National and Regional Self-Sufficiency Goals: Implications for International Agriculture 9781685851569

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National and Regional Self-Sufficiency Goals

National and Régional Self-Sufficiency Goals Implications for International Agriculture

edited by

Fred J. Ruppel Earl D. Kellogg

Lynne Rienner Publishers

•

Boulder & London

Published in the United States of America in 1991 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1991 by Lynne Rienner Publishers, Inc. All rights reserved

Library of Congress Cataloging-in-Publication Data National and regional self-sufficiency goals : implications for international agriculture / edited by Fred J. Ruppel and Earl D. Kellogg. p. cm. Includes bibliographical references and index. ISBN 1-55587-152-6 (alk. paper) 1. Food supply—Developing countries. 2. Agricultural productivity—Developing countries. 3. Produce trade—Developing countries. 4. Agriculture and state—Developing countries. I. Ruppel, Fred J. H. Kellogg, Earl D. HD9018.D44N38 1991 338.1'8—dc20 90-25593 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984.

Contents List of Tables and Figures

vii

PART 1 INTRODUCTION

An Introduction to Agricultural Self-Sufficiency Issues Earl D. Kellogg and Fred J. Ruppel

3

Conceptual Issues in Analyzing the Economics of Agricultural and Food Self-Sufficiency John M. Staatz

13

Mechanisms for Achieving Food Self-Sufficiency E. Wesley F. Peterson

27

PART 2 REGIONAL STUDIES

Self-Sufficiency in Latin America andNamatieTraore

Douglas H. Graham 47

The Evolution of Food Self-Sufficiency Policies in West Africa John M. Staatz and Jennifer B. Wohl

65

Food Security Policy Options in Eastern and Southern Africa Mandivamba Rukuni and Carl K. Eicher

89

Food Self-Sufficiency and Food Security in India: Achievements and Contradictions Alain de Janvry and Elisabeth Sadoulet

107

Agricultural Self-Sufficiency in Southeast Asia: Malaysia and Thailand Ellen Fitzpatrick

121

Agricultural Self-Sufficiency in Developed Countries Stephen C. Schmidt

141

V

vi

CONTENTS

PART 3 FURTHER ISSUES

10 Dynamics of Self-Sufficiency and Income Growth Norman Rask

167

11 Structural Change in Food Demand and National Food Self-Sufficiency Goals LaurianJ. Unnevehr

181

12 International Agricultural Trade and Food Self-Sufficiency FredJ.Ruppel

197

13 Structural Adjustment and Food Security in Developing Countries E. Wesley F. Peterson

215

PART 4 CONCLUSION

14 An Overview of Agricultural Self-Sufficiency in Developing Countries Earl D. Kellogg

231

About the Contributors Index About the Book

243 245 251

Tables and Figures TABLES

1.1 1.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

Nominal Value of U.S. Agricultural Exports and Imports, by Selected Fiscal Years Nominal Value of U.S. Agricultural Exports, Calendar Years 1975-1989 Average Levels of Consumption, Production, and SelfSufficiency in Cereal Products for Twenty-four Latin American Countries for Selected Periods, 1961-1985 Average Levels of Consumption, Production, and SelfSufficiency in Livestock Products for Twenty-four Latin American Countries for Selected Periods, 1961-1985 Profile of Self-Sufficiency in Cereal Products for Twentyfour Latin American Countries for Selected Periods, 1961-1985, by Level of Self-Sufficiency Profile of Self-Sufficiency in Livestock Products for Twentyfour Latin American Countries for Selected Periods, 1961-1985, by Level of Self-Sufficiency Number of Latin American Countries with Increases and Declines in per Capita Production and Self-Sufficiency Indicators in Average Annual Period Growth Compared to Previous Period Average for Cereal Products Selected Profile of Trends in Production per Capita and SelfSufficiency in Cereal Products for Twenty Latin American Countries for the Period 1961-1985 Cereal Self-Sufficiency Ratios for Latin American Countries Experiencing Long-run Increases or Modest Declines in SelfSufficiency in Cereal Products for the Period 1961-1985 Cereal Self-Sufficiency Ratios for Latin American Countries Generally Experiencing a Major Long-run Decline in SelfSufficiency in Cereal Products for the Period 1961-1985

vii

5 6

49

49

51

51

52

54

55

55

TABLES AND FIGURES

4.9

4.10

4.11

4.12

5.1 5.2 5.3

Consumption and Production per Capita of Cereal Products and Self-Sufficiency Indicators for Selected Cereal Products for Oil-Exporting Countries, 1961-1985 Consumption and Production per Capita of Cereal Products and Self-Sufficiency Indicators for Selected Cereal Products for Selected Oil-Importing Countries, 1961-1985 Consumption and Production per Capita of Cereal Products and Self-Sufficiency Indicators for Selected Cereal Products for Selected Central American Countries, 1961-1985 Changes in Production per Capita and Self-Sufficiency in Average Decadal Level Compared to Previous Period Average in Cereal Products for Twenty Latin American and Twelve Asian Countries for the Decades 1966-1975 and 1976-1985 Comparative Evolution of the West African Food Situation, 1948-1985 Indicators of Nigeria's Foreign Agricultural Trade, 1963-1988 Trends in Cereals Self-Sufficiency in Major Sahelian Countries, 1974/75-1988/89

58

59

61

62

66 69 76

7.1 7.2 7.3

Basic Statistics on Food Grains in India, 1951-1987 Agriculture in Indian Trade, 1957-1985 Income and Price Statistics, 1951-1985

111 112 117

8.1

Self-Sufficiency Ratios

122

9.1

Foodgrains, Feedgrains, and Meat Self-Sufficiency in Selected Developed Market Economy Countries Developed Countries: Producer Subsidy Equivalents, 1982-1986 Average Projected Real International Price Effects of a Phased Liberalization of Food Markets in Industrial Market Economies, 1988-1990 and 1995

9.2 9.3

10.1 10.2

11.1 11.2

Representative Cereal Equivalent Conversion Factors Per Capita GNP and Annual per Capita Food Consumption in Cereal Equivalents for Selected Countries, 1961 and 1985 Results of Regressions of Meat Consumption on Income in Ninety-seven Countries Meat Elasticities Among Countries at Different Stages of Development

143 154

158 171 173

183 184

TABLES AND FIGURES

11.3

ix

11.5

Coarse Grain, Feed Use, and Maize Self-Sufficiency Ratios by Level of per Capita Income for Developing Countries Average Structural Change in Food Demand: An Example from the Republic of Korea Summary of Welfare Effects of Increase in Feed Demand

12.1

Average Annual Percentage Changes in World Grain Trade

199

13.1 13.2

Selected Commodity Prices, 1970-1980 Current Account Balances, Debt, and Debt-Service Ratios for Selected Countries, 1970 and 1986

217

11.4

187 188 193

219

FIGURES

3.1 3.2

The Market for Food in a Small Country Producer Price Supports

7.1 7.2

Per Capita Foodgrains Supply and Availability Foodgrains Imports and Stocks

113 115

10.1 10.2

Food Consumption and Income, 1961-1985 Food Consumption and Income by Level of Agricultural Self-Sufficiency Food Consumption and Income by World Population Breakdown Agricultural Self-Sufficiency, 1961-1985

174

10.3 10.4 11.1 11.2

12.1 12.2 12.3

14.1 14.2

A Model of the Market for Meat and the Derived Demand for Feed in a Developing Country A Model of the Coarse Grains Market in a Developing Country World Trade in Total Grains, 1960/61 to 1989/90 General Equilibrium Analysis of International Trade Impacts on Domestic Markets Partial Equilibrium Analysis of International Trade Impacts on Domestic Markets Self-Sufficiency Ratios for Grains in Developing Countries, 1961-1987 Self-Sufficiency Ratio for Grains by Income Class of Developing Countries, 1961-1987

29 32

175 177 178

190 191 198 201 202

234 236

part one

INTRODUCTION

chapter one

An Introduction to Agricultural Self-Sufficiency Issues

Earl D. Kellogg Fred J. Ruppel

The drive for agricultural and food self-sufficiency has been an important force in the post-World War II international economic scene. The goals of food self-sufficicncy and agricultural export promotion have been prominent in political and economic agendas of many nations—both high- and lowincome. Although the allocation of public and private resources to achieve these goals often has not been commensurate with the political rhetoric, the call for agricultural self-sufficiency and export promotion continues to be articulated in many national plans and political agendas. THE IMPETUS TO ACHIEVE AGRICULTURAL SELF-SUFFICIENCY IN DEVELOPING COUNTRIES

