Food Security, Food Prices and Climate Variability

Molly Brown

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781135096335
• Edition: 1
• Topic: Commerce
• Subtopic: Agrobusiness

The agriculture system is under pressure to increase production every year as global population expands and more people move from a diet mostly made up of grains, to one with more meat, dairy and processed foods. This book uses a decade of primary research to examine how weather and climate, as measured by variations in the growing season using satellite remote sensing, has affected agricultural production, food prices and access to food in food-insecure regions of the world.

The author reviews environmental, economics and multidisciplinary research to describe the connection between global environmental change, changing weather conditions and local staple food price variability. The context of the analysis is the humanitarian aid community, using the guidance of the USAID Famine Early Warning Systems Network and the United Nation's World Food Program in their response to food security crises. These organizations have worked over the past three decades to provide baseline information on food production through satellite remote sensing data and agricultural yield models, as well as assessments of food access through a food price database. These datasets are used to describe the connection, and to demonstrate the importance of these metrics in overall outcomes in food-insecure communities.

1

FOOD SECURITY, FOOD PRICES AND CLIMATE VARIABILITY

Introduction

High food prices are a concern for all families, but are particularly difficult for the poor who struggle to purchase enough food for their daily needs even when prices are low. For farming families, food prices affect household income as well as expenditures, since they grow food for sale as well as for their own consumption. Weather-related production variability is also a source of income uncertainty for farmers, and when food prices are high and production fails, these households will have particular difficulties obtaining enough food for three meals a day. In this book, the inter-relationships among food prices, food security and the variability of food production due to climate and weather are examined.

The Earth observation data record from satellites is now three decades long, providing robust, spatially explicit, high quality datasets that can be used to determine growing conditions across continents. Droughts, floods or other extreme weather events that affect agricultural yield and ultimately food production can be observed using satellite remote sensing data. Remote sensing uses instruments mounted on satellites or in planes to produce images or scenes of the Earth’s surface, and is part of a suite of tools that provide up-to-date and quantitative information about land conditions to decision makers. These datasets serve as the basis for understanding trends and extremes of weather that impact the availability of food over large areas. Climate variability can be quantified by satellite data and used to estimate the likely impact on agricultural and economic systems.

Unusually or prohibitively high local food prices are a primary cause of food insecurity in the world. Information on food prices can enable diagnosis of market functioning, weather-related production shortfalls, and changes in accessibility of food across wide areas. These are all warnings of food security problems that policy makers should respond to, but may not be visible through other sources of information due to the complexity of the food system. Integrating climate-related shocks into food price analysis should be a new source of information for policy makers in their efforts to protect the most vulnerable from food security threats.

Climate variability is defined as seasonal, annual, interannual or several years-long variations in temperature and precipitation around an average condition defined over several decades. Climate variability can affect agricultural growing conditions both positively and negatively. As our climate changes, farmers will experience increased variability, with a heightened risk of both floods and droughts (Wetherald and Manabe, 2002; IPCC, 2007). Both positive and negative extreme events may affect agricultural production and therefore food security. Large-scale reductions in rainfall and food production across semi-arid regions of Africa were a proximate driver of the extreme food security crises of the 1970s and 1980s (von Braun et al., 1998). Dramatic increases in food production over short periods without simultaneous improvements in transportation or market outlets may cause wholesale drops in food prices and rotting of excess grain in storage facilities, causing reductions in the income of small farmers (Sharma, 2013). Without anticipation of climate extremes, poor planning and inadequate policy response by governments in developing countries could exacerbate household food insecurity over large areas.

The World Food Summit of 1996 defined food security as existing when “all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life” (UN, 1996). Four conditions must be fulfilled simultaneously to ensure food security: food must be available, each person must have access to it, the food consumed must fulfill nutritional requirements, and access must be stable enough throughout the life of the person to ensure health. These elements are hierarchical and build on one another. Having food stocks in a region is not enough to ensure universal access to that food, and even if a household has access to available food, its members may be too sick to use the food effectively to attain an active and healthy life. Finally, availability, access and utilization of food must be maintained throughout the life of each person for food security to be achieved (Barrett, 2010).

