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How Can Trade Improve Food Security in Sub-Saharan Africa?

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For decades, earnings from farming in many developing countries, including in Sub-Saharan Africa, have been depressed by a pro-urban and anti-trade bias in own-country policies, as well as by governments of richer countries favoring their farmers with import barriers and subsidies. Both sets of policies reduced global economic welfare and agricultural trade, and almost certainly added to global inequality and poverty and to food insecurity in many low-income countries. Progress has been made over the past three decades in reducing the trend levels of agricultural protection in high-income countries and of agricultural disincentives in African and other developing countries. However, there is a continuing propensity for governments to insulate their domestic food market from fluctuations in international prices, which amplifies international food price fluctuations. Yet when both food-importing and food-exporting countries so engage in insulating behavior, it does little to advance their national food security. This paper argues that there is still plenty of scope for governments to improve economic welfare and alleviate poverty and food insecurity by further reducing interventions at their national border (and by lowering trade costs). It summarizes indicators of trends and fluctuations in trade barriers before pointing to changes in both border policies and complementary domestic measures that together could improve African food security.

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Center on Food Security and the Environment
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Kym Anderson

Takeo Hoshi

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Former Henri H. and Tomoye Takahashi Senior Fellow in Japanese Studies at the Freeman Spogli Institute for International Studies
Former Professor, by courtesy, of Finance at the Graduate School of Business
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PhD

Takeo Hoshi was Henri and Tomoye Takahashi Senior Fellow at the Freeman Spogli Institute for International Studies (FSI), Professor of Finance (by courtesy) at the Graduate School of Business, and Director of the Japan Program at the Shorenstein Asia-Pacific Research Center (APARC), all at Stanford University. He served in these roles until August 2019.

Before he joined Stanford in 2012, he was Pacific Economic Cooperation Professor in International Economic Relations at the Graduate School of International Relations and Pacific Studies (IR/PS) at University of California, San Diego (UCSD), where he conducted research and taught since 1988.

Hoshi is also Visiting Scholar at Federal Reserve Bank of San Francisco, Research Associate at the National Bureau of Economic Research (NBER) and at the Tokyo Center for Economic Research (TCER), and Senior Fellow at the Asian Bureau of Finance and Economic Research (ABFER). His main research interest includes corporate finance, banking, monetary policy and the Japanese economy.

He received 2015 Japanese Bankers Academic Research Promotion Foundation Award, 2011 Reischauer International Education Award of Japan Society of San Diego and Tijuana, 2006 Enjoji Jiro Memorial Prize of Nihon Keizai Shimbun-sha, and 2005 Japan Economic Association-Nakahara Prize.  His book titled Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001) co-authored with Anil Kashyap (Booth School of Business, University of Chicago) received the Nikkei Award for the Best Economics Books in 2002.  Other publications include “Will the U.S. and Europe Avoid a Lost Decade?  Lessons from Japan’s Post Crisis Experience” (Joint with Anil K Kashyap), IMF Economic Review, 2015, “Japan’s Financial Regulatory Responses to the Global Financial Crisis” (Joint with Kimie Harada, Masami Imai, Satoshi Koibuchi, and Ayako Yasuda), Journal of Financial Economic Policy, 2015, “Defying Gravity: Can Japanese sovereign debt continue to increase without a crisis?” (Joint with Takatoshi Ito) Economic Policy, 2014, “Will the U.S. Bank Recapitalization Succeed? Eight Lessons from Japan” (with Anil Kashyap), Journal of Financial Economics, 2010, and “Zombie Lending and Depressed Restructuring in Japan” (Joint with Ricardo Caballero and Anil Kashyap), American Economic Review, December 2008.

Hoshi received his B.A. in Social Sciences from the University of Tokyo in 1983, and a Ph.D. in Economics from the Massachusetts Institute of Technology in 1988.

Former Director of the Japan Program at the Shorenstein Asia-Pacific Research Center
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How can trade improve food security in sub-Saharan Africa?