Agricultural self-sufficiency has become an important goal in many developing countries. As developing nations gained independence in the 1950s and 1960s, economic development became a primary focus along with goals of national consolidation and public sector development. Many approaches for achieving economic development in developing countries were presented and tried. Not much emphasis was given to agricultural development in the approaches discussed in the 1950s, but increased attention to agriculture did occur in the 1960s for a number of reasons.1 Agriculture was the largest economic sector in most of these developing countries. To increase national and per capita incomes, something had to be done about agriculture, because in many countries 50 to 75 percent of the people depended on that sector for their livelihood, and 40 to 60 percent of the national income was produced in the agricultural sector. Agriculture was such a dominant sector that overall economic development was difficult to achieve without agricultural development. The agricultural sector also had important contributions to make to the process of structural transformation and overall economic development (Johnston and Mellor 1961). Agriculture could provide labor, capital, foreign exchange, and food, 3

4

INTRODUCTION

and could become a market for goods produced in the nonagricultural sector. As populations began to grow rapidly and urbanization occurred, many developing countries began to rapidly increase their imports of agricultural products. Imports of major food staples by developing countries increased by 84 percent between 1966-1970 and 1976-1980 (Paulino 1986). During the same time period, these imports increased by 186, 140, and 123 percent in North Africa/Middle East, Sub-Saharan Africa, and Latin America, respectively. Net imports (imports minus exports) of major food staples by developing countries tripled between the late 1960s and the early 1980s. This "drain" on foreign exchange caused severe problems regarding developing countries' abilities to import needed capital goods for structural transformation. Therefore, conserving foreign exchange for goods other than agricultural imports was another important reason why agricultural selfsufficiency became an important policy goal in many developing countries. DEVELOPED NATIONS' CONCERNS ABOUT SELF-SUFFICIENCY IN DEVELOPING COUNTRIES

Food imports in developing countries have come primarily from North America, Western Europe, and Australia, with the United States being the largest agricultural exporting country. Developing nations' agricultural selfsufficiency goals have caused concerns among agricultural groups in some developed nations, particularly the United States. These concerns are based on the belief that efforts to increase agricultural self-sufficiency in developing nations will be successful and will reduce their imports of agricultural products. To understand these concerns within the United States requires an understanding of changes in U.S. agricultural exports over time. U.S. agricultural exports increased (in nominal dollars) from $4.6 billion in FY 1960 to $39.7 billion in FY 1989—an increase of over 750 percent (Table 1.1). U.S. agricultural exports did not increase evenly throughout this 30year period. The value of U.S. agricultural exports grew steadily during the 1960s and 1970s, peaking in 1981 at $43.3 billion (Table 1.2). Then, between 1981 and 1986, U.S. agricultural export values declined by 40 percent. Only in later years did these values increase again. During the mid1970s and 1980s, agricultural exports were an important component of farm income for several commodities, and any actions that might have threatened the U.S. agricultural export market were of serious concern to U.S. agricultural groups. The proportion of U.S. agricultural exports going to various country groups has also changed. In CY 1975-1977, an average of 31.7 percent of all U.S. agricultural exports went to developing countries, whereas in CY 19871989, the average was 41.1 percent. Concerns in the United States about

5

AGRICULTURAL SELF-SUFFICIENCY

Table 1.1 Nominal Value of US Agricultural Exports and Imports, by Selected Fiscal Years (million US dollars)

US agricultural exports US agricultural imports

1960

1970

1980

1989

1960-1989 Increase (percent)

4,628 4,010

6,958 5,686

40,481 17,276

39,651 21,479

757 436

Source: USDA, Economic Research Service, Foreign Agricultural Trade of the United States, various issues.

agricultural self-sufficiency in developing countries are partially based on the following three trends (abstracted from information in preceding paragraphs): 1. 2.

3.

Agricultural exports have become more important to the U.S. agricultural economy in the 1970s and 1980s. Developing country markets have become an important market segment for U.S. agricultural exports, and they are continuing to grow in importance. The declines in U.S. agricultural exports between 1981 and 1986 have been interpreted by some groups as being caused by the agricultural self-sufficiency policies of developing countries.

Because of these trends in U.S. agricultural exports, agricultural and food self-sufficiency policies of developing countries are of major concern to the U.S. agricultural community. These concerns have led to political action by U.S. farm organizations, including efforts to restrict agricultural development programs of U.S. and international development assistance and lending institutions. 2 The concerns of agricultural exporting nations about agricultural selfsufficiency policies of developing countries may not be well founded for a number of reasons. First, the historical record shows developing countries are becoming less self-sufficient in agriculture rather than more. Although this is true for both food and feed grains, the trend of reduced self-sufficiency is particularly pronounced for feed grains (Vocke 1988). Second, with rapid population growth, moderate income growth, and relatively high income elasticities of demand for agricultural products, developing countries face potentially high rates of growth in demand for agricultural products. These factors combined could cause agricultural demand to increase by 3.5-4.5 percent annually. By contrast, in the past ten years, developing countries have increased their agricultural production by only 2.6 percent per year (USDA 1988). Hence, developing countries are unlikely to be able to attain overall self-sufficiency in agricultural production unless they

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FURTHER ISSUES

prices restrict consumers from expressing a food demand more commensurate with their high income levels. It seems reasonable to assume that food imports in Japan would be substantially greater (and food self-sufficiency substantially lower) if policies in that country allowed food prices to approximate international levels. Approximately one-half of the world's population lives in countries with income levels of less than $400 GNP per capita, essentially at beginning development levels (Figure 10.3). Another 35 percent live in countries that are in the rapid food consumption growth stage with incomes of $400-6,000 per year. In these countries, a significant proportion of any increase in per capita income will be translated into an increased demand for food. Only 15 percent of the world's population has a per capita food demand that is largely satiated. Countries with income levels in excess of $6,000 GNP per capita are found principally in Europe and North America. These countries have adequate to surplus land resources and climates favorable to forage and feedgrain production—factors that favor production of beef, which, in turn, is the least efficient converter of cereals to meat products. It is probable that as developing countries in more tropical environments increase their consumption levels they will turn more to poultry and pork and less to beef. Many of these developing countries will need to import corn and other feedgrains, at costs substantially greater than those that presently exist in the exporting countries of North America and Europe. These exporting countries currently constitute the high consumption phase of the sample. As more countries pass through the development phases, the income-consumption curve shown in Figure 10.1 will probably plateau at a slightly lower level. The pace of economic development in the less developed countries and the degree to which this development is translated into personal income will determine the extent of growth in food demand. If development efforts are successful, the increased food needs could be substantial and will require both agricultural production growth in developing societies as well as expanded world food trade. THE DYNAMICS OF SELF-SUFFICIENCY The dynamics of agricultural self-sufficiency in countries experiencing rapid income growth demonstrates clearly the inability of agricultural production to accompany consumption increases in most low- and middle-income countries (Table 10.2 and Figure 10.4). In these countries, self-sufficiency has declined substantially as incomes have grown. In contrast, high-income countries show rising levels of self-sufficiency as productivity of agriculture continues to grow, and consumption increases are limited largely to population growth, which itself has slowed. In summary, it is possible to identify three general stages of agricultural self-sufficiency as countries pass through the development process. First, at

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FURTHER ISSUES

The evolution of international economic conditions contributed substantially to the financial problems encountered by many developing countries in the 1980s. However, it can also be argued that the policies of the developing countries themselves were partially responsible for their predicament. Many economists argue that developing countries have instituted policies that favor urban consumers at the expense of rural food producers (Johnson 1987; Mellor 1988). These policies include overvalued exchange rates, direct consumer subsidies for food and other necessities, taxation of exported farm products, and protection of domestic industries from foreign competition (Johnson 1987). An overvalued exchange rate means that imported goods are relatively less expensive, and it contributes to an objective of insuring that urban consumers are able to obtain food and other necessities at low prices. Although this policy satisfies the political need to prevent the erosion of urban real incomes, it has the disadvantage of raising prices of exported goods in terms of foreign currencies, thereby dampening demand. As noted earlier, many of the exports from developing countries are primary commodities often produced by smallholder agriculturalists. Direct consumer subsidies are often used to lower prices still further. Policies of this nature, however, can be costly, particularly in low-income countries where resources to finance the government budget are limited. One way to raise government revenue is to tax exports. Export taxes, however, further reduce the prices received by producers of exportable goods (Timmer 1986). Finally, many developing countries have attempted to promote industrialization through strategies based on import substitution and protection of infant industries. Policies of this nature have the effect of raising the prices of industrial goods within the country. Johnson (1987) noted that many industrial goods (such as fertilizer) are destined for agricultural producers who end up having little incentive to purchase them because of their relatively high price combined with the depressed prices producers receive for their output. In addition, because developing countries frequently lack well-developed capital markets, the main sources of investment capital for these industries are foreign investors and the government. In many instances, governments have established semigovernmental firms, often referred to as parastatals. These firms are often less efficient than private companies because they rely on government subsidies for support. Parastatals can thus become a further drain on the government budget. Of course, the particular set of circumstances that led to debt and payments problems varied in different countries. This point is well illustrated by the very different experiences of several countries in West Africa described by Staatz and Wohl in Chapter 5. Nevertheless, the general outcome was similar throughout the Third World. Government budget deficits financed by expansion of the money supply led to high inflation rates. In some countries, government budget deficits were more than 10 percent of GNP (Table 13.2). Reluctance to devalue the currency as internal prices rose exacerbated balance-

