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Food Insecurity in Southern Africa: Regional Dynamics

Food Insecurity in Southern Africa: Regional Dynamics. Peter Draper Trade Research Fellow GSI Seminar, Pretoria 3 rd November, 2008. OVERVIEW. Forces shaping regional food insecurity: “old” conventional wisdoms in a fast-changing world What role for subsidies?.

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Food Insecurity in Southern Africa: Regional Dynamics

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  1. Food Insecurity in Southern Africa: Regional Dynamics Peter Draper Trade Research Fellow GSI Seminar, Pretoria 3rd November, 2008

  2. OVERVIEW • Forces shaping regional food insecurity: “old” conventional wisdoms in a fast-changing world • What role for subsidies?

  3. Forces shaping regional food insecurity: “old” conventional wisdoms in a fast-changing world New reality “Old” picture

  4. 1. Forces shaping food insecurity: “old” conventional wisdoms • Global demand/supply mismatches • Supply side shocks and constraints • Technology and productivity • Socio-political dynamics • Multilateral trade regulations

  5. Global demand/supply mismatches: old picture Main culprit?

  6. Global demand/supply mismatches: old picture Australian drought

  7. Global demand/supply mismatch • 2006/7 saw substantial production declines and associated declines in inventories of major food crops • Diversion of production into ethanol undoubtedly exacerbated this • What will 2009/10 bring? • Increased plantings owing to 2007/8 price signals? • Reduced demand owing to financial crisis? • At least a reversal of upward speculative pressures? • How long will this last before structural dynamics resume?

  8. Supply side shocks and constraints • Shocks to the system have been severe in recent years • Oil price rises, which underpinned high input costs • The global financial crisis, which entails: • Reduced aid flows and availability of multilateral funds • Reduced commodity prices means lower availability of domestic revenues, even if well-managed • Albeit lower input prices • In Africa supply-side constraints are acknowledged as being severe: • Infrastructure • Institutions • Capital stock • These are likely to persist for a sustained period, owing to dynamics of underdevelopment and lack of financing

  9. Technology and productivity

  10. Technology and productivity • Decades of under-investment in agriculture to blame? • IMF/World Bank structural adjustment? • Manifestation of broader supply-side constraints? • What about developing country (African) attitudes to science-based production, eg GMOs? • Lack of a “green-revolution” in Africa

  11. Socio-political dynamics • Colonial legacies, especially: • land ownership • Concentration on cash-crop production • Combined with pre-colonial inheritances: • Communal land-ownership • Subsistence production • Land-tenure is a central political dynamic: • Subsistence versus commercial production • Inhibits urbanization and industrialization?

  12. Multilateral trade regulations • “Faustian bargain” with developed world, especially the EU: • Preferential access ensures “locking-in” effect • EU subsidies and tariff peaks combine to shut out other producers (especially Latin American) • Dismantling this system would: • Introduce competition from efficient, Cairns group exporters into EU markets • Put upward pressure on prices – a problem for food importers and food-aid dependent states • But begin the process of correcting price signals • Hence the politics of the Doha round are fraught

  13. 2. What role for subsidies? • Start with “African” political economy • Revenue-raising capacities severely constrained • Aid dependencies widespread • Weak institutions (governance agenda) • Subsidies mean managing potentially powerful political interests even assuming the money was available (which it isn’t) • Hence other policy measures are more important, but the subject for another day • And implementation remains the key • Nonetheless:

  14. What role for subsidies? • Supply – side investments: • Rural and cross-border roads • Irrigation • Research and development (GMOs?) • Extension services • Climate – proofing? • Water management • Urban infrastructure • Diversification (those preferences…) • Transforming land ownership (towards commercial agriculture) • Food prices (bread and circuses…)

  15. What role for subsidies? Developed countries… • Of greater importance is the multilateral agenda, specifically: • Disciplining price supports • Eliminating export subsidies • Disciplining food aid • Which has to be sensitively managed (no big bangs) if it is to be sustainable

  16. Some things seem eternal…

  17. Thank you draperp@mweb.co.za

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