Lower Food Prices Research Articles

In the Midst of the Large Dam Controversy: Objectives, Criteria for Assessing Large Water Storages in the Developing World

By some estimates, there are 47,000 large dams in the world. India had 4,635 “large dams” as per ICOLD definition. Only technical criteria such as height and storage volume are used for this classification. Large dam projects increasingly face opposition from the environmental lobby from around the world for their negative social and environmental impacts, while their role in development was largely ignored. There are three issues being investigated in this paper. First: the role of water in human development and economic growth, and the role of large storages. Second: what should be the best criterion for classifying dams in a way that they truly reflect the engineering, social and environmental challenges posed by dams? Three: what new objectives and criteria, and variables need to be incorporated in the cost–benefit analysis of dams so as to make it comprehensive? The authors have derived a new index called sustainable water use index (SWUI) from the composite water poverty index (WPI) developed by C. Sullivan (2002), to assess the water situation of a country. It includes four of the five sub-indices of WPI, to capture attributes such as access to and use of water, water environment and institutional capacities in water sector, each having equal weightage. The SWUI was calculated for 145 countries using data from Laurence et al. (2003). Analyses suggest that improving the water situation can drive its economic growth, through the human development route. It is further argued that building large storages would be crucial for improving the water situation of a country on a sustainable basis. The analysis based on data of 13,631 large dams across the world shows that the height of the dam does not have any bearing on the volume of water stored, a strong indicator of the safety hazard posed by dams. Further analysis using data of 9,878 large dams shows that the height has no bearing on the area of land submerged, again an indicator of the negative social and environmental effects. The regression using data on 156 large dams across India shows that normative relationship exists between the area of submergence and numbers of people displaced by dams. Therefore, a combination of criteria such as height, storage volume and the area under submergence needs to be considered for assessing the negative social and environmental consequences of dams. Further analysis shows that the available estimates of dam displacement could be “gross over-estimates” in the order of magnitude of eight. By illustrating the significant positive impact of large reservoir project on stabilizing national food prices, contributing clean energy, improving recharge to groundwater in semi arid and arid regions, and ensuring social security, the authors argue that economic viability of these projects should be assessed in relation these positive externalities they create. The authors estimate the benefit due to lower food prices attributed to large dams in India as Rs. 42.90 billion annually. At the same time, the negative externality effects of large dams should be built in the cost of dam projects to increase the accountability on the part of water development agencies in less developed countries, towards the communities, which are adversely affected by large dams.

Are low food prices pro-poor? Net food buyers and sellers in low-income countries.

There is a general consensus that most of the poor in developing countries are net food buyers and food price increases are bad for the poor. This could be expected of urban poor, but it is also often attributed to the rural poor. Recent food price increases have increased the importance of this issue, and the possible policy responses to these price increases. This paper examines the characteristics of net food sellers and buyers in nine low-income countries. Although the largest share of poor households are found to be net food buyers, almost 50 percent of net food buyers are marginal net food buyers who would not be significantly affected by food price increases. Only three of the nine countries examined exhibited a substantial proportion of vulnerable households. The average incomes (as measured by expenditure) of net food buyers were found to be higher than net food sellers in eight of the nine countries examined. Thus, food price increases, ceteris paribus, would transfer income from generally higher income net food buyers to poorer net food sellers. The analysis also finds that the occupations and income sources of net sellers and buyers in rural areas are significantly different. In rural areas where food production is the main activity and where there are limited non-food activities, the incomes of net buyers might depend on the incomes and farming activities of net food sellers. These results suggest the need for reevaluation of the consensus on the impact of food prices on food needs. Further work on the regional differences, and more important, on the second order effects, are necessary to answer these questions more precisely. Only on the basis of further analysis can we start generating better policy responses.

Globalisation and Poverty in Latin America: Some Channels and Some Evidence

This paper provides an overview of the main mechanisms through which globalisation can affect poverty and household welfare in Latin America and presents supporting evidence from different case studies in the region. One case study explores the impacts of agricultural trade liberalisation in world markets on poverty in Argentina, with an emphasis on labour income effects via real wages. The second case study examines the impacts of CAFTA on net producers and net consumers among the indigenous population in Guatemala. The analysis explores short‐run impacts as well as medium‐run impacts as households adjust farm decisions. Finally, a last exercise is set up to study the role of agricultural liberalisation on wages, employment and unemployment when there are frictions in labour markets. These case studies show that the impacts of trade on developing countries are heterogeneous. In Argentina, there are gains from liberalisation of world agriculture and higher food prices. In Guatemala, instead, the indigenous population would benefit from lower food prices. It is clear that household adjustments and complementary factors are fundamental ingredients of any reasonable evaluation of the welfare impacts of trade reforms.

