Famine

Agriculture / Economics / Famine / Food / Self-Promotion — 5 Comments
17
Apr 12

Commodity Exchanges, Commodity Speculation, and Food Security in Africa

The Floor of the Chicago Board of Trade

A farmer lives with two time horizons in mind. One is the months-long growing seasons his crops abide by. The other is the immediate reality of having to feed his family each day, regardless of the price of grain at harvest in three months, whether a drought will wither plants in the field, or whether perfect rains will yield a bumper crop.

Across rural Africa, such uncertainty hounds smallholder farmers—which is nearly everyone. In Ethiopia, 80 percent of the population of more than 80 million are small-scale farmers and produce 95 percent of the country’s agricultural output.

If more and better information within agricultural markets can make uncertainty recede like darkness in front of a candle, the Ethiopian Commodity Exchange is a bank of high-powered floodlights. A commodity exchange that broadcast crop prices to rural farmers not only helps them get higher prices for their produce, but also improves the food distribution system to resist shortages in times of drought.

That’s from a recent article in GOOD magazine by Tate Watkins.

The article discusses the potential for commodity exchanges to improve food security in Africa. In a nutshell, at times of impending food scarcity, commodity exchanges can help by raising food prices, which can help avert food crises and famines. This helps food consumers by improving their food security.

But commodity exchanges can help food producers by smoothing prices over time. That is, commodity exchanges can help reduce the uncertainty over the prices farmers will face come harvest time, which in turn leads farmers to making more efficient production decisions.

What about Commodity Speculation?

This is in stark contrast with the oft-touted “fact” according to which commodity speculation caused the food crisis of 2008. If you are interested in commodity speculation, see this Energy Economics article by Scott Irwin and Dwight Sanders, in which the authors argue that there is little to no causal evidence that commodity speculation led to the 2008 spike in food prices.

Tate interviewed me for the GOOD magazine article quoted above, and one of the things I said ended up making it to the article. I will always be grateful to Tate for bringing to my attention the Kansas City Star‘s style guide, which supposedly helped Ernest Hemingway develop his distinctive style. Tate has his own blog here, and you can follow him on Twitter here.

Agriculture / Commentary / Economics / Famine / Food / Macro / Micro — Comments Off
6
Mar 12

Spring Break Classic Posts: Seven Billion People on Earth: Enough with the Fear Mongering

(It’s Spring Break here this week, so I am taking the week off from blogging to work to revise a few articles and begin working on new research projects. As a result, I am re-posting old posts that some new readers might have missed but which were very popular the first time I posted them. The following was initially posted on October 31, 2011.)

The seven billionth person on Earth will be born today according to the United Nations. To mark occasion, the BBC has developed an application that allows calculating your own number. I learned that, of all the people now alive, I was born 4,133,669,462nd.

As is inevitably the case when talking about the world’s population, the birth of the seven billionth person has caused a rash of newspaper articles, newscasts, and blog posts about how this really is a sign that at least two of the Four Horsemen of the Apocalypse – famine and death — will soon be here.

YouTube Preview Image

For a perfect example of that type of fear mongering, see this presentation, by Australian journalist Julian Cribb.

The Reverend’s New(est) Clothes

But really, Cribb is merely serving us the reheated leftovers of Reverend Thomas Malthus‘ Essay on the Principle of Population. In this book, first published in 1798, Malthus asserted that disease and famine would naturally arise to limit the size of any population.

Thus, because population growth would outpace agricultural growth (after all, there is only a limited amount of arable land in the world), disease and famine would take care of keeping the size of the population in check. Malthus actually estimated that the upper bound was equal to about one billion. Continue reading →

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1
Mar 12

Free Download of Calestous Juma’s “The New Harvest: Agricultural Innovation in Africa”

Calestous Juma’s most recent book The New Harvest: Agricultural Innovation in Africa is now available for free from the Kennedy School of Government website. Here is an overview of the book:

African agriculture is currently at a crossroads, at which persistent food shortages are compounded by threats from climate change. But, as this book argues, Africa faces three major opportunities that can transform its agriculture into a force for economic growth: advances in science and technology; the creation of regional markets; and the emergence of a new crop of entrepreneurial leaders dedicated to the continent’s economic improvement.