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For decades, earnings from farming in many developing countries, including in sub-Saharan Africa, have been depressed by a pro-urban bias in own-country policies, as well as by governments of richer countries favouring their farmers with import barriers and subsidies. Both sets of policies reduced global economic welfare and agricultural trade, and almost certainly added to global inequality and poverty and to food insecurity in many low-income countries. Progress has been made over the past three decades in reducing the trend levels of agricultural protection in high-income countries and of agricultural disincentives in African and other developing countries. However, there is a propensity for governments to insulate their domestic food market from fluctuations in international prices, and that has not waned. That action amplifies international food price fluctuations, yet when both food-importing and food-exporting countries so engage in insulating behaviour, it does little to advance their national food security. Anderson argues much scope remains to improve economic welfare and reduce poverty and food insecurity by removing trade distortions. He summarizes indicators of these trends and fluctuations in trade barriers before pointing to changes in both border policies and complementary domestic measures that together could improve African food security.

Kym Anderson is the George Gollin Professor of Economics, foundation Executive Director of the Wine Economics Research Centre, and formerly foundation Executive Director of the Centre for International Economic Studies at the University of Adelaide, where he has been affiliated since 1984. His also a Professor of Economics, Arndt-Corden Dept of Economics, Australian National University, Canberra. His research interests and publications are in the areas of international trade and development, agricultural economics, environmental economics, and wine economics. His most recent projects have focused on empirical analysis of such issues as the Doha Development Agenda of the World Trade Organization; global distortions to agricultural incentives; economics of agricultural biotechnology (GMO) policies globally; and wine globalization.

Johann Swinnen (commentator). Johan Swinnen is Professor of Development Economics and Director of LICOS Center for Institutions and Economic Performance at the University of Leuven (KUL) in Belgium. He is also Senior Research Fellow at the Centre for European Policy Studies (CEPS), Brussels, where he directs the programme on EU agricultural and rural policy. From 2003 to 2004 he was Lead Economist at the World Bank and from 1998 to 2001 Economic Advisor at the European Commission.

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Kym Anderson George Gollin Professor of Economics, School of Economics, University of Adelaide; Professor of Economics, Arndt-Corden Dept of Economics, Australian National University, Canberra Speaker

Johan Swinnen

LICOS Center for Transition Economics
K.U.Leuven
Deberiotstraat
34 3000 Leuven, Belgium

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Professor at the University of Leuven (KUL) in Belgium. Research Affiliate, Rural Education Action Project, FSE Visiting Scholar
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PhD

Johan Swinnen is Professor of Development Economics and Director of LICOS Center for Institutions and Economic Performance at the University of Leuven (KUL) in Belgium. He is also Senior Research Fellow at the Centre for European Policy Studies (CEPS), Brussels, where he directs the programme on EU agricultural and rural policy. From 2003 to 2004 he was Lead Economist at the World Bank and from 1998 to 2001 Economic Advisor at the European Commission.

He is a regular consultant for these organizations and for the OECD, FAO, the EBRD, and several governments and was coordinator of several international research networks on food policy, institutional reforms, and economic development. He is President—Elect of the International Association of Agricultural Economists and a Fellow of the European Association of Agricultural Economists. He holds a Ph.D from Cornell University.  

His research focuses on institutional reform and development, globalization and international integration, media economics, and agriculture and food policy. His latest books are “Political Power and Economic Policy” (Cambridge Univ Press),  “The Perfect Storm: The Political Economy of the Reform of the Common Agricultural Policy” (CEPS),  “Global Supply Chains, Standards, and the Poor” (CABI), “Distortions to Agricultural Incentives in the Transition Economies of Europe and Central Asia” (World Bank Publications), and “From Marx and Mao to the Market” (Oxford University Press -- and Chinese translation by Beijing University Press). He is the president of The Beeronomics Society and editor of the book “The Economics of Beer” (Oxford Univ Press).

