pingali,Prabhu Pingali,

Head, Agricultural Policy & StatisticsHead, Agricultural Policy & StatisticsBill and Melinda Gates FoundationBill and Melinda Gates Foundation


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Drivers of Change

Rising Incomes, Urbanization anddiet transition

Changing patterns oftrade and FDI

Transformation of food markets

Changing food and productionsystems


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GDP per capitaannual average percent change

-3

-2

-1

0

1

2

3

4

5

6

7

Developing

Countries

East Asia

and Pacific

Europe and

Central Asia

Latin

America and

Caribbean

Middle East

and N.

Africa

South Asia Sub-

Saharan

Africa

realGDP

percapita

,annualaverageperce

ntchange

1980

1990

2001-2005

2006-20015


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Urban Population to Outnumber Rural

Source: UN, World Population Assessment 2002


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Rising Incomes, Urbanization anddietary transition

Cereal based diets to energydense diets

Higher share of processed

pre-prepared food

Growing concerns on food safety

Dual problem of under and overnutrition


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-4

-3

-2

-1

0

1

2

3

4

1961-75 1976-90 1991-03

Percentp.a.

Cereals

Roots

Sugar

Pulses

Oilcrops

Horticulture

Meat

Milk

Change in per capita consumption ofdifferent commodities in developingcountries


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Consumption of different meatcommodities in developing countries

0

20

40

60

80

100

120

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

kcal/person/day

Bovine Meat

Mutton & Goat Meat

Pigmeat

Poultry Meat


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The long run real commodityprices have been declining

Real prices for commodity group


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The agricultural trade deficit ofLDCs is widening

Billion US$

0

2

4

6

810

12

14

61 65 69 73 77 81 85 89 93 97 01 03

total agricultural exports total agricultural imports


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Share in Agricultural Exports,1981-90 to 1991-2000

0%

20%

40%

60%

80%

100%

1981-1990 1991-2000

Least Developed

Other Developing

Developed

0%

20%

40%

60%

80%

100%

1981-1990 1991-2000

Primary Products Processed Products

Source: FAO 2004, Stateof Commodity Markets


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Agricultural trade is concentrated ina few developing countries

Half of all developing countries captured by Argentina,Brazil, Malaysia and Thailand

E.g., Brazil trade balance vs. other developing countries:

Source:FAO 2004


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Changing patterns of trade

Low competitiveness of domesticcereal and livestock production

Trade in processed productsexpanding rapidly

Capacity limitations in meeting

sanitary and phyto-sanitarystandards


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Food markets are changing


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FDI: The other face of globalization

FAO: State of Food Insecurity, 2004


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Supermarket share of Retail FoodSales


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The Changing Food System

Inputs Primaryproduction

Processingandpackaging

Distributionand retail

Consumption

Individuals Enterprises

Governed by Institutions:Rules and regulations

Markets (Contracts)

Transport Services


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Evolution of food systems

Skill basedTradition basedManagement

Highly sciencebased

Local + sciencebasedKnowledge

+ Post harvestProductionoriented

Technology

DifferentiatedStaple basedSystem type

NewOld


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New Rules for a New Game

Centralization of procurement Squeezing of supplier lists

Shift from spot markets to specializedwholesalers New intermediaries and logistics

Contract farming Exclusion of small farmers

Rise of private standards Quality, safety


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Who wins and who loses out?


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Food System Transformation:Country-level heterogeneity

ImportantNot ImportantNot ImportantScale

Economies

Highlydifferentiated

Food Staples+ Export Crops

Food StaplesOutput

Mix

InternationalNationalSubsistenceMarket

Orientation

50%Share of Ag

labor in total

30%Share of Ag

in GDP

Industrialized

Agriculture

Modernizing

Agriculture

Traditional

Agriculture


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Key issues for small farmers

Size matters

Location is crucial Land quality is important

Public good investments are essential


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Issues for Agricultural R&D

Intensification of cereal systems whileallowing for diversification out of cereals

Focus on cereal productivity improvementin marginal environments

Research on small holder post harvest

operations enhancing quality & safety Enhance environmental sustainability

Deal with the rising costs of labor


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Policy focus:

Policy redirection towards creating the enablingenvironment

Facilitate the transitional process Ensure those small farmers that enter modern food

systems, stay in for the long run (winners)

Facilitate the entry of those farmers that have potential

(possibles) Exit strategies for the ones not able to enter the

food system (losers)


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Conclusions

The transformation process can contributeto agricultural and overall growth

The transition is not frictionless and ispainful

Governments need to concentrate onbeing facilitators, regulators and providersof safety nets

Pay attention to inter-regional and intra-societal differences

pingali-transformation of food systems

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