Filled with case studies from within Africa and success stories from developing nations around the world, The New Harvest outlines the policies and institutional changes necessary to promote agricultural innovation across the African continent. Incorporating research from academia, government, civil society, and private industry, the book suggests multiple ways that individual African countries can work together at the regional level to develop local knowledge and resources, harness technological innovation, encourage entrepreneurship, increase agricultural output, create markets, and improve infrastructure.

If you are like me and prefer to have the entire book in a single .pdf file, scroll down on the page for a link to the complete text of the book.

Calestous is also a prolific tweeter. You can follow him on Twitter by clicking here.

Development / Economics / Famine / Food / Micro / Policy — Comments Off
2
Feb 12

US Food Aid Does Have an Impact in Developing Countries, Just Not the One You Think It Has (Updated)

A new working paper by Nathan Nunn and Nancy Qian:

This paper examines the effect of US food aid on conflict in recipient countries. To establish a causal relationship, we exploit time variation in food aid caused by fluctuations in US wheat production together with cross-sectional variation in a country’s tendency to receive any food aid from the United States. Our estimates show that an increase in US food aid increases the incidence, onset and duration of civil conflicts in recipient countries. Our results suggest that the effects are larger for smaller scale civil conflicts. No effect is found on interstate warfare.

This is bound to make waves among food policy scholars and in Washington, DC, where the Farm Bill, part of which sets guidelines for the provision of food aid, is due to be renewed this year.

I have not yet had a chance to read the paper (I’m teaching two classes this semester, so most of my reading time goes to those; I’ve been on the same “pleasure”-reading book since before Christmas), so please take the following with a grain of salt since it’s off the top of my head, but I wonder whether it might have made for cleaner identification to use weather shocks (specifically, extreme weather events and natural disasters) as a source of exogenous variation instead of fluctuations in US wheat production.

In other words, it could perhaps be the case that US wheat production affects conflict through means other than US food aid, so using unpredictable shocks to the supply of US food aid might make for more solid identification. But as I said, I have not yet had a chance to read the paper, and Nunn and Qian are both careful empiricists, so they probably address my concern somewhere in the paper.

UPDATE: Jon Prettyman, a Masters of Public Policy student advisee of mine, just emailed with this: “I saw the Nunn and Qian paper on several blogs today and I’m reading through it now, primarily because it sounds an awful lot like my thesis, and came across the answer to the question from your post.  They did use weather in an earlier draft of the paper, but found that wheat production yields similar estimates and is easier to interpret.”

Agriculture / Economics / Famine / Food / Giving — Comments Off
30
Jan 12

Who Wins and Who Loses During Food Crises?

In a very good article in the latest issue of Science, Jo Swinnen and one of his coauthors explain that, as with many other changes in economic circumstances, rising food prices are a boon to some people and a bane to others. Here is the summary:

Spikes in food prices have pushed food security to the top of the global policy agenda. Price increases have mixed effects on poverty and hunger: They increase the cost of food for consumers but increase incomes of farmers, who represent the bulk of the world’s poor. Net effects will differ depending on whether poor households or countries buy or import, or sell or export food (infrastructure, institutions, and market imperfections will play roles, as well). Policies to influence prices imply winners and losers, not just between rich and poor, but also among the poor. These nuances are too often absent in public debate, to the detriment of policy-making. Moreover, the arguments put forward today, that high food prices generally hurt the poor, are in contrast with those put forward a few years ago, that low food prices were hurting the poor.

Put simply, when food prices rise, food producers benefit and food consumers lose out. But while the media used to causally link low food prices to poverty and hunger, it was high food prices instead that were blamed for poverty and hunger during the food crises of 2008 and of 2010-2011. Continue reading →

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