DEVELOPING COUNTRIES

221

of-payments deficits and depleted foreign exchange reserves. Part of the deficit in the balances of payments of these countries was due to capital outflows to service debt incurred during the 1970s. Because credit had been so readily available, inadequate attention may have been paid to the nature of the projects being financed. Unsound projects do not generate the revenues needed to service the debt used to finance them. Consequently, much of the debt servicing had to be financed from traditional export revenues, or additional borrowing if these traditional sources were insufficient. Debt service charges in some countries rose to more than one-half of the value of total exports (Table 13.2). Of course, borrowing to service debt is an unsustainable strategy, and realization of this fact triggered the financial crises of the 1980s. STRUCTURAL ADJUSTMENT PROGRAMS AND FOOD SECURITY

As these crises developed, the IMF established special funds and other facilities to deal with the problems (Kaibni 1988). The most important function of the IMF is to assist member countries in dealing with balance-ofpayments deficits. If the deficit is expected to be temporary, the IMF will generally lend financial resources to the country until the problem is resolved. If the payments deficit appears to stem from more fundamental problems, it is not likely to be resolved by short-term loans. In these cases, the IMF makes resources available only if the country agrees to correct the fundamental problems causing the recurrent payments deficits (Dethier 1987). This is the concept of conditionality, which is the basis for structural adjustment programs. The World Bank is the other international institution involved in these programs. Traditionally, the World Bank has focused on providing loans to finance development projects. In the 1980s, however, the Bank began making loans to help support structural and sectoral adjustment (Nicholas 1988). These loans are also conditional on agreement to reform policies and are designed to ease the transition to a more liberal policy setting. Typical structural adjustment programs include a number of reforms. To control inflation, countries are required to reduce government budget deficits and restrict the growth of the money supply (Dethier 1987). Reducing public sector deficits requires some combination of measures to increase government revenue and reduce government expenditure. Frequently, costly food subsidies and public sector wage bills are targeted as means to limit government expenditures. Another measure generally included in structural reform programs is currency depreciation. This measure is expected to have a direct impact on the balance-of-payments deficit by making a country's exports more competitive on world markets and reducing demand for imports through an increase in their prices. Of course, if a country is highly dependent on imported goods, the increase in import prices will contribute to inflation,

222

FURTHER ISSUES

making it necessary to pursue even more rigorous austerity policies for the domestic economy. Reduction in budget deficits is often referred to as an "expenditurereducing" policy, whereas depreciation coupled with reductions in the levels of protection is referred to as "expenditure-switching" (Smith 1987). Expenditure-reducing and expenditure-switching policies are the traditional measures recommended by the IMF to manage internal demand. In the 1980s, it became apparent that traditional demand management would not resolve underlying structural problems. Thus, in addition to these conventional measures, the IMF and World Bank have begun requiring pricing reforms expected to improve the efficiency of production (Smith 1987). These supply-side measures often included changes in policies with respect to public and private firms as well as measures noted earlier to eliminate consumer subsidies, freeze public sector wages, and liberalize foreign trade (Dethier 1987). In many cases, privatization of parastatals and other public enteiprises has been made a condition for structural adjustment assistance (Mukhoti 1987). The expectation is that these reforms will lead to a reduction in demand and to an increase in domestic supplies as production becomes more efficient. Most of the measures included in structural adjustment programs are predicated on the assumption that current policies have distorted relative prices, thereby encouraging unsustainable consumption and production patterns. The hope is that elimination of these price distortions will lead to growth and put an end to the recurrent financial crises faced by developing countries. The problem with these notions is that changing the current structure of relative prices in these countries will affect the distribution of income and wealth. Much concern has been expressed that structural adjustment policies will lead to greater income inequality, thereby increasing the extent of poverty in developing countries (Dethier 1987; PinstrupAndersen 1987, 1988). These issues are explored in the remainder of this section. In assessing the impact of structural adjustment programs on the ability of various groups in developing countries to obtain adequate food, it is important to recognize that these countries would have had to undergo some form of adjustment regardless of the actions of the IMF, World Bank, or other donors. As Johnson (1987) noted, IMF conditionality is not invoked unless the state of a country's economy is so bad that it is incapable of resolving its debt and payments problems without outside assistance. In other words, for many countries, the alternative to structural adjustment programs is even greater economic chaos. On the other hand, Pinstrup-Andersen argues that it is difficult to determine whether apparent health and nutritional problems among children in some developing countries were caused by the poor economic performance that led to the structural adjustment programs or by the adjustment programs themselves. He suggested that even if the programs

DEVELOPING COUNTRIES

223

themselves were not the cause, they have not been effective in offsetting the decline in the health and nutritional status of low-income families. Structural adjustment programs have been criticized for their insensitivity to the social and political realities of the developing countries, their emphasis on short-term measures at the expense of longer-term investments, their reliance on questionable assumptions concerning the response of people in developing countries to pricing reforms, and their potential negative impact on low-income households (Weber et al. 1988; Johnson 1987; Shaw and Singer 1988; Pinstrup-Andersen 1987, 1988). Based on the description of structural adjustment programs in the previous section, it is clear that these programs will have significant effects on consumption levels, savings, investment, employment, and prices. Overall, food prices and the prices of imported goods are likely to rise; real wages, particularly those of public sector employees, are likely to fall; and employment in government agencies and public enterprises is likely to be reduced. Changes of this nature will affect various social groups differently. For example, farmers may benefit from higher prices, whereas low-income urban workers may be hurt. An appropriate framework for analyzing these changes is provided by Sen's (1984) notion of entitlement failures. Sen suggested that individual entitlements to sets of commodities depend on initial endowments and "an exchange entitlement mapping . . . which specifies the set of commodity bundles any one of which person i can choose to have through 'exchange' (trade and production)" (Sen 1984, p. 454). Given an initial endowment and the possibilities for exchange open to an individual (the exchange entitlement mapping), an individual will be malnourished if there is no commodity bundle available that contains adequate food, either through exchange or within the initial endowment (Sen 1984, p. 455). It is important to note that exchange entitlement mappings are socially instituted and depend on the particular legal, cultural, and economic characteristics of a given society. Well-nourished individuals may become malnourished if changes lead to an entitlement failure. An entitlement failure can occur through loss of some or all of an initial endowment or through an unfavorable change in exchange entitlements (Sen 1984). Unfavorable changes in exchange entitlements are of particular relevance in assessing the impact of structural adjustment programs. Some individuals will find that the higher prices for food and other necessities mean that they can no longer afford to purchase a nutritionally adequate diet. Those who lose their jobs will find their ability to trade for food seriously attenuated. Pinstrup-Andersen (1988) described an important cause of entitlement failure in developing countries. He pointed out that many low-income families are engaged in the production of goods that are neither exported nor imported. Structural adjustment programs generally lead to increases in the prices of traded goods but have little effect on nontraded goods. Workers producing

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nontradeables are likely to see prices of the goods they purchase rise more rapidly than the prices of the goods they sell. This is an example of an entitlement failure. Conversely, other low-income families rely on in-kind incomes, the real purchasing power of which is not eroded by price increases (Pinstrup-Andersen 1988). These individuals benefit from more secure entitlements. Government services can also form an important part of individual entitlements. If this is the case, cuts in government programs (e.g., food stamps) to balance government budgets can lead to diminished entitlements. Low- and moderate-income households in developing countries are vulnerable to collapses in their entitlements. Structural adjustment may lead to a fall in the standard of living of relatively wealthy families, but these individuals are unlikely to suffer serious declines in their health or nutritional status. As Hopkins (1988) noted, the economic distortions that are to be corrected by the adjustment programs were most likely put in place by governments responding to the political pressure of wealthy and powerful elites pursuing their own special interests. It is unlikely that these groups will agree to absorb all the negative consequences of structural adjustment policies, leading many observers to suggest that it is the poor who bear the greatest burden in adjusting countries (Shaw and Singer 1988). Thus the principal food security issue concerns the effects of adjustment on the entitlements of the poor. Of course, the poor fall into many different social groups in developing countries. Johnson (1987) argued that urban households generally have higher incomes than farm families and that these latter households contain the majority of the poor in developing countries. Others pointed out that many rural households, particularly in Africa, are net purchasers of agricultural staples (Weber et al. 1988). These authors suggested that increased food prices would be of benefit only to the relatively small proportion of well-todo farmers who are net sellers of agricultural products. It should also be noted that, although urban incomes may generally be higher than rural incomes, many city-dwellers live very precarious lives and could be seriously harmed by increased food prices as well as lowered employment and wages in urban areas. The preceding comments suggest that the number of low-income families that benefit or lose from adjustment will depend on the particular social and economic configuration of a country. However, it is certain that some low-income households in every country undergoing structural adjustment will experience further contractions of their entitlements. Estimates of the actual number of people adversely affected by these adjustments would require empirical evidence that is not readily available. Pinstrup-Andersen (1987) presented the results of studies in Chile and Sri Lanka showing decreases in calorie consumption for low-income families at the same time that calorie consumption among upper-income households remained constant or increased. He also cited evidence of deterioration in the

