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Food and nutrition policy

AID, trade, and hunger

AID, trade, and hunger

George Kent
Department of Political Science, University of Hawaii, Honolulu, Hawaii 96822, USA

WHY DO STAPLE IMPORTS INCREASE?

A study published in 1979 by the International Food Policy Research Institute (IFPRI) showed that from 1961 to 1976 the 16 developing market economies with the highest rates of growth in the production of staple foods also had high rates of increase in their imports of staple foods [1]. IFPRI's paradoxical finding was that increased domestic production results in increased, not decreased, purchases abroad. Table 1 lists the 16 countries identified as having high growth rates in the production of staple foods and shows some of the key data in the IFPRI study.

The IFPRI study suggests that growth in the production of staple foods leads to increased imports of such foods because there is an intervening variable at work, namely, genuine economic development, signified by overall economic growth. That is, it is assumed that the purchase of imported staples is the result of increasing productivity,

increasing earned incomes, and increasing market demand, resulting in an improved quality of life. The report also asserts that "the progress toward improved nutrition was much more favourable in the rapid growth countries" than in the rest of the developing market economies. Alternative understandings need to be considered: in countries with rapidly growing production of food staples, increasing imports might serve simply to compensate for increasing exports, or they might be associated with increasing external debt or with tied aid.

Increasing Exports

In some cases imports of food staples may be increased to replace increasing exports of other food staples. These imports could be interpreted as simple substitutes, rather than as reflections of economic growth, particularly if the average caloric intake for a country has not significantly increased.

TABLE 1. Average annual rates of growth and percentage change in net staple food imports for countries with rapid growth in stable food production 1961 to 1976

Source: Adapted from Bachman and Paulino (1, pp. 26, 33], using FAO estimates.

TABLE 2. Ratios of disbursed and outstanding debt to GNP (percentages)

Source: World Debt Tables, Vol. 1: External Debt of Developing Countries

(World Bank, Washington, D.C., 1980), pp. xiii-xxvii.

a. This source did not include data on Iran.

Brazil, for example, has been a substantial exporter of corn and coarse grains and, simultaneously, a major importer of wheat. The energy intake from cereals overall has increased only modestly from an average of 873 calories per capita per day in the period from 1961 to 1965 to 915 calories in 1977, indicating that the imports have, for the most part, simply replaced the exports [2].

Debt

It has been suggested that the massive expansion of exports from developed to less developed countries in Latin America in the 1970s "was almost entirely an artifact of increased bank lending to the LDCs in the same period, not a by-product of genuine development" [3]. Elsewhere, multilateral or bilateral lending or export credits might have been more important than bank lending. Regardless of the sources of credit, the increasing imports of agricultural staples into these 16 countries could have been due more to increasing loans than to true internal development. Table 2 supports this proposition: in 12 of the countries listed in the table external debt grew faster than the Gross National Product (GNP) in the period from 1973 to 1979.

Tied Aid

Imports from developed countries may be particularly high because their loans and grants are tied to stipulations that the developing countries import from the developed" country lenders and grantors. According to the US Department of State, "It has been estimated that about 70 per cent of bilateral US assistance disbursements and 50 per cent of our contributions to multilateral development banks are spent on US goods and services" 14] . In the fiscal year 1983 the US Agency for International Development financed a total of US$680.9 million worth of purchases from the United States private sector, and US$130.4 million of these were animal and vegetable products [5].

These purchases constitute the assistance itself, through concessional sales. They do not represent freely negotiated purchases at prevailing prices taking place on the open market. Less developed countries increased their imports partly because they were able to obtain them on concessional terms rather than pay the full market price for them.

Table 3 shows: the value of US agricultural exports under specified US Government-financed programmes (PL 480 and the Mutual Security Program); the value of exports outside specified government programmes; and the share of the total that falls under specified government programmes. Clearly, for many of the importing countries, large shares of their imports of US agricultural products are directly attributable to assistance programmes.

TABLE 3. Shares of US agricultural exports under specific government programmes, 1954-1977

Source: Food for Peace [6. Appendix, table 2] .

Table 4 shows the extent of concessional sales specifically for cereals for some of the countries in the IFPRI study. Several have continued to receive substantial concessional sales well beyond the IFPRI study period, suggesting that their domestic agriculture is still not well developed.

Apart from direct grants and concessional sales, increasing imports of US agricultural products by less developed countries have been due partly to extraordinary pressure from the US Department of Agriculture to promote exports of American agricultural products [6].

Development assistance of various kinds may help to stimulate the imports of food staples, but in the absence of explicit or implicit ties obligating reciprocity, there is no assurance that the purchases will be from the country providing the assistance. With China's entry into the staple export trade, buyers have more options [7] .

THE DISPOSITION OF NEW FOOD SUPPLIES

Questions need to be raised about the disposition of both increased imports of staple food supplies and new incre meets in domestic production. Some staple foods may go to exports, some to feed, and some to middle and upper income classes, leaving little for the poor who need it most. Thus, imports and agriculture growth do not necessarily help to reduce hunger.

