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IFPRI Policy Seminar: Policymakers’ Responses to Food Price Crises
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Transcript of IFPRI Policy Seminar: Policymakers’ Responses to Food Price Crises
Policy-Makers Responses to Food Price Crises: Results from a 14-Country
Political Economy Study
Per Pinstrup-Andersen
IFPRI
May 2, 2013
14 Participating Countries (Bangladesh, Brazil, China, Egypt, Ethiopia, India, Kenya, Malawi, Mozambique, Nigeria, Senegal, South Africa, Vietnam, Zambia)
European Union
United States
Collaborating Institutions: Cornell University, UNU-WIDER, and University of Copenhagen
Bill & Melinda Gates Foundation
Project OverviewProject OverviewFood Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend and Volatility
Policy Response
Impact
Domestic Price-Related
FactorsPolicy
Process
Political Economy
Project OverviewProject OverviewFood Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend and Volatility
Policy Response
Impact
Domestic Price-Related
FactorsPolicy
Process
Political Economy
Food Price Over TimeFood Price Over Time
Wheat Weekly Price MinusWheat Weekly Price Minus12-Month Moving Average12-Month Moving Average
Project OverviewProject OverviewFood Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend and Volatility
Policy Response
Impact
Domestic Price-Related
FactorsPolicy
Process
Political Economy
Wheat Prices in the World Market,South Africa and Bangladesh, 2005-2012
Source: Baltzer (2013)
Rice Prices in the World Market,China and India, 2005-2012
Source: Baltzer (2013)
Maize Prices in the World Market,Malawi and Zambia, 2005-2012
Source: Baltzer (2013)
Increase in the Domestic Food Price as a Percent of the Increase in World Prices, June 2007-2008
Source: Minot, N. 2010. Transmission of World Food Price Changes to African Markets and its Effect on Household Welfare. Paper presented at the Comesa policy seminar, 25-26 January, Maputo, Mozambique.
Estimates and Projections of Undernourished Estimates and Projections of Undernourished People Worldwide, 1990-2015People Worldwide, 1990-2015
Source: 2012 Global Food Policy Report, IFPRI.
Real Food Price Indices in the EU andthe World Market 2005-2012 (2005=100)
Source: Swinnen, Knops, and Herck (2013)
Cereal Prices in the EU and Cereal Prices in the EU and World Market 2005-2012World Market 2005-2012
Source: Swinnen, Knops, and Herck (2013)
Coefficients of Variation for Selected Food Price Indices (2005-2012)
Source: Swinnen, Knops, and Herck (2013)
U.S. Ethanol and Maize Prices, 2004-2006
Source: Rausser and de Gorter (2013)
MaizeEthanol
U.S. Maize and Ethanol Prices, 2007-2012
Source: Rausser and de Gorter (2013)
Maize price Ethanol price
Project OverviewProject OverviewFood Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend and Volatility
Policy Response
Impact
Domestic Price-Related
Factors
Policy Process
Political Economy
The Policy Response (1)The Policy Response (1)
1. Slow down domestic food price increases and volatility Trade policies to reduce price transmission Direct price control Removal of VAT on food Short term supply management Production expansions
The Policy Response (2)The Policy Response (2)
2. Reduce negative impact on select groups Targeted cash transfers Targeted and untargeted food subsidies Increasing public sector wages
Process and Process and Implementation Issues (1)Implementation Issues (1)
1. Ad hoc, delayed action
2. High fiscal costs Revenue losses
Export bans Import tariffs Elimination of VAT
Program costs
3. Interference with price signal
Process andProcess andImplementation Issues (2)Implementation Issues (2)
4. Poor targeting (intentional or not) Transfers, safety nets Food and fertilizer subsidies
5. Corruption
6. Cross-border trading
7. Selective enforcement of export bans
8. Untimely government procurement
Project OverviewProject OverviewFood Price Trend and Volatility in the World Market
Price Transmission
Domestic Price Trend and Volatility
Policy Response
Impact
Domestic Price-Related
Factors
Policy Process
Political Economy
Political Economy Lessons (1)Political Economy Lessons (1)
1. Protecting government legitimacy
2. Pursuing domestic policies irrespective of international consequences
3. Unitary government decision-making is unusual
4. Repeating past or expanding current policies
5. Relative power of stakeholder group varied
Political Economy Lessons (2)Political Economy Lessons (2)
6. Increasing urban bias
7. Smallholders versus larger farms
8. Mutual mistrust between government and the private sector
9. Foreign agencies had little influence
Lessons for Development AssistanceLessons for Development Assistance
1. Do not assume unitary government decision-making process
2. Expect strong urban bias
3. Expect strong bias in favor of large-scale farming
4. Rhetoric and priority action may differ wrt smallholders
5. Mutual mistrust between public and private sector may be an important hindrance to broad-based economic growth
Full papers and research briefs available at: http://www.wider.unu.edu/research/current-programme/en_GB/Political-Economy-of-Food/
Research briefs also available at:
www.foodpolicy.dyson.cornell.edu