An Examination of Calorie Demand Relationship in Pakistan

An Examination of Calorie Demand Relationship in Pakistan

Asia-Pacific Regional Outlook

Looking ahead, prospects are relatively bright. Regional growth is expected to amount to 6 percent both this year and next, propelled by vigorous exports and strong domestic demand in China and India. Meanwhile, headline inflation is expected to remain around 3—3½ percent, as lower food prices offset the impact of higher oil prices. At the same time, the region’s current account balance is forecast to remain around 3 percent of GDP, albeit with large changes in its distribution.

Agricultural Technology, Productivity, Poverty and Food Security in Madagascar

This paper uses a unique, spatially-explicit dataset to study the link between agricultural performance and rural poverty in Madagascar. We show that, controlling for geographical and physical characteristics, communes that have higher rates of adoption of improved agricultural technologies and, consequently, higher crop yields enjoy lower food prices, higher real wages for unskilled workers and better welfare indicators. The empirical evidence strongly favors support for improved agricultural production as an important part of any strategy to reduce the high poverty rates currently prevalent in rural Madagascar.

China's Accession to the World Trade Organization: What Is at Stake for Agricultural Markets?

We analyze the impact of China's accession to the World Trade Organization on major crop and livestock markets using the Food and Agricultural Policy Research Institute (FAPRI) modeling framework. We incorporate expected changes in consumer income, textile production, and trade policies as exogenous shocks to the baseline model. Following accession, revenues decline in China's livestock, grain, and oilseed industries, while cotton production prospers despite increased imports. Chinese consumers benefit from lower food prices, with vegetable oil, dairy, and meat consumption increasing significantly. Argentina, Brazil, Canada, the European Union, and the United States are the greatest beneficiaries from expanded agricultural trade with China.

Agricultural Research and Urban Poverty: The Case of China

This paper develops a framework to measure the impact of agricultural research on urban poverty. Increased investments in agricultural R&D can lower food prices by increasing food production, and lower food prices benefit the urban poor because they often spend more than 60% of their income on food. Application of the framework to China shows that these food price effects are large and that the benefits for the urban poor have been about as large as the benefits for the rural poor.

Concentration and Innovation in the U.S. Food Industries

We investigate the effect of industrial concentration on productivity growth, a proxy for innovation, in the U.S. food industries. Here, we search for a possible critical level of concentration, i.e., the inverted-U hypothesis beyond which its relationship with productivity can turn negative. Productivity growth is specified as function of growth in concentration and vice versa with conditioning variables. The resulting simultaneous panel model is estimated using a panel (grouped) database comprising of 36 food-processing industries and the 1964-1992 period. Results suggest the conditioned productivity-industrial concentration relationship has an inverted-U shape. The critical level of concentration, where the relationship between growth rates of productivity and concentration turns negative, appears to be 62.3, a 24% increase from the current levels. A mapping of the net effects of an increase in concentration suggests that current deadweight loss of $7.8 billion can be reduced to about $2.8 billion when concentration increases by 18% from its current level. A reassessment of the income distributional effects of concentration suggests that consumers gain from lower food prices and agricultural producers face an increase in demand, albeit in a second-best world.

Rice for the masses: food policy and the adoption of imperial self-sufficiency in early twentieth-century Japan

The adoption, following the Rice Riots of 1918, of a policy of 'imperial self-sufficiency' in rice is generally regarded as a triumph for Japan's ­industrial interests, securing as it did lower food prices for wage-earners, and as a major cause of the 'agricultural problem' of the inter-war years. However, when viewed against the background of developments in the rice market and in Japan's international trade in rice from 1890 onwards, it can also be seen as a response to, on the one hand, shifts in the pattern of food demand as consumers became better off and adopted 'urban' life-styles, and, on the other, the emergence of ­bureaucratic support for the protection of the small-scale, rice-cultivating farm household in Japan. In this light, what turned out to be a costly solution, in both the short and long terms, to the food supply problem of industrial Japan can be argued to have been less a 'defeat for agriculture' and more a compromise between industrial interests, consumer demand and the prevailing structure of ­agriculture.