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nutritional status of children in the Philippines as well as increases in malnutrition in Costa Rica, Brazil, and Ghana. All of these countries were involved in structural adjustment programs, some of which included elimination of government-supported health and nutrition programs. It is important to note that causal linkage cannot be inferred from the association between structural adjustment programs and the apparent deterioration of health and nutritional status among low-income households. In particular, nothing in the above results can be interpreted to mean that the countries would have been better off refusing IMF and World Bank assistance. On the other hand, one could argue that international donors should be more concerned with easing the burden of adjustment for the most vulnerable populations. Nicholas (1988) noted that the early World Bank adjustment programs focused mainly on improving efficiency and only recently have they been reoriented toward broader social concerns. Studies by the Bank indicated that the poor in Africa are less likely to be adversely affected by structural adjustment programs than poor in other areas because more of the African low-income families are food producers. These studies also suggested that the poor suffer less if adjustments are undertaken early and in an orderly manner because the negative effects of economic problems become more intractable if there is a delay in attacking them. However, the Bank study also concluded that simply promoting economic growth will not insure that there is not a decline in the well-being of low-income households (Nicholas 1988). In other words, structural adjustment programs need to include provisions specifically targeted at compensating and protecting the poor if a deterioration of their situation is to be avoided. In addition to provisions aimed at maintaining the entitlements of the poor as low-income countries undergo structural adjustment, it may often be necessary to tailor the programs to the particular circumstances of a given country. Several writers have argued that the assumptions underlying these adjustment programs are not valid for many developing countries. For example, raising food prices is expected to stimulate agricultural production, making the country less dependent on imported food, and thereby improving the balance of trade. Smith (1987) and Weber et al. (1988) questioned this reasoning in the case of Africa where the response of marketed surpluses to price increases is often small. Rao (1989) found that the supply response in developing countries is generally low, making price policies somewhat ineffective in stimulating production. Smith (1987) concluded that changing the structure of relative prices will have a greater impact on income distribution than it will on food production. If these results are accurate, raising food prices may not contribute to a solution of the balance-of-payments problem but may lead to entitlement failures for low-income food purchasers. Mukhoti (1987) also criticized the reasoning underlying currency adjustments. He pointed out that the extent to which devaluation improves the balance of payments depends on the way in which producers and

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consumers respond to the change in import prices relative to export prices. For example, firms producing exports may be unable to respond to opportunities to increase exports because of increases in the costs of imported inputs, protectionism in the industrialized countries, or other market imperfections. Likewise, demand for imported goods may not change greatly if a large proportion of these imports are luxury goods destined for a wealthy elite. These special conditions in many developing countries may make devaluation much less effective at correcting balance-of-payments deficits than is generally expected (Mukhoti 1987). CONCLUSIONS

Many developing countries have been forced to undertake painful adjustment programs as their economic situation has deteriorated. The causes of these economic difficulties have much to do with the extraordinary events of the 1970s, many of which were beyond the control of developing country governments. However, these governments had also been pursuing policies that contributed to the crisis. In addition, many of the economic policies of the industrialized countries made the process of adjustment in the Third World more difficult. This is particularly true of the policies affecting agriculture. The United States, Japan, and the European Community protect their agricultural sectors with an array of support prices and trade barriers that lessen the ability of developing countries to expand their agricultural exports (Johnson 1987). In addition, there are barriers to industrial exports from developing countries. All of these factors contributed to the severe crises of the 1980s and the resultant adjustments in developing countries. That these adjustments are painful is evidenced by the extensive social unrest in countries such as Venezuela and Argentina. The response of international donors and agencies such as the IMF and World Bank has been to provide adjustment assistance that is conditional on substantial policy reforms in developing countries. It has been recognized that these structural adjustment programs will have profound effects on prices, wages, income distribution, and poverty. Although the evidence is scattered and inconclusive, it does appear that low-income families are particularly vulnerable to entitlement failures as structural adjustment programs are implemented. It cannot be concluded from these remarks that developing countries should refuse to adjust. Economic adjustment is unavoidable. The purpose of the IMF and World Bank structural adjustment programs is to facilitate this adjustment process. There are two issues of great practical importance in this context. First, it is likely that the poor will suffer disproportionately from structural adjustment unless specific measures are introduced to compensate them for the negative effects of these austerity programs. Several authors have recommended using food aid to insure food security for low-income

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households (Shaw and Singer 1988; Mellor 1988; Stewart 1988). Employment creation, nutritional programs for vulnerable groups such as women and children, and education and training would all be useful elements of programs to maintain and expand the entitlements of low-income families. A second important issue concerns the need to tailor adjustment programs to the special conditions in particular countries. If the amount of food marketed by domestic producers does not increase substantially as prices are raised, it may be preferable to retain such price-depressing policies as food subsidies while devoting more resources to the real problem, which may be infrastructural or technological. In this context, it is important that the IMF, World Bank, and other donors institute systems to monitor the effects of the adjustment programs. Monitoring systems are a critical component of a flexible approach to structural adjustment that allows for modification of the programs in light of their effects. Weber et al. (1988) called for increased empirical analysis of rural economic relationships in order to provide better information for the design of adjustment programs. In conducting the country-specific analyses needed for the effective design, monitoring, and adaptation of structural adjustment programs, food security for low-income households should be of particular concern. Developing countries have to bear the bulk of the social costs of structural adjustments. Through agencies such as the IMF and the World Bank, industrial countries also contribute to the process. Some bilateral agencies such as the U.S. Agency for International Development (USAID) have begun to provide adjustment assistance as well. The role of wealthy nations in facilitating adjustment in the Third World is critical if these countries are to avoid such long-term problems as environmental degradation or an unproductive labor force resulting from inadequate education and childhood nutrition. Of equal importance with the provision of development assistance is the reform of economic policies in the industrial countries themselves. Protectionism in the United States, Europe, and Japan makes it extremely difficult for developing countries to export enough to earn the foreign exchange required to finance needed imports. Dismantling existing trade barriers and resisting the creation of new forms of protection are important elements in achieving balance-of-payments equilibrium in developing countries. There is also a need for the United States to begin a structural adjustment program of its own. The United States is the largest debtor nation in the world. Extensive borrowing to finance continuing government budget deficits contributes to the high real interest rates causing such problems for the Third World. Although reforms in industrialized countries can be politically controversial, the effects of such efforts would be much less disruptive than the potential threat to the well-being of low-income families in developing countries undergoing painful economic adjustment.

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REFERENCES Dethier, Jean-Jacques. "Macroeconomic Adjustment Policies and Income Distribution: The Macroeconomic Relationships." Food and Nutrition Bulletin 9, 1 (1987): 9-23. Hopkins, Raymond F. "The Politics of Adjustment." Food Policy (February 1988): 47-55. International Monetary Fund (IMF). International Financial Statistics, 1986. Washington, D.C.: IMF, 1987. Johnson, D. Gale. "IMF Conditionality and Agriculture in Developing Countries." In The Political Morality of the IMF, edited by Robert J. Myers. New Brunswick, NJ.: Transaction Books, 1987. Kaibni, Nihad M. "Financial Facilities of the IMF and the Food Deficit Countries." Food Policy (February 1988): 73-82. Mellor, John W. "Food Policy, Food Aid and Structural Adjustment Programs." Food Policy (February 1988): 10-17. Mukhoti, Bela. "The International Monetary Fund and Low-Income Countries." United States Department of Agriculture, Economic Research Service, Foreign Agricultural Economics Report No. 224. Washington, D.C., 1987. Nicholas, Peter. "Adjustments and the Poor." Food Policy (February 1988): 8389. Organization for Economic Cooperation and Development (OECD). Development Cooperation in the 1990's. Paris: Organization for Economic Cooperation and Development, 1989. Pinstrup-Andersen, Per. "Macroeconomic Adjustment and Human Nutrition." Food Policy (February 1988): 37-46. . "Macroeconomic Adjustment Policies and Human Nutrition: Available Evidence and Research Needs." Food and Nutrition Bulletin 9, 1 (1987): 6986. Rao, J. M. "Agricultural Supply Response: A Survey." Agricultural Economics 3, 1 (1989): 1-22. Sen, Armartya. Resources, Values and Development. Cambridge, Mass.: Harvard University Press, 1984. Shaw, John, and Hans Singer. "Introduction: Food Policy, Food Aid and Economic Adjustment." Food Policy (February 1988): 2-9. Smith, L. D. "Structural Adjustment, Price Reform and Agricultural Performance in Sub-Sahara Africa." Journal of Agricultural Economics 40, 1 (January 1987): 21-31. Stewart, Frances. "Adjustment with a Human Face: The Role of Food Aid." Food Policy (February 1988): 18-26. Timmer, C. Peter. Getting Prices Right, Ithaca, N.Y.: Cornell University Press, 1986. Valdes, Alberto, and Ammar Siamwalla. "Introduction." In Food Security for Developing Countries, edited by Alberto Valdes. Boulder, Colo.: Westview Press, 1981. Weber, Michael T„ John M. Staatz, John S. Holtzman, Eric Crawford, and Richard H. Bernsten. "Informing Food Security Decisions in Africa: Empirical Analysis and Policy Dialogue." American Journal of Agricultural Economics 70, 5 (1988): 1044-1052. World Bank. World Development Report, 1988. New York: Oxford University Press for the World Bank, 1988.

