Desktop version

Home arrow Marketing

Current Developments and Future Challenges

The complacency of the 1980s and 1990s regarding the global food— population balances has given way to serious concerns about food security globally. The year 2002 seems to be a turning point (see Fig. 1.2). Food prices in real terms started an upward trend in 2002. Furthermore, the food price crisis of 2007—2008 drew significant attention to the issue of food security and caused serious concerns that extreme events may become more frequent in the future. However, even before the crisis it was obvious that food insecurity concerns are becoming a recurring theme, as it is estimated that about one billion people did not have access to sufficient, safe and nutritious food.

Starting in 2002, food prices exhibit not only an upward trend, but also higher volatility and spikes, as shown in Fig. 1.3 ? Price volatility affects household incomes and purchasing power and, thus, food security. In fact,

Trends in Food Prices (2002-2004 = 100). Source

Fig. 1.2 Trends in Food Prices (2002-2004 = 100). Source: FAO Food Price Index Nominal and Deflated

Trends in Nominal Prices of Food Commodities (2002-2004 = 100). Source

Fig. 1.3 Trends in Nominal Prices of Food Commodities (2002-2004 = 100). Source: FAO annual Food Price Indices, Nominal price levels and volatility are interrelated in determining food security, with higher prices implying a stronger welfare impact of volatility for consumers, while the opposite is true for producers. Hence, focusing only on price spikes will not suffice to assess the overall welfare consequences of price volatility. Based on the view that volatility is the normal state of agricultural markets, three possible causes of international food price volatility may be considered: a decline in food demand elasticity, trade policies, and investment dynamics and speculation. With a universal increase in incomes, food demand is less price sensitive, leading to higher volatility. Restrictive trade measures adopted by many countries to protect consumers during periods of crises are considered to have contributed to the observed increase in prices. Another possible explanation is the recurrent nature of food crises (1950s, 1970s, 2000s) which might be related to the dynamics of investment and trade. Finally the role of speculation in the futures market on food price volatility has been quite controversial with diverging views on the formation of price bubbles.

In searching for the causes of this profound change several explanations have been offered, climate change being one of them. Stern with his book on the economics of climate change has raised public awareness about the consequences of climate change and the need to undertake immediate action for mitigation (Stern 2006). The nexus between food security, climate change and sustainability has become now the big issue and has generated great concern among academics and policy makers alike. An example of such concern is shown in an article that appeared in Science (Godfray et al. 2010). The paper claims that growing competition for land, water and energy will affect the ability to produce enough food globally.

It is shown, also, that although production of main grains and root crops increased only modestly over 50 years from 1960 to 2010, production of coarse grains increased by almost threefold, implying that it is meat demand that drives the food system. Perhaps globalisation has elevated a large part of the global population to affluence, changing food consumption towards foods of animal origin and also production and trade patterns, and significantly affecting population well-being everywhere. The paper advocates a sustainable intensification of production calling for policies of an interdisciplinary nature because of the complexity of the problem.

A major study by the IFPRI on Food Security, Farming and Climate Change to 2050 suggests that if climate change is left unchecked it will result in a 20 per cent increase in malnourished children in 2050 (25 million more than with perfect mitigation). The study calls for public policies that will address poverty and climate change resilience with broad-based income growth, investment in specific kinds of agricultural productivity and strengthening of international trade agreements (Nelson et al. 2010).

The 2015 Food and Agriculture Organization (FAO) State ofFood Insecurity in the World states that although hunger has continued to decline, it remains an everyday challenge for almost 800 million people in developing countries. Thus hunger eradication and food security should remain a key commitment of decision-makers at all levels (FAO 2015b). A key factor for success in reducing undernourishment and food insecurity is economic growth but only when it is inclusive, providing opportunities for the poor, who have meagre assets and skills. Enhancing the productivity of family farmers and strengthening social protection mechanisms are key factors for promoting inclusive growth, along with well-functioning markets and governance.

Thus, currently, the nexus of food security, sustainability and globalisation establishes a new perspective in the long-standing issue of food security in the horizon of 2050. This new perspective should take into account a number of issues:

  • • Population is expected to reach 9.5 billion in 2050, with two thirds in urban areas; thus forecasts of long-term trends of food demand-supply balances are necessary for policy definition at global and country levels.
  • • Trade is an area that poses several challenges and risks in the definition of public policy for food security. International agricultural markets can be a source of food commodities for importing countries but also a source of revenue for exporting countries to finance staple imports.
  • • Linked to trade is commodity price dynamics in international markets and their relation to domestic prices and incomes. In this respect, the operation of complicated global agro-food value chains, foreign direct investment (FDI) and responsible investment are important consideration in the functioning of international agricultural markets, as well as the integration of small-scale agricultural production to local and GVCs.
  • • Productivity, investment and financing are important policy areas for bridging the yield gap, increasing food supply and incomes of small farmers by linking them to markets, thus addressing food and nutrition insecurity in the majority of the rural areas of the developing countries. Gender issues are also part of the agenda as many agricultural households are headed by women.
  • • Resource efficiency and sustainability in the context of green growth strategies are important issues in attaining long-term food security at global and country levels. Promoting resource efficiency and sustainable consumption and production, decoupling economic growth from resource use and environmental degradation, and helping poor people to meet their basic needs will require behavioural changes in production and consumption decisions.
  • • Governance and institution issues at country and global levels are important considerations in the design of public policy for enhancing food and nutrition security.
< Prev   CONTENTS   Source   Next >

Related topics