Commentator
Symposiums
Global Food Policy and Food Security Symposium Series

The Yaqui Valley Revisited: A case study on agricultural sustainability in Mexico

The Yaqui Valley is the birthplace of the Green Revolution and one of the most intensive agricultural regions of the world, using irrigation, fertilizers, and other technologies to produce some of the highest yields of wheat anywhere. It also faces resource limitations, threats to human health, and rapidly changing economic conditions. In short, the Yaqui Valley represents the challenge of modern agriculture: how to maintain livelihoods and increase food production while protecting the environment.

Aquaculture in China and its Role in Global Markets and Resources

Seafood plays a critical role in global food security and protein intake. The global supply of seafood increasingly comes from aquaculture - the farming of fish, shellfish, and aquatic plants. China is the dominant leader in this field, supplying about two-thirds of global aquaculture production. China also consumes an estimated one-third of global aquaculture output, a figure that is expected to increase as the country proceeds along its developmental trajectory.

Oil palm development in Indonesia: Demand, trade, and land use

Indonesia is currently the world’s top palm oil producer. Since the 1980s total land area planted to palm oil has increased by over 2,100 percent growing to 4.6 million hectares – the equivalent of six Yosemite National Parks. Plantation growth has predominately occurred on deforested native rainforest with major implications for global carbon emissions and biodiversity.

Klaus Mittenzwei

Encina Hall
Stanford University
Stanford, CA 94305

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Anna Lindh Fellow, The Europe Center
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PhD

Klaus Mittenzwei is an agricultural economist at the Norwegian Agricultural Economics Research Institute in Oslo, Norway. He completed his doctorate at the University of Life Sciences, Norway in 2001. His dissertation focused on the role of political institutions as a significant source for explaining agricultural policies. In a current follow-up research project funded by the Norwegian Research Council, he will analyze these findings in greater detail. Other areas of research include modeling the effects of agricultural policies on the economic, environmental and societal objectives of society. In particular, the CAPRI modeling system (covering world agricultural trade and the details of the agricultural policies in the EU-25, Norway and Turkey) is used to understand how agricultural policy reforms affect the often conflicting agricultural policy objectives like farmers’ income, productivity and public goods provided by the agricultural sector.

Biofuels: The changing nature of agricultural demand

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Policies promoting ethanol and biodiesel production and use in the U.S., Europe, and other parts of the world since the mid-2000s have had profound—and largely unintended—consequences on global food prices, agricultural land values, land acquisition, and food security in developing countries. They have also created regional opportunities in the form of agricultural investments, crop yield growth, and booming farm economies. Rising incomes in emerging economies are generating increased demand for transportation fuels, thus stimulating further growth of the global biofuel industry. This seminar will explore the politics, economics, and global food security implications of the expanding biofuel sector. Several policy questions will be raised, including the role of biofuel mandates on food prices, the role of trade policies for stabilizing food prices in an era of increasingly tight demand, and the role of land policies and institutions for feedstock production and income distribution in the developing world.

Siwa Msangi, Senior Research Fellow in the Environment and Production Technology Division at the International Food Policy Research Institute (IFPRI) will provide commentary. Msangi's work focuses on the major socio-economic and bio-physical drivers affecting agricultural production and trade, and their impacts on nutrition, poverty and the environment. Dr. Msangi manages a research portfolio that includes the economic and environmental implications of biofuels, and has coordinated the project Biofuels and the Poor in partnership with FSE.  