part four

CONCLUSION

chapter fourteen

An Overview of Agricultural Self-Sufficiency in Developing Countries Earl D. Kellogg The notion of self-sufficiency in agriculture has been attractive to developing countries since the 1950s and 1960s, when many countries gained independence. In this chapter, the record of agricultural self-sufficiency in developing countries is explored in several dimensions—through time, among world regions, by commodity categories, and by country income class. The chapter concludes with a discussion of the rationale for and implementation concerns about self-sufficiency and food security policies. TIME TRENDS AND REGIONAL DIFFERENCES IN SELF-SUFFICIENCY

The record of achievement of national and regional self-sufficiency goals in agriculture has been different depending on time periods and world regions. If one defines the self-sufficiency ratio as the proportion of total consumption accounted for by domestic production and release from domestic stocks, the quantity of imports and exports can be evidence of changes in selfsufficiency. That is, an indication of changes in world aggregate selfsufficiency can be obtained from world agricultural trade trends. As Ruppel indicated in Chapter 12, trade in grains grew moderately in the 1960s (almost 4 percent annually), rapidly in the 1970s (more than 7.5 percent annually), and slowly in the 1980s (less than 1 percent annually). This evidence suggests that the degree of aggregate self-sufficiency during the 1970s changed substantially, but that during the 1980s self-sufficiency has probably not changed as rapidly. In the 1960s, Latin American countries recorded relatively high levels of self-sufficiency in both cereal and livestock products. From the 1970s on, as discussed by Graham and Traore in Chapter 4, the trend in Latin America has been declining self-sufficiency in cereals and stable self-sufficiency ratios for livestock products. The self-sufficiency ratios for the twenty-four Latin American countries did not decline as rapidly in the early 1980s, however, as 231

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they had in the 1970s. As shown in Table 4.12, the record is somewhat different in Asia. Of twelve Asian countries, approximately equal numbers had increases versus decreases in agricultural self-sufficiency between 1961-1965 and 1966-1975. However, between 1966-1975 and 1976-1985, nine of the twelve countries had increases in self-sufficiency ratios in agriculture. For Africa, the self-sufficiency ratio declined substantially in the 1970s and early 1980s. Indications are that the cereal self-sufficiency ratio in Africa may have increased somewhat in the later 1980s, but continues to be less than one. These broad trends mask significant changes in self-sufficiency records of various countries. For example, in Africa, which is considered to have the "worst" record regarding food self-sufficiency, Zimbabwe regularly generates surpluses of white maize (a major food grain), as do Zambia and Tanzania. Also, Nigeria has reduced its net imports of wheat and maize dramatically since 1982 (see Table 5.2), indicating a rise in self-sufficiency in these grains. In summary, it appears the decline in self-sufficiency in developing countries was rapid in the 1970s, but has slowed considerably in the 1980s. The obvious question is why the decline in self-sufficiency seemed to have slowed or reversed in the 1980s. Although the answer, of course, is different for each country, some general trends are apparent. As discussed in many of the previous chapters, changes in selfsufficiency can be attributed either to changes in the domestic quantity supplied (domestic production plus net changes in domestic stocks) or to changes in the quantity consumed. To understand what has happened in the 1980s in the aggregate for developing countries we must look at forces that define these quantities supplied and consumed during the decade. Agricultural production growth in developing countries during the 1980s could be one reason for the slowing trend in declining self-sufficiency in developing countries. That is, the explanation for increasing self-sufficiency ratios could be that domestic production has increased faster than domestic demand. However, this has not occurred in the aggregate for developing countries. With per capita agricultural production in developing countries at an average index of 100 for 1979-1981, the 1986-1988 average index had dropped to 99.5 (FAO 1989). That is, increases in per capita agricultural production have not occurred in the 1980s in developing countries and consequently do not explain the relative increases in self-sufficiency that have been observed. Much of this leveling off of declines in agricultural self-sufficiency in developing countries can be explained on the demand side. The economic record in the 1980s has been difficult and unusual for many developing countries, so much so that Mellor (1989) has referred to the economic performance of the 1980s as an aberration. The interaction of several factors had a dampening effect on economic growth in developing countries in the early to mid-1980s. The second oil shock increased energy and petroleum

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prices in developing countries, thereby requiring larger amounts of already scarce foreign exchange to import needed oil supplies and products. High real interest rates also required increasing amounts of foreign exchange to meet debt payments on increasing debt values (see Table 13.2). Real interest rates in the 1980s were five times higher than in the 1970s and about twice as high as in the 1960s (World Bank 1990). In contrast, the terms of trade for many developing country primary products were declining throughout the 1980s, and internal prices of many agricultural products were further distorted by policy interventions in developing countries (World Bank 1990). These and other factors, such as grossly unbalanced public budgets, brought increasing pressure inside many developing countries to restructure policies and development strategies. The restructuring policies that were internally adopted (and externally demanded of developing countries through conditionality terms for further loans) temporarily slowed growth in developing countries. In addition, spillover effects leading to slower growth in developed countries reduced export opportunities for many developing countries. All of these factors resulted in a reduction in overall economic growth, little progress on reducing poverty, and diminished growth in the demand for food. As Mellor (1989) indicated, "These circumstances provided an illusion of food self-sufficiency in many developing countries." These circumstances were particularly difficult for countries in subSaharan Africa, the Middle East and North Africa, and Latin America and the Caribbean. During the 1980s, real per capita gross domestic product declined by 2.2 percent in sub-Saharan Africa, was essentially constant in the Middle East and North Africa, and declined by 0.6 percent in Latin America (World Bank 1990). Both South and East Asia fared much better in terms of economic performance in the 1980s. SELF-SUFFICIENCY BY COMMODITY CATEGORIES AND INCOME LEVELS

The self-sufficiency record in developing countries also differs by class of commodity and income level of the countries. Figure 14.1 indicates that the self-sufficiency ratio in foodgrains has been below one for developing countries during the entire thirty-year period 1960-1989, with a pronounced downward trend in foodgrain self-sufficiency throughout the period (Vocke 1990). For coarse grains, the decline in self-sufficiency has been even greater. This outcome results from a slower rate of productivity improvement in developing countries in these commodities, in addition to the rapidly increasing demand for livestock products and, hence, coarse grain feed demand that occurs with rising incomes. This phenomenon, as discussed by Rask and Unnevehr in Chapters 10 and 11, was particularly evident in the 1970s. For both food- and feedgrains, the self-sufficiency ratios have been relatively stable in the 1980s after substantial declines in the 1970s.

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Ratio (1 = self-sufficiency) 1.2

Feed grains

2000

Source: Vocke (1990, fig. 5). Note: Ratio is grain production divided by the sum of grain production and net imports.

Figure 14.1 Self-Sufficiency Ratios for Grains In Developing Countries, 1961-1987

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The self-sufficiency record for grains among developing countries also varies by income class. For low-income developing countries, the grain selfsufficiency ratio has been slightly below one and relatively constant from 1961 to 1987 (Figure 14.2). For middle-income developing countries, the self-sufficiency ratio was below one and relatively constant in the 1960s, but fell in the 1970s before increasing slightly in the 1980s. For the highestincome developing countries—the newly industrialized countries—the selfsufficiency ratio has declined steadily, from greater than one in the 1960s to less than 0.8 in 1987. These figures confirm the relationships discussed in Chapter 10 regarding self-sufficiency and income growth. If incomes continue to grow and developing countries move to higher income categories, grain self-sufficiency, particularly in coarse grains, is likely to continue to decline. However, should incomes in developing countries decline, consumers could again alter their diets, substantially decreasing demands for animal products and leading to an increasing trend in self-sufficiency for coarse grains. Clearly, agricultural exporting countries have a strong interest in seeing developing countries improve their income positions as higher-income developing countries become greater agricultural import markets. In summary, the apparent leveling off of declines in agricultural selfsufficiency during the 1980s in developing countries has resulted not from increases in agricultural production but from decreases in effective demand stemming from limited foreign exchange availability, reduced income growth, and declining terms of trade for primary products in developing countries. These factors have caused a substantial reduction in the growth of demand for agricultural products and a consequent slowdown in the trend of declining self-sufficiency experienced in the 1970s. SELF-SUFFICIENCY VERSUS FOOD SECURITY

Discussions about agricultural or food self-sufficiency and food security are often confusing and controversial. Part of the difficulty results from a lack of common understanding of the terms, disagreements about the consequences on various groups of achieving these objectives, and the lack of understanding about the motivations for establishing these concepts as objectives. Definitions The degree of food self-sufficiency is the proportion of total domestic consumption of a food good or a set of food goods accounted for by domestic production and release from domestic stocks over a specified period of time. Contrast this definition to that of food security: the degree of food security is the degree of access by all people over a specified period of time to enough food for an active and healthy life.

