Global Commodity Markets and Food SecurityMay 03, 2019 · Price indexes, constant US$ (2010 = 100) 1974 World Food Summit ... Source: FAO (2016), The State of Agricultural Commodity

Global Commodity Markets and Food Security

John Baffes

• Food commodity markets

• Evolution of “food security”

• Incidence of food insecurity

• Food insecurity today

Outline





Outline

New frontiers and opportunities

Global commodity prices

30

60

90

120

150

180

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Index, nominal terms, 2010 = 100Post-recession

peak 2011:Q1

Post-recession

trough 2016:Q1

Energy

Metals

Agriculture

Source: World Bank

Note: Last observation is August 2018.


Key food commodity prices, 2011-18

Source: World Bank

Note: Last observation is August 2018.

100

150

200

250

300

350

400

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

Wheat Maize

$ US/metric ton

300

400

500

600

700

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19

Soybeans Rice

$ US/metric ton


Stock-to-use ratios for grains

0.10

0.15

0.20

0.25

0.30

0.35

0.40

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Maize Rice Wheat

Ratio

Source: U.S. Department of Agriculture (WASDE).Notes: Based on the September 2018 data release.


The 1974 price spike “triggered” the food security debate

Source: World Bank.

0

40

80

120

160

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Agriculture

Metals

Energy

Price indexes, constant US$ (2010 = 100)

1974World Food

Summit





Outline


Defining food security

“Food security” is a descriptive concept first articulated in the area of food

policy in the mid-1970s. The concept has evolved and expanded from a focus

on food supply at the national level.

For much of the twentieth century, discussion of malnutrition focused on the

lack of sufficient caloric intake.

In recent decades, there has been growing attention to the “triple burden of

malnutrition”: (i) chronic undernourishment; (ii) micronutrient deficiencies –

“hidden hunger” – and (iii) obesity.

There is greater awareness of the complexity of malnutrition which increasingly

includes over- and under-consumption of calories.

Source: FAO (2016), The State of Agricultural Commodity Markets, p. 18.


Evolution of “food security”

World Food Summit (1974): “Availability at all times of adequate world food supplies of basic foodstuffs to

sustain a steady expansion of food consumption and to offset fluctuations in production and prices.”

FAO (1983): “Ensuring that all people at all times have both physical and economic access to the basic food

that they need.”

World Bank (1986): “Access of all people at all times to enough food for an active, healthy life.”

World Food Summit (1996): “Food security, at the individual, household, national, regional and global levels

[is achieved] when all people, at all times, have physical and economic access to sufficient, safe and

nutritious food to meet their dietary needs and food preferences for an active and healthy life.”

FAO (2001): “Food security [is] a situation that exists when all people, at all times, have physical, social and

economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for

an active and healthy life.”

Source: FAO and World Bank


Food security and UN’s SDG 2

UN (2015): Sustainable Development Goal 2 (SDG 2) focuses on ending hunger, achieving food security and improved

nutrition and promoting sustainable agriculture. In particular:

SDG 2.1: End hunger and ensure access by all people, in particular the poor and people in vulnerable situations,

including infants, to safe, nutritious and sufficient food all year round by 2030.

SDG 2.2: End all forms of malnutrition by 2030, including achieving, by 2025, the internationally agreed targets on

stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant

and lactating women and older persons.

SDG 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women,

indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other

productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-

farm employment.

SDG 2.4: Ensure sustainable food production systems and implement resilient agricultural practices that increase

productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change,

extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality.

SDG 2.5: By 2020, maintain the genetic diversity of seeds, cultivated plants and farmed and domesticated animals and

their related wild species, including through soundly managed and diversified seed and plant banks at the national,

regional and international levels, and promote access to and fair and equitable sharing of benefits arising from the

utilization of genetic resources and associated traditional knowledge, as internationally agreed.


Pathways from food insecurity to malnutrition

Source: FAO (2018), The State of Food Security and Nutrition in the World. Figure 14, p. 30.





Outline


Prevalence of undernourishment

10%

11%

12%

13%

14%

15%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017P

Percent of global population

Note: P denotes projection.Source: FAO (2018), The State of Food Security and Nutrition in the World.


Composition of undernourishment

Source: FAO (2018), The State of Food Security and Nutrition in the World.