World Poverty and the Role of Agricultural Technology: Direct and Indirect Effects

Agricultural technology can help reduce poverty through direct and indirect effects. Direct effects are gains for the adopters while indirect effects are gains derived from adoption by others leading to lower food prices, employment creation, and growth linkage effects. Conceptualising and measuring these effects is highly complex, yet is needed for each region if technology is to be used as an effective instrument for poverty reduction. We propose a methodology for doing this in the context of computable general equilibrium modelling and apply it to archetype models for Africa, Asia, and Latin America. Results show that the dominant effect of technology on poverty is through direct effects in Africa, indirect agricultural employment effects in Asia, and linkage effects through the rest of the economy in Latin America. In each case, increasing the poverty reduction effect through the targeting of technology across crops and through complementary rural development programmes is also explored.

Money, Meat, and Inflation: Using Price Data to Understand an Export Shock in Sudan

Sudanese inflation dramatically fell in 2000. But just prior to the sharp decline, an export ban was placed on Sudanese livestock. Motivated by this clue, and in the absence of any reliable income or employment data, this paper systematically develops simultaneous models of the consumer price index (CPI) and the exchange rate to assess the economic impact of the export ban. It finds that livestock exports play a large economic role as an important source of income and as a store of value. In the long run, livestock exports are positively associated with nonfood inflation. In the short run, food price movements are negatively associated with livestock exports: to help smooth income, lower food prices generate increased livestock exports. Therefore, unable to export livestock, farmers may have flooded the local market with meat, lowering food prices. Moreover, the loss of income and the decline in wealth lowered aggregate demand, leading to the decline in nonfood prices.

Money, Meat, and Inflation: Using Price Data to Understand An Export Shock in Sudan

Sudanese inflation dramatically fell in 2000. But just prior to the sharp decline, an export ban was placed on Sudanese livestock. Motivated by this clue, and in the absence of any reliable income or employment data, this paper systematically develops simultaneous models of the consumer price index (CPI) and the exchange rate to assess the economic impact of the export ban. It finds that livestock exports play a large economic role as an important source of income and as a store of value. In the long run, livestock exports are positively associated with nonfood inflation. In the short run, food price movements are negatively associated with livestock exports: to help smooth income, lower food prices generate increased livestock exports. Therefore, unable to export livestock, farmers may have flooded the local market with meat, lowering food prices. Moreover, the loss of income and the decline in wealth lowered aggregate demand, leading to the decline in nonfood prices.

Global and local implications of biotechnology and climate change for future food supplies.

The development of improved technology for agricultural production and its diffusion to farmers is a process requiring investment and time. A large number of studies of this process have been undertaken. The findings of these studies have been incorporated into a quantitative policy model projecting supplies of commodities (in terms of area and crop yields), equilibrium prices, and international trade volumes to the year 2020. These projections show that a "global food crisis," as would be manifested in high commodity prices, is unlikely to occur. The same projections show, however, that in many countries, "local food crisis," as manifested in low agricultural incomes and associated low food consumption in the presence of low food prices, will occur. Simulations show that delays in the diffusion of modern biotechnology research capabilities to developing countries will exacerbate local food crises. Similarly, global climate change will also exacerbate these crises, accentuating the importance of bringing strengthened research capabilities to developing countries.

A further test of Podkaminer's hypothesis: The case of post‐liberalisation Bulgaria

BELL & ROSTOWSKI (1995) undertake an empirical test of Podkaminer's hypothesis that administered food prices in Poland during the period 1965-78 were substantially higher, and the administered prices of both durables and services were substantially lower, than their equilibrium levels (Podkaminer, 1982, 1987). In summary, the queues, waiting lists and other evidence of formalised rationing in Poland during this period were considered by Podkaminer to be evidence of the long and persistent disequilibrium of the Polish market. Queuing for food was the result of the spillover of excess demand from other consumer markets, not because food was too cheap relative to its equilibrium price. Consequently, Podkaminer concluded, a policy of raising Polish food prices in an attempt to restore market equilibrium was inappropriate. Instead, increasing supplies and/or prices of non-food goods and services would have diverted more disposable income towards expenditure on those categories whilst reducing the demand for food to the level of supply. Markets would then have cleared with lower food prices and higher prices for non-food goods and services. Podkaminer's conclusions contradicted a widely held view, articulated by Nove (1985) amongst others, that administered food prices in the socialist centrally planned economies were much lower than their equilibrium prices. That being so, the particular outcome of Bell & Rostowski's study-that Podkaminer's hypothesis is confirmed and that 'much of the microeconomic disequilibrium in the pre-liberalisation Polish economy resulted from the excessively low prices of services' (p. 529)-bears closer examination in the context of other countries.