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Self-Sufficiency Ratio for Grains 1.2

1.1

1

0.9

0.8

0.7

0 6

1Q61

1965 1963

Low Income

Middle Income

1969 1967

1973 197 1

1981

1977 1975

1979

1985 1983

1987

Newly Industlralized

Source: USDA data provided by Gary Vocke. Figure 14.2 Self-Sufficiency Ratios for Grains by Income Class of Developing Countries, 1961-1987.

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Self-sufficiency often is an intermediate objective to broader goals, that is, saving foreign exchange or reducing economic and/or political dependency on certain nations (see Chapter 7). Food security is a more complex notion that is often oriented to more fundamental concerns and goals of development, such as the degree of access to basic requirements for maintaining and improving human welfare. Food self-sufficiency is a one-dimensional concept, as noted above. The self-sufficiency ratio can be increased by increases in domestic production, increases in domestic stock released, and decreases in food consumed. The food security definition, on the other hand, has two dimensions: the availability of food (enough food for an active and healthy life) and the ability of people to acquire food (access by all people). Therefore, food security involves food supply (production, storage, imports) and the degree to which all people can obtain that food (income levels and distribution, access to resources and services, and specific food distribution programs). Self-Sufficiency One way to increase food self-sufficiency in developing countries would be to decrease food consumption. Obviously, this is not desirable. Indeed, one of the concerns of the 1980s has been that the leveling off of the declines in food self-sufficiency has probably resulted from a slowing of growth or a decline in food consumption in some countries and developing country regions. In this example, events have led to increases in food self-sufficiency and decreases in food security. Conversely, increases in income growth in developing countries (a valued outcome of development) can lead to declines in self-sufficiency of various food goods, as demonstrated in Chapters 10 and 11 and Figure 14.2. In spite of declining self-sufficiency, these events would probably lead to increases in food security. Self-sufficiency in a particular commodity in which a country has a comparative advantage in the international marketplace is likely to be economically and politically sound. These increases in agricultural production can lead to broad-based income growth and, hence, increases in food security. However, the adoption of policies that subsidize certain commodities or classes of agricultural products for many years in order to achieve selfsufficiency where there is no comparative advantage becomes more controversial. Economists argue that direct designated policies to increase broad self-sufficiency in agriculture in developing countries are costly and do not add to the capital necessary for sustained growth into the future. Policies such as supporting output prices, subsidizing inputs, and erecting trade barriers (see Chapters 2 and 3) decrease national economic welfare and promote inefficient allocation of resources within a nation and among countries. These direct policies to increase agricultural self-sufficiency typically also require substantial public expenditures and public administrative

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capabilities that are in short supply in developing countries. The promotion of effective strategies for increasing either long- or short-term agricultural self-sufficiency where no comparative advantages exist is difficult. To be effective, these strategies often require substantial efforts to control smuggling (see Chapter 5), to administer artificial pricing for both producers and consumers, or to subsidize specific inputs. For most countries, self-sufficiency policies also must involve storage management. As discussed in Chapters 7 and 12, storage/stock management can be complicated and costly. Domestic food storage and stock management entails substantial investments in infrastructure (transport and storage), human resources to determine appropriate levels and least-cost storage strategies, and market intelligence to ascertain present and future price levels and fluctuations in the domestic and international market. It is necessary to develop the infrastructure and analytical capability to have an effective storage and stock management, but this is difficult for many developing countries. Therefore, this capability ought to be oriented toward increasing food security, and not on the narrow objectives of supply management for selfsufficiency reasons. In addition, these types of self-sufficiency policies often produce substantial economic and political pressures that may eventually lead to instability both in the domestic economy and in the political realm. Some of these pressures emanate from the inevitable development of official and black-market prices and exchange rates. This leads to smuggling and vested interests in illegal activity with the consequent instabilities this type of activity entails. Other economic and political pressures result from erecting trade barriers, subsidizing inputs or supporting output prices to achieve selfsufficiency. Public budget deficits tend to increase with the consequent reduction in public services. Food commodities that are not being supported may become more limited, and agricultural trade barriers to food imports would limit the access of the population (particularly urbanites) to a larger variety of food and food products. Even with these well-known disadvantages associated with agricultural self-sufficiency, many nations continue to promote self-sufficiency policies. This proclivity can be explained partly by understanding that agricultural selfsufficiency is most often an intermediate objective to be utilized in reaching more fundamental goals (see Chapter 7). A degree of agricultural selfsufficiency may be used to improve economic independence. Certainly, there are various countries that seek increased independence from previous colonial powers. Decreased economic dependence on superpowers or on nations with fundamentally different policies or practices is often a broad goal expressed by leaders in various developing countries. Many nations also distrust the international market as a stable and neutral supplier of an important commodity such as food. The uncertainty of prices, quantities available, and the various "strings attached" to trade in a key

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commodity can lead some nations to promote self-sufficiency policies for agriculture. Lastly, some countries follow self-sufficiency policies because the political power of agricultural producer groups is substantial enough to support protectionism and to obtain favorable policy intervention for agricultural production activities. Food Security Food self-sufficiency policies are almost always oriented to supply-side factors. Of more fundamental interest is human welfare, the foundation of which is access to an adequate, safe, and varied diet. As discussed by many authors in this volume, to reach this more fundamental goal policymakers need to be concerned with increasing the chronic food security of people rather than focusing only on attaining self-sufficiency. To increase food security requires a comprehensive set of activities and policies that are oriented to addressing both sides of the food security equation (Chapter 6). Regarding access to food, investments must be oriented to infrastructural development that allows agricultural products to reach people in isolated areas as efficiently as possible. Infrastructural development is also necessary to develop an effective storage/stock system that can help address questions of transitory food security. One of the best ways to assure food security is to have broad-based income growth among the lower income groups in the society. To accomplish this goal requires special attention to developing employment opportunities for a broad segment of the people. Income enhancement may tend to decrease food self-sufficiency, but it is absolutely essential to longterm food security. To sustain and enhance income generation, particularly among the lower income segments of a society, will require specific attention to policies of broad-based access to land, educational opportunities, and capital. These policies are essential and fundamental for the development of sustained food security in the long run. Finally, on the demand side, food-security strategies must also consider how to provide economical access to food by people who do not have the means to acquire it. Until employment and other income-enhancing opportunities are present for all segments of the population, available food must be channeled to the truly needy so as to achieve short- and medium-term food security. Food-for-work programs, coupon schemes, and fair (subsidized) price food shops are among the various strategies tried in this regard (Chapter 7).

The most basic element in a food-security strategy must be to promote cost-reducing technological innovations that can and will be adopted by agricultural producers and by input and output market firms, as discussed in Chapter 11. This element of a strategy can contribute markedly to food security and increased economic growth. Technological innovation provides an opportunity for the economy to produce agricultural products at lower real

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costs, allowing agricultural producers to obtain higher income and wealth positions, offering consumers the opportunity to purchase agricultural products at lower prices, and improving the possibility of the nation becoming competitive in certain commodities for international markets. Appropriate technology adoption in agricultural production and marketing activities can yield productive income streams that provide payoffs to individuals and to the economy for many years. Lower cost agricultural products also encourage agribusiness development, particularly in value-added processing industries. All of these changes support increases in the level of demand for domestically produced goods, thereby contributing to domestic employment and encouraging broad-based development (Chapter 1). Broad-based economic development (increased income and welfare among a significant proportion of the population) is a key to sustainable development and increased food security, and it is also more politically appealing than scenarios characterized by more narrow income increases of only the urban or wealthy elite groups. CONCLUSION

The development of an effective food security effort requires a comprehensive set of activities. Policies must be developed regarding international phenomena, macroeconomic forces, and microeconomic concerns. Strategies must be formed regarding private sector development; infrastructure investments; and access of people to land, capital, and educational opportunities. All of these considerations must deal with the sustainability of the strategies in terms of economic and environmental viability over the long term. Two other aspects of developing food-security strategies that meet these considerations make the task even more complex. First, many forces that affect the effectiveness of any food-security strategy (e.g., weather and international economic phenomena) are external to the context of the developing country. Second, the decade of the 1990s promises to contain a number of uncertainties that will be difficult to predict. Therefore, foodsecurity strategies will require adjustment through time as conditions change. Countries that adjust successfully will have to continually strengthen their indigenous capacity to deal with these uncertainties and complex issues. To prepare for this type of situation, developing countries must make basic investments in infrastructure, institutions, and people. For many developing countries, continuous adjustment will require substantial institutional development, particularly in institutions for analyzing and implementing development policies and in institutions for research and technology dissemination. This institutional development is essential if developing countries are to effectively deal with the uncertainties and opportunities of the future related to food security. Of fundamental importance in developing and implementing successful food security