Biofuels videos: Roz Naylor talks food security and energy with Near Zero

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Rosamond L. Naylor

The Jerry Yang and Akiko Yamazaki
Environment and Energy Building
Stanford University
473 Via Ortega, Office 363
Stanford, CA 94305

(650) 723-5697 (650) 725-1992
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Senior Fellow, Stanford Woods Institute and Freeman Spogli Institute for International Studies
William Wrigley Professor of Earth System Science
Senior Fellow and Founding Director, Center on Food Security and the Environment
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PhD

Rosamond Naylor is the William Wrigley Professor in Earth System Science, a Senior Fellow at Stanford Woods Institute and the Freeman Spogli Institute for International Studies, the founding Director at the Center on Food Security and the Environment, and Professor of Economics (by courtesy) at Stanford University. She received her B.A. in Economics and Environmental Studies from the University of Colorado, her M.Sc. in Economics from the London School of Economics, and her Ph.D. in applied economics from Stanford University. Her research focuses on policies and practices to improve global food security and protect the environment on land and at sea. She works with her students in many locations around the world. She has been involved in many field-level research projects around the world and has published widely on issues related to intensive crop production, aquaculture and livestock systems, biofuels, climate change, food price volatility, and food policy analysis. In addition to her many peer-reviewed papers, Naylor has published two books on her work: The Evolving Sphere of Food Security (Naylor, ed., 2014), and The Tropical Oil Crops Revolution: Food, Farmers, Fuels, and Forests (Byerlee, Falcon, and Naylor, 2017).

She is a Fellow of the Ecological Society of America, a Pew Marine Fellow, a Leopold Leadership Fellow, a Fellow of the Beijer Institute for Ecological Economics, a member of Sigma Xi, and the co-Chair of the Blue Food Assessment. Naylor serves as the President of the Board of Directors for Aspen Global Change Institute, is a member of the Scientific Advisory Committee for Oceana and is a member of the Forest Advisory Panel for Cargill. At Stanford, Naylor teaches courses on the World Food Economy, Human-Environment Interactions, and Food and Security. 

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Siwa Msangi Senior Research Fellow Commentator International Food Policy Research Institute
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Global Food Policy and Food Security Symposium Series

Managing price volatility: Approaches at the global, national, and household levels

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This paper serves as background to the fourth presentation in a Symposium Series on Global Food Policy and Food Security hosted by the Center on Food Security and Environment at Stanford University and supported by the Bill and Melinda Gates Foundation.

Political dynamics, not economic analysis, drive the domestic policy response to sharply rising food prices. The political objective during a food price crisis is almost always to keep it from happening. In the short run, this means “stabilizing” domestic food prices despite whatever is happening in world markets. Stabilizing domestic food prices in the face of sharply escalating world prices is not a foolish goal—most countries try to do it. The real issue is whether this can be done effectively and efficiently. The answer is always “no” unless the country has planned well ahead for such a contingency and already has an operational food price stabilization program in place. 

As a matter of “good practice,” all countries are discouraged by international donors from conducting such programs. Instead, countries are urged to implement “social” safety nets in times of food price spikes. The economic rationale is clear: let market prices signal the scarcity of food resources so that supply and demand can adjust, and then compensate the poor for deterioration in their standard of living when food prices rise. The problem is that safety nets that reach the poor quickly and effectively take considerable time to design and implement, and are quite costly in fiscal terms if the poor are a substantial share of the total population. Historically, unless the country is already running a cash transfer program to the poor, the emergence of a food price crisis is too sudden for an effective government response. Gearing up emergency food relief safety nets is not an effective response to a sudden spike in food prices.

More active measures to prevent food price spikes are needed, both domestically and internationally. One starting point would be for countries with large populations to gradually build their grain reserves to the point where they do not feel vulnerable to spikes in world prices and to possible grain embargoes from their regular suppliers. It would be desirable to have such stockholding strategies coordinated internationally, but this is unlikely in other than rhetorical terms. Still, the mere existence of these stocks, even if domestically controlled, would have a calming influence on world grain markets (especially on the very thin world rice market). With calmer markets, recourse to more open trade policies becomes politically feasible (and it is almost always economically desirable). Eventually, the reality of the high costs of grain storage will stimulate a more balanced approach to food security, with both reserves and trade playing significant roles.

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Peter Timmer
Peter Timmer
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