Access to the food that is present in a community depends on the range of choices available to an individual or household, given the prevailing price of food, their income and the existing formal or informal safety net arrangements (Sen, 1981). When demand for food is stable, then access to food reflects the society’s distribution of wealth and access to resources. When prices are high or change rapidly, the poor suffer the most since they spend most of their income on food and have no cushion against rising prices. The urban poor, who buy all their food, are particularly vulnerable. Food price spikes, or a rapid increase in the price of food over a few months, can have large and potentially irreversible impacts on social welfare, including impacts on health, nutrition, schooling, child labor and savings (Grosh et al., 2008). Maintaining adequate consumption and defending assets in the face of rapid price increases can be enormously challenging for all except the most well off, particularly in countries whose populations already spend over half their income on food.

The price of food in a local market is determined by the supply of food as well as demand. Since everyone needs to eat every day, demand is fairly constant whereas supply can be widely variable, particularly in developing countries whose food production struggles to keep pace with demand. Since countries with large food insecure populations also are characterized by economies with large numbers of semi-subsistence farmers and small field sizes, widespread weather shocks to production can have a significant effect on the amount of food a country has to feed its population. Weather shocks impact the income of these farming households as well as their expenditures, increasing the demand for food in small local markets during a time of restricted supply. Even in normal years, local markets are susceptible to seasonality of the cereal supply (abundant after harvest, scarce during the growing season) and in the price of food (high during the growing season, low after harvest) reducing food security every year when farmers are using the most energy and need the most food.

Economic analysis of market price dynamics and market functioning is a critical part of how we understand the impact of weather extremes on food security. In many food insecure regions, small open-air markets function poorly and are isolated from capital city and international commodity markets. Expensive and inadequate rural transportation infrastructure, high transaction costs and inadequate legal frameworks contribute to low levels of participation in the market by many subsistence farmers. When local food production is affected by weather shocks, lack of well-functioning local markets severely reduces the ability of farmers to buy food from outside a weather-affected area at a reasonable cost.

Given the impact of food production and weather on the price of food, the need for integrated estimates of these are compelling. It has become increasingly clear that food security crises are far more related to market conditions than to weather shocks directly. If we can use models to understand the impact of droughts and other weather shocks on likely future price changes, we can amend food policies and craft better, more effective response to food security crises that are based both on markets and on agricultural dynamics.

Economic models can be used to characterize the impact of external shocks on local food markets and the communities that rely upon them (Kshirsagar and Brown, 2013). By characterizing the interaction between agricultural production and international prices on local food prices, our knowledge of how best to assess and respond to food security problems of communities across the world will be improved. This book explores the connection and interaction between climate variability, food prices and food security, using environmental information on the past three decades from satellite remote sensing to understand changes in food production and observations of food prices in small, local markets. Putting these datasets together using a quantitative model that exploits past observations, we can gain insight into the likely effect of future changes in climate and climate variability on food security in vulnerable regions.

Objectives

This book focuses on synthesizing basic research that describes the linkages among climate variability, food prices and food security in developing countries. The objective is to strengthen our understanding of the impact of climate variability on the price of food for vulnerable populations. Improved use of existing data by the early warning and humanitarian communities can make a big difference in how international organizations respond to food security crises.

By quantitatively connecting climate variability to food prices using a modeling framework, researchers and analysts can provide insights that will help early warning organizations recommend appropriate responses to high food prices and low food production. Developing a production–price model will allow early estimation of the impact of drought on food prices in markets as well as the likely geographic extent of these impacts. This book seeks to answer the following questions:

• How do climate variability and weather extremes influence local prices and access to food?

• Which food markets are most vulnerable to weather-related production shocks? Are these markets in regions with food security problems?

• How do global commodity prices impact local food prices and food security in a region?

• Can we use satellite observations to relate the biophysical response of plants due to climate variability to yield and overall food production?

• Do local food prices respond to agriculturally relevant weather shocks in food insecure regions?

• Can nutrition outcomes be linked to climate variability and food price volatility using data and analysis?

• What monitoring, analysis and policy changes are needed in the global humanitarian system to respond to the links between climate, weather and food prices in food insecure countries?