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strategies will be the requirement for well-trained people to do research, to formulate policy and strategy, and to manage private sector enterprises. These institutional, infrastructural, and human resource investments will require foreign assistance that is both sensitive to national needs and free of "fads" that can comprehensively and quickly change foreign aid agendas across a number of countries. The 1990s are likely to present developing countries with quite different political pressures emanating from the developed world than those that shaped the strategic development agendas in the 1960s, 1970s, and 1980s. However, some of the same development problems of the 1980s will continue to affect developing countries in the 1990s, such as large external debt payments, possible oil shocks, rapidly increasing numbers of people, and environmental difficulties. In what promises to be an uncertain—but perhaps promising— decade, our success at developing effective food security programs will deteimine, to a great extent, how successful we are at development. REFERENCES Food and Agriculture Organization (FAO). FAO Production Yearbook. Rome: United Nations, 1989. Mellor, John W. Agricultural Development: Opportunities for the 1990s. International Food Policy Research Institute, Food Policy Statement No. 10. Washington, D.C.: IFPRI, June 1989. Vocke, Gary. "Agricultural Trade, Self-Sufficiency, and Economic Development." In Trade and Development: Impact of Foreign Aid on U.S. Agriculture, edited by Gary Vocke. United States Department of Agriculture, Economic Research Service, Staff Report AGES 9044. Washington, D.C.: June 1990. World Bank. World Development Report 1990. New York: Oxford University Press for the World Bank, 1990.

The Contributors ALAIN DE JANVRY is professor in the Department of Agricultural and Resource Economics at the University of California, Berkeley. CARL K. EICHER is professor in the Department of Agricultural Economics at Michigan State University. ELLEN FITZPATRICK is a graduate research assistant in the Department of Agricultural Economics at Michigan State University. DOUGLAS H. GRAHAM is professor in the Department of Agricultural Economics and Rural Sociology at the Ohio State University. EARL D. KELLOGG is executive director of the Consortium for International Development and research professor in the Department of Agricultural Economics at the University of Arizona. E. WESLEY F. PETERSON is associate professor in the Department of Agricultural Economics at the University of Nebraska. NORMAN RASK is professor in the Department of Agricultural Economics and Rural Sociology at the Ohio State University. MANDIVAMBA RUKUNI is dean of the Faculty of Agriculture and senior lecturer of agricultural economics at the University of Zimbabwe in Harare. FRED J. RUPPEL is assistant professor in the Department of Agricultural Economics at Texas A&M University. ELISABETH SADOULET is adjunct assistant professor in the Department of Agricultural and Resource Economics at the University of California, Beikeley. STEPHEN C. SCHMIDT is professor in the Department of Agricultural Economics at the University of Illinois. JOHN M. STAATZ is associate professor in the Department of Agricultural Economics at Michigan State University. 243

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ABOUT THE CONTRIBUTORS

NAMATIE TRAORE is a graduate research assistant in the Department of Agricultural Economics and Rural Sociology at the Ohio State University. LAURIAN J. UNNEVEHR is assistant professor in the Department of Agricultural Economics at the University of Illinois. JENNIFER B. WOHL is a graduate research assistant in the Department of Agricultural Economics at Michigan State University.

Index Africa, 232 Latin America, 231 Changes in grain trade, 231 Changes Asia, 232 Class of commodity, 233-234 income class, 235 Chile, 56, 58 China, 14, 15, 21, 24, 25, 125, 135, 208 Club of Rome, 147 Coefficient of variation, 114—115 Coffee, 213 Colombia, 56, 58 Common Agricultural Policy (CAP), 32, 146 Common Market, 16, 211 Comparative advantage, 10, 200, 205, 206, 208, 213 Concessional sales, 210 Conditionality, 215, 221, 222 Costa Rica, 54, 55, 60 Council for Mutual Economic Assistance, 211 Cuba, 23 Customs union, 210, 211

Afghanistan, 209 Africa, 8. 182, 183, 211 agricultural trends, 94-95 early stage of development, 90-93 food security equation, 93-94 food trends, 94-95 Agricultural development history, 3 Agricultural research, 36, 37 Agricultural sector contributions of, 3, 4 Agricultural Stabilization Act, 145 American agricultural economics applications, 7 Andean Group, 211 Argentina, 53-54 Asia, 8, 182, 183, 186, 187 Association of Southeast Asian Nations (ASEAN), 133, 211 Australia, 4, 143-145, 157 Autarky, 29, 30 Balance of payments, 215, 218, 220, 221, 226, 227 Bananas, 213 Belgium, 135 Botswana, 101 Brazil, 54, 55, 63 Buffer stocks, 39-41

Deficiency payments, 33 Depreciation, 209 Devaluation, 209 Developed countries, 9 Developing countries coarse grain use, 181, 187, 188 meat demand in, 183-189 Diet changes in, 169-170, 181, 185 See also Food demand Dominican Republic, 56, 58

Canada, 142-150, 156, 157 Caribbean Community, 211 Cartels, 209 Central African Customs Union, 211 Central America, 60, 61, 211 Central American Common Market, 211 Cereal equivalents, 170, 172-175 Changes in agricultural self-sufficiency, 232

East African Community, 211

245

246

INDEX

Eastern Africa, 8, 95-96 economic access to food. 101-102 employment, 100-101 food marketing, 99-100 food production, 94-95 food security, 102-104 food situation, 95-98 food storage, 99-100 rural infrastructure, 99-100 Economic Community of the Countries of the Great Lakes, 211 Economic Community of West African States, 211 Economic development, 167-170 Economic integration, 210-213 Economic record of developing countries, 232-233 Economic union, 211 Ecuador, 56, 57, 63 Effective demand, 27-29 Egypt, 109 El Salvador, 56, 60 Embargo, 147-148, 199, 209 Entitlement, 223, 224, 226 Ethiopia, 94 European Community (EC), 31-33, U S MS, 151, 155, 158-161, 199, 210, 212 European Free Trade Association (EFTA), 156, 158, 210 Exchange rate adjustment, 220 Exchange rate policies, 67, 71, 74, 75, 82, 84 Exchange rates, 199 Expenditure reducing, 222 Expenditure switching, 222 Export-led development, 207 Export restrictions, 148-149 Federal Land Development Agency (FELDA), 128, 129 Feed, 181, 185-195 model of supply and demand, 189-192 yield trends, 194, 195 Feedgrains, 197 First National Development Plan; balance of payments deficits, 70 food production during, 70 import restrictions, 72 objectives, 70 Food and Agriculture Act, 149 Food and Agriculture Organization (FAO), 147, 171

Food aid, 208, 227 Food demand changes with income growth, 186-191 Food imports, 4, 7 Food security, 58, 146, 147, 207, 208, 215, 216, 223, 224, 227 contrast to food self-sufficiency, 237 definition, 235 policies to increase, 239 requirements for successful strategies, 240 Food self-sufficiency, 167-169, 172-173, 176, 178-179, 208 contrast to food security, 237 definition, 235 policies designed to increase, 237238 problems encountered in promoting, 238 rationales for promotion, 238-239 Food stocks, 206-207 Foodgrains, 197-199 Foreign aid, 40, 41 Foreign currency, 209 Foreign exchange, 4, 42 Fourth Development Plan, 72 France, 212 Free trade area, 210 General Agreement on Tariffs and Trade (GATT), 141, 152, 161 Germany, 212 GNP, 171-172 per capita, 171-178 Government budgets, 220, 221, 222, 224, 227 Government intervention, 108, 109, 141, 152 Government policy, 189, 192-195 Guatemala, 54, 60 Guyana, 56 Haiti, 56 Honduras, 56, 60 Import quotas, 30-31, 204 Import substitution, 220 Importer identity, 208 Imports complementary, 213 supplementary, 213 Income, 34-35