Nutritional status and the allocation of time in Rwandese households

This paper analyzes the activity patterns of adult men and women in approximately 110 Rwandese households surveyed four times in 1982–1983. Dynamic models are separately estimated for men and women for the time spent sleeping and resting, performing heavy activities, doing housework, and on agriculture. The models postulate simultaneity between men and women's activities and investigate the differential feedbacks. The main findings are that low incomes and high food prices reduce the households' energy intakes, thereby forcing the adults to spend additional time resting and sleeping. Second, both men and women share the workload in spite of poor nutritional status. Third, for women, there is substitution between housework and agriculture, the former tasks being relegated to other household members. Lastly, energy intakes of twice the Basal Metabolic Rate seem inadequate for the sustenance of active adults. The policy implications of the results are discussed.

Wheat Price Policy in Pakistan: A Welfare Economics Approach

The production of wheat is vital to the economy of Pakistan; wheat accounts for over one-third of planted acreage, contributes roughly one-third of the agricultural sector's value added, and is the major staple in the nation's diet. The growth rate of wheat production in Pakistan over the past thirty years has been phenomenal: nearly five percent per year [Cornelisse and Kuijpers (1987)]. This outstanding performance in the growth of wheat output is remarkable considering that it has occurred in spite of government intervention that has reduced incentives to wheat production. Economists have devoted much time and effort to the analysis of the divergence between domestic and international prices for agricultural commodities. Wheat prices that prevail in world markets represent the opportunity cost of agricultural resources, reflecting the scarcity value of the inputs used in the production of wheat. Economic efficiency occurs when domestic prices for both producer and consumers equals world prices. Government intervention often occurs for reasons other than economic efficiency; governments may distort domestic agricultural prices to increase revenues, promote industrialisation, maintain low food prices for industrial workers or low-income consumers, or insulate domestic producers from fluctuations in world commodity market prices. Government intervention that maintains the domestic price of wheat at levels lower than the world price results in decreased output levels and higher rates of consumption than would occur in a free market, free trade regime. This form of price intervention results in a transfer of income from wheat producers to wheat consumers, efficiency losses that represent foregone opportunities for agricultural resources, and an increase in government expenditures.

White-Collar Lima, 1910–1929: Commercial Employees and the Rise of the Peruvian Middle Class

T 1HE year 1919 saw increasing social unrest throughout much of the world, and Peru was no exception. A general strike in January led President Jose Pardo to decree the eight-hour workday, and demonstrations for lower food prices ignited a wave of looting and mob violence in May.1 Politics was equally unstable: on July 4, President-elect Augusto B. Leguia carried out a coup rather than wait for Congress to confirm his victory. Amid the agitation, few paid attention to a strike called one Saturday morning in late September. Led by clerks in the import-export firms, banks, and retail stores of Lima and Callao, the action was nonviolent, orderly, even polite. No mounted police were called in; in fact, the National Assembly voted to support the strikers' demands. The pickets, numbering about 1,500, went home as soon as business leaders agreed to arbitration.2

La politique agricole en question : quelle alternative au soutien des prix ?

Debate about the agricultural policy: what to substituate for support prices ? The support price policy has been intituted during an intensive economic grooth period. It has lost to day his economical and political legitimity and the short term adaptation of the C.A.P. appears claerly insufficient. Several alternatives are analysed in this paper like a generalization of quotas, last propositions of the E.E.C. Commission, or ceiled supports by worker. Then it appears that the main problem is not a technical problem but the question of the economic interest of low food prices, and the discussion of the economic grooth regulation system.

Structural Adjustment and African Women Farmers

In the 1980s, development experts and donor agencies agreed on the importance of macreconomic policies to development in sub-Saharan Africa. Policy reforms aimed at getting prices right were preconditions for structural adjustment loans and grants in many sub-Saharan countries. Recently, however, debates about structural adjustment lending programmes have ensued, and they are the topic of this volume. One side argues for structural adjustments - devaluation, increases in artificially low food prices and interest rates, an emphasis on exportables, a decrease in government spending, wage freezes, the removal of subsidies - as a way to invigorate stagnating economies. Another side argues that structural transformation of the economy - substantial shifts in the structure of demand and production - is needed in the development process, not just monetarist policies. Still others claim that adjustment policies ignore the reality of life at the micro-level, where up to 80 percent of the food consumed is produced by women farmers. For women, a decrease in government spending may mean exorbitant school fees and no available medicines; wage freezes may mean no remittances from sons and husbands; the removal of subsidies may mean that expensive fertilizers are priced beyond their reach; an emphasis on exportables may mean a decrease in the resources available to their food crops. The result may be at worst more African food crises in the 1990s and at best a more skewed income distribution in sub-Saharan Africa.