27.4%

2.7%

10.7%

36.5%

2.9%

14.8%

0% 10% 20% 30% 40%

Low income

High income

World

2000-01 2014-15

19.8%

15.5%

9.4%

8.2%

6.5%

3.0%

26.6%

19.2%

16.1%

9.4%

11.6%

4.4%

0% 5% 10% 15% 20% 25% 30%

Sub-Sharan Africa

South Asia

East Asia and Pacific

Middle East and North Afirca

Latin America and the Caribbean

Europe and Central Asia

2001-02 2014-15

By income level By region


Acute food insecurity in 2017

Source: Food Security Information Network, Global Report on Food Crises 2018.

17.0

8.9

7.7

7.6

6.5

6.1

3.3

0 4 8 12 16 20

Yemen

Nigeria

DRC

Afghanistan

Syria

South Sudan

Somalia

Million

CONFLICTConflict was the key driver of acute food insecurity in 18 countries and territories, affecting 74 million people.

CLIMATE SHOCKSClimate shocks were the main drivers of acute food insecurity in 23 countries and territories, affecting 39 million people.

8.5

5.1

4.0

3.4

0 2 4 6 8 10

Ethiopia

Malawi

Zimbabwe

Kenya

Million


Incidence of obesity

5.1%

5.2%

5.3%

5.4%

5.5%

5.6%

5.7%

2010 2011 2012 2013 2014 2015 2016 2017

Percent of global population

Source: UNICEF, WHO, and World Bank

10.9%

7.3%

6.0%

3.6%

5.6%

0% 4% 8% 12%

Middle East and North Afirca

Latin America and the Caribbean

East Asia and Pacific

Sub-Sharan Africa

World

Percent based on 2016-17 average values





Outline


Commodity consumption in China and India

2.4

21.4

11.3

22.6

5.7

8.6

24.8

3.7

12.0

18.7

22.2

21.8

50.4

49.4

50.5

12.5

0 15 30 45 60

GDP

Population

Edible oils

Grains

Base metals

Iron ore

Coal

Crude oil

Share of world total (percent)

2014-16 1990-92

Source: World Bank, BP Statistical Review of World Energy, World Bureau of Metals Statistics, U.S. Department of Agriculture

China

1.2

16.5

9.3

9.9

1.8

1.9

5.2

1.9

3.0

17.8

13.5

9.7

3.0

5.4

10.5

4.4

0 15 30 45 60

GDP

Population

Edible oils

Grains

Base metals

Iron ore

Coal

Crude oil

Share of world total (percent)

2014-16 1990-92

India


Domestic vis-à-vis external conditions

Source: Baffes, Mitchell, and Kshirsagar (2017), “What drives local food prices: Evidence from the Tanzanian Maize Market,” World Bank Economic Review.

Note: Bars represent R-squares from an Error Correction Model, starting with the regional price only, then adding domestic non-food prices, export policies, and so on.

0.00

0.05

0.10

0.15

0.20

0.25

Regional price + Non-food prices + Trade policies + Seasonality + Climate shocks

R-squared


Global risk map, July-September 2018

Source: FAO, Early Warning, Early Action report on food security and agriculture, 2018, July-September.


Global risk map, July-September 2018

Source: FAO, Early Warning, Early Action report on food security and agriculture, 2018, July-September.

Conflict Climate shocks


The state of food insecurity today

The early debate on food security focused on food availability.

When supply responded (as expected, high prices induced innovation), attention shifted to

income so emphasis was placed on poverty issues (Amartya Sen championed the shift).

As poverty rates declined, emphasis shifted to other issues including quality of food, nutritional

balance, income distribution, and sustainability of supplies.

While there has been considerable progress on food security (undernourishment declined by 4

percentage points during the past 15 years),

o Gains have been uneven: East Asia and Latin America & the Caribbean experienced large gains. But, Sub-

Saharan Africa lags behind while Middle East & North Africa achieved very limited progress;

o There are pockets with persistently high rates of malnutrition, mainly due to conflict and climate shocks.

New challenges have emerged:

o Climate change presents a challenge, especially at a local level, in turn highlighting the role of trade;

o Obesity rates are increasing.

More differentiated approaches are warranted to address these challenges.


World Bank’s commodity analysis

Thank youwww.gpca.org.ae

Documents

Global Commodity Markets and Food SecurityMay 03, 2019 · Price indexes, constant US$ (2010 = 100) 1974 World Food Summit ... Source: FAO (2016), The State of Agricultural Commodity