INDEX

Income consumption link, 169-170, 1 7 2 175 Income distribution, 207 Income growth, 200 India, 8, 16, 20, 125 absolute poverty, 118 Andhra Predesh, 116 chronic food security, 113-114 Dehli territories, 116 food availability, 113-114, 116-117 food imports, 115 food self-sufficiency, 107-119 food stock, 115 food subsidies programs, 115-116 Gujarat, 116 infant mortality, 118 Kerala, 116 life expectancy, 118 producer subsidy equivalent, foodgrains, 116 Tamil Nadu, 116 transitory food security, 114-116 Indonesia, 135 Infant industry, 205, 213, 220 Inflation, 217, 218, 220, 221 Infrastructure, 204 Input subsidies, 37, 215 Integrated Rural Development Programs (IRDP), 127-128 International commodity agreements, 210 International Monetary Fund (IMF), 10, 215, 218, 221, 222, 225, 226, 227 International trade, 197, 204, 207, 208, 213 Ireland, 16 Japan, 15, 17, 21, 22. 23, 143-145, 148, 151, 155, 156, 158, 159, 162 Kenya, 95, 95, 99 Korea (Republic of), 185, 188 Land reform, 37 Latin America, 4, 8, 47-64, 182, 183, 186, 187 cereal production, 4 7 - 6 4 consumption, 48-53, 5 8 - 6 1 livestock production, 47-51, 6 2 - 6 4 production, 48-53, 5 8 - 6 1 self-sufficiency, 4 7 - 6 4 self-sufficiency decline, 5 6 - 6 0 Latin American Free Trade Association, 211

247 Less developed countries (LDCs), 215, 216, 218, 220, 222-227 debt, 215, 216, 221 Livestock production technology, 181, 185, 186, 187 See also meat Low-income households, 216, 223, 224, 225, 226 Macroeconomic policies, 207 Malaysia, 9, 92, 121-130, 137, 138 food security objectives, 124 food security strategy, 122, 123, 136, 137 palm oil, 23, 124, 128, 130, 137, 138 policies, 122-128 rice, 123-130, 137 rubber, 123, 124, 128, 130, 137 stocks, 126 subsidies, 127 Mali, 66, 75-80, 84, 85, 90 Marketing boards, 31 Meat demand, 183-189 international trade, 182, 189 model, 189-192 See also livestock Mexico, 56, 63 Monetary union, 211 Morocco, 109 Most-favored-nation status, 210 Muda, 128 Namibia, 89 National Agricultural Plan (NAP), 126, 128 National Economic Plan (NEP), 125, 127 New Zealand, 143-145, 157 Nicaragua, 56 Nigeria, 8, 90-92, 99 Babangida, 73, 74 Buhari government, 73 devaluation, 74 evolution of self-sufficiency policies, 70, 71 exchange rate, 71 foreign exchange, 6 9 - 7 3 Green Revolution Programme, 72 import bans, 68, 71, 72 import licensing, 7 0 - 7 4 labor, 68 land, 70 marketing boards, 70, 74

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INDEX

migration, 71, 74 oil boom and bust, 71 Operation Feed the Nation (OFN), 72 opportunity costs of time, 68, 81 overevaluation of naira, 71, 73, 74 population growth, 71 producer prices, 72 protection of domestic agriculture, 68, 70-72 smuggling, 72, 73 tariffs, 68, 73. 80 urbanization, 68 Nontariff barriers, 30, 200, 204 North Atlantic Treaty Organization (NATO), 210 North America, 4 Nutrition, 216, 222, 223, 225, 227 Organization of American States, 210 Organization for Economic Cooperation and Development, 151, 153, 156, 158 Organization of Petroleum Exporting Countries (OPEC), 199, 209, 216, 218 P.L. 480, 41 Pacific Rim, 206 Panama, 56 Paraguay, 53 Peru, 56, 58 Philippines, 185, 186, 188 Pineapples, 213 Policy reform, 150-152 Population, 34 Portugal, 135 Primary commodity prices, 216-218 Product promotion, 35 Production-consumption gap, 168 Production variability, 206-209, 212 Quota rents, 30 Rationing, 36 Rwanda, 14 Sahel countries, 8, 16 cereal consumption, 76, 77, 84 cereal production, 81, 82, 83, 85 CILSS, 76, 81, 82, 83, 85, 87 Club du Sahel, 76, 81, 82, 83, 85, 87 drought, 75, 78, 83 exchange rate policies, 82, 83, 84

export subsidies, 80, 82 factors affecting self-sufficiency, 7 7 78 food aid, 77, 81 growth rate in domestic demand, 80-81 growth rate in domestic supply, 80;import tariffs, 80, 83 Lomé (Togo), 83, 85 marketing policies, 80 Mindelo (Cape Verde), 82 processing of cereals, 82 producer prices, 77, 80 protection of domestic agriculture, 77, 78, 79, 82, 83 regional protected cereals market, 21 thin markets, 77 transportation costs, 77, 84 urbanization, 75, 81 variable levies, 82 Sanitary and qualitative restrictions, 31, 32 Saudi Arabia, 209 Second National Development Plan perception of self-sufficiency, 70—71 quality of government spending, 70 research fund allocation, 70 Self-sufficiency area coverage, 15, 16 agricultural, 8 carryover stocks, 17 cereal, 8 commodity coverage, 14 general definition, 13-15, 17, 27 goals, 3, 4 intertemporal, 39-41 livestock, 8 nutritional need, 16 price level, 16 role of income growth, 9 time coverage, 17, 18 trends in developing countries, 5 Self-sufficiency policies, 28-38, 215, 220, 222, 224, 226, 227 Demand side policies, 23 role of effective demand, 14, 15 Self-sufficiency policies, rationales for infant industry argument, 20 national defence, 19 preservation of traditional values, 20 protection of domestic agriculture, 20, 21 risk and stability, 18-20 Self-sufficiency policies, supply infrastructure development, 22

INDEX

input subsidies, 22 institutional changes, 22 price supports, 22 Self-sufficiency ratio, 13

249

soil erosion, 133 structural transformation, 134-136 Thin markets, 18 Third National Development Plan

Senegal, 35, 42

import duties, 71, 73

Sistema Alimentario Mexicano, 56

protection, 71

Sixth National Development Plan, 134

Trade liberalization, 158-161

South Korea, 14, 17, 19, 20, 23, 206

Trade

South America, 211

creation, 210-212

South Africa, 157

deficits, 209

Southeast Asia, 9, 124, 132

diversion, 210-212

Southern African Development Coordination Conference (SADCC),

Uganda, 95

211

United States, 4, 135, 142, 145, 148, 149, 159, 154, 155, 158-161, 199, 208, 209

Southern Africa, 8, 96-98 economic access to food, 101-102 employment, 100-101 food marketing, 99-100 food production, 98-99 food security, 102-104 food situation, 96-98

Uruguay, 53 US agricultural exports, 4 proportion to various countries, 4-6 value overtime, 4 US agricultural imports, 6, 7

food storage, 99-100 rural infrastructure, 99-100 Soviet Union, 19, 21, 147-149, 199, 208

Venezuela, 56, 57, 63 Voluntary export restraints (VER), 30

Stocks, 114-115, 117 Storage, 206, 207

Welfare, 159

Structural adjustment, 27, 28, 32, 33, 34,

West Africa

35. 36, 39, 40, 73-75

Benin, 73, 74, 83

devaluation, 74

Burkina Faso, 66, 75, 76, 81, 84

impact on Nigeria's neighbors, 71

Cape Verde, 75, 82, 84

import restrictions during, 71

Chad, 72. 74, 75, 84

monitoring, 39

Côte-d'Ivoire, 67, 81, 84

programs, 10

Ghana, 67, 84

Sub-Saharan Africa, 4, 89

Guinea, 67, 78, 84

Subsidies, 204

Guinea Bissau, 75. 80, 84

Sudan, 89, 99

Liberia, 84

Supply, 27, 28, 34, 35, 37, 38, 39

Mali, 66, 75-80, 84, 85 Mauritania, 67, 75, 76, 79, 80, 84

Tanzania, 95, 97, 98, 102

Niger, 72, 74-77, 84

Tariff, 30. 31, 39. 205. 212

Nigeria, 66-75, 84

Technological change, 27, 36, 37

Senegal. 75, 76, 79, 80. 81, 84, 85

Terms of trade, 28, 29, 39

SierraLeone, 84

Thailand, 9, 121-123, 130-138

The Gambia, 75, 76, 77, 79. 80, 84

fertilizer, 132, 133 food security strategies, 122, 123, 130, 131, 133, 135, 136, 137 policies, 122, 123, 131, 132, 133, 135

Togo, 67. 83, 84 West African Economic Community, 211 Western Europe, 4 World Bank, 10, 128, 132, 133, 171, 215, 221, 222, 225-227

rice, 130-138 Safcol, 135 self-sufficiency ratio, 122

Zambia, 96, 97, 98, 99, 102 Zimbabwe, 94, 96-103

About the Book The drive for agricultural and food self-sufficiency in countries throughout the world has become an important topic in international political discussions. This book uses a basic economic framework to set forth the issues and debates surrounding self-sufficiency and also describes the current situation in Asia, Africa, Latin America, and the developed countries. A combination of thematic and region-specific analyses examines various justifications for pursuing goals of agricultural and food self-sufficiency and the mechanisms used to achieve those goals. The authors consider the meaning of selfsufficiency, the degree to which it is being achieved now or is likely to be achieved in the future, and the implications of these factors for world trade and food security.

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