Geographic focus

Although the focus of the book is on global issues of food security, many examples and data-sets are from Africa. Africa has the most widely documented severe food security problems, and has captured the focus of the international community. When drought occurs and food production suffers, local food markets in Africa are poorly supplied and the impact of these events can be seen in the food price time series. Because as a region, it has many governmental and non-governmental organizations working on alleviating food security problems, there is a lot of effort put into gathering and posting in publicly accessible databases food price information. Famine early warning systems are one of the primary actors in food security assessment and contribute to this work through the gathering and distribution of food price information in Africa.

Early warning of food security crises involves a chain of information communication systems that link observations of the determinants of food security to decision makers and then actors who can respond to those crises. The US Agency for International Development’s (USAID) Famine Early Warning Systems Network (FEWS NET), the United Nations Global Information and Early Warning System (GIEWS) and other local, regional and national early warning systems work to provide timely and actionable information on food security crises to those whose responsibility it is to respond. These organizations routinely collect food prices and information on agriculturally relevant weather conditions, and assess the food security situation in affected communities. But they lack the analytical framework to link the information together in a quantitative way, since the links between weather and food prices can be obscure (Barrett and Maxwell, 2005; Brown, 2008a).

Plate 1 shows the extent of the global food price information currently available from the United Nations and USAID. Note that many of the time series, particularly outside capital cities, are in Africa. These datasets are gathered and distributed to improve response to food security crises, and thus are more comprehensive in regions where emergency food aid is more likely to be distributed. Regions with comprehensive, effective, government-led food price stabilization policies, such as India, Pakistan and China, are in general excluded from this book. Because the focus is the interaction between food prices, food security and climate variability, if food prices are artificially controlled, then different analytical methods from those presented here must be used to study the effect of production variability on household income and security.

Early warning organizations are a target for the research, approaches and analysis provided in this book. The author has worked with FEWS NET and has studied its methods and data for the past decade, and thus many of the examples and datasets used here are derived from the system. It is one of the best known and most influential of the early warning systems, and it works to move research from theory to practice rapidly when it has been shown to be of use (Brown et al., 2007; Funk et al., 2007; Husak et al., 2013). The system and its partners are also the focus for potential adoption of the relationships and models explained here. If a better integration of biophysical and socio-economic drivers of food insecurity can be achieved, then more effective and timely information on the causes and appropriate responses to food security crises can be provided for decision makers seeking to respond to crises before they harm human welfare and development.

Income and food prices

Food prices are relevant to food security through their impact on constraining household food consumption when prices rise but incomes do not (Benin and Randriamamonjy, 2008; Brown, 2008b; Dangour et al., 2012). Household incomes in developing countries are affected by many factors, including family size, number of employed or economically active family members, returns on investments and savings, and other factors. In many developing countries, rural household incomes are made up of many entitlements and assets that are not monetized, such as loans and gifts of food from relatives and friends, productive resources such as land, farm implements and seed stock, livestock, and natural resources in the public domain. Purchasing food on the market, however, requires cash, which is problematic to obtain if most of the household’s assets are non-monetary. Households that grow food for their own consumption may have substantial assets such as land, farming equipment, livestock and housing, but converting these assets to cash will require a market or purchaser that is within the area where the farmer lives. During times of drought or crisis, farming households may grow only a fraction of the food they need for the year. If many farmers in a region are in need of cash because their crops also failed, the value of assets that can be sold to buy food will be affected because of a lack of demand (Sen, 1981). Simultaneously, the cost of purchasing food can increase substantially, reducing access to food across wide areas. This widespread, geographically coherent effect of weather on market prices can be anticipated with appropriate observations and models.

Food prices matter for food security outcomes since large proportions of households acquire some or all of their food from the market, even in good agricultural years (Godfrey et al., 2010; Pinstrup-Andersen, 2009). Figure 1.1 shows estimates of a...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Acknowledgments
• List of abbreviations
• 1 Food security, food prices and climate variability
• 2 Food security and monitoring systems
• 3 Climate variability, agriculture and remote sensing
• 4 Trends in national food security and the impact of climate
• 5 Markets and determinants of food prices
• 6 Food prices and seasonality
• 7 Modeling the impact of climate variability on local food prices
• 8 Environmental and nutrition outcomes
• 9 Policy implications of price dynamics and the way forward
• Index