TABLE 4. Shares of concessional cereal imports in total cereal imports (percentaces) ^a

a. A dash indicates less than 1 per cent. Source: United States Department of Agriculture, Food Policies in Developing Countries (USDA, Washington, D.C., 19831, p. 30.

Exports

Increments in agricultural production may contribute little to the domestic food supply if that production is export oriented and there are no compensating imports. In Thailand, for example, rice production from 1970 to 1980 increased 31 per cent, but exports increased 263 per cent. In combination with a population increase, this level of exportation led to a decline in per capita rice availability of 18.5 per cent over the period. Thailand's food balance sheets do not indicate any compensation from other food items [8]. The energy intake per capita per day from rice in Thailand averaged 1,547 calories from 1961 to 1965, reached a peak of 1,662 calories in 1968, and fell to 1,384 in 1977 [2]. In 1978 in this "rice bowl of Asia," poor farmers robbed trucks and trains loaded with rice to solve their "crisis of subsistence" [9] . Thailand increased its rice production, but increased its exports even more, and thus the amount remaining for domestic consumption actually decreased.

Feed

The IFPRI study acknowledges that a substantial share of staple food crop production may be used for livestock feed. From 1972 to 1974 the share used for feed in the 16 countries listed in table 1 ranged from under 1 per cent in several countries to as high as 44 per cent in Brazil. It is also acknowledged that the use of cereals for livestock feed tends to increase faster than the use of cereals for human consumption.

Another study makes it clear that grain imports are largely for feed [10]:

Growth in feed grain imports to rapidly growing LDCs has been especially strong, as rising incomes in these countries stimulated demand for meat, poultry, and dairy products derived from feed grains.

Data were recently examined on wheat and coarse grain imports for 15 of the most rapidly growing LDCs .... The annual rate of growth of coarse grain imports for use as animal and poultry feed for these 15 countries was 21 per cent between the average for 1970-71 to 1972-73 and the average for 1976-77 to 1978-79.

As incomes increase, an increasing share of the available food staples is used for livestock feed. This livestock is consumed more by the middle and upper classes than by the poor. Thus, the use of staples as feed is a mechanism which moves food toward richer people, drawing off supplies from where they are needed most. Indeed, in Mexico, "the 20 million poorest people in the country now consume less grain than is fed to the animals producing meat, milk, and eggs for the rich" [11] .

Increasing allocations to feed may be partially due to increasing production of livestock for export. Brazil, for example, has become a major exporter of poultry meat, and its exports are heavily subsidized by the government | 12] . This export of meat amounts to a form of indirect export of grain. From the perspective of the poor, it is doubtful whether the benefits gained from the export trade are sufficient to compensate for the resulting reduction in domestic grain supplies. Additional questions need to be posed about the distribution of benefits and costs from the subsidy on the export trade.

Income Class

Growth in the production of staples can have significant effects on nutrition. In the IFPR I analysis [1]:

The study countries as a whole registered an average yearly increase of 0.8 per cent in per capita dietary energy intake during the study period .... The only decline occurred in Sri Lanka. In comparison, nearly half of the rest of the DME [developing market economies] countries showed declines in dietary energy consumption during this period.

As table 5 shows, however, more recent data indicate that, of this group of countries, not only Sri Lanka but also Ghana and the Ivory Coast had a decrease in average calorie intake over the time period. FAO data now show that Ghana actually should not have been included among the countries with rapid growth in the production of food staples.

TABLE 5. Food energy supply (average number of calories per day)

Source: FAO [2].

A far more serious problem is that the IFPRI findings, like the data in table 5, were based on food balance sheets, and do not give attention to the distribution of the increased intake. There is a vast difference between improving nutritional levels on the average and alleviating malnutrition. The IFPRI study spoke of the first but not the second.

The IFPRI study asserted that "a rise in per capita income increases the demand for food and tends to raise dietary energy levels" [1]. The increases in income, however, are likely to go to those who already have relatively high incomes. In market economies, food is distributed primarily on the basis of purchasing power, not need. Thus, the increases in consumption are likely to be enjoyed by those who are already adequately nourished. Average energy intake levels may increase, but may also do nothing to alleviate malnutrition.

With increasing average incomes the supply of food tends to move away from poorer classes towards richer classes [13, 14]. The size of the pie, as a whole, may be increasing, but if it moves away from the poor at a rapid rate, that growth does them little good. The argument that malnutrition may be alleviated as average incomes increase relies on the highly questionable assumption that the benefits from economic growth in general and trade in particular, which generally are concentrated in the upper ranks of society, trickle down. The evidence in the literature can only lead one to doubt that trickledown argument [15,16] . The question, however, is finally an empirical one.

Consider the case of the Philippines. Despite the fact that average gross national product per capita increased in the first half of the 1970s, the number of people in poverty in the Philippines increased. A World Bank study observes that "a relatively high economic growth (overall, and even in agriculture) alone is not sufficient to reduce poverty quickly" [17]. The study elaborates:

An examination of agricultural growth and poverty trends during the 1970s shows that for poverty alleviation what is important is not so much the overall rate of growth in agriculture as the pattern of that growth. During 1970 to 1975, the overall agricultural growth rate was close to 5 per cent per annum which should have normally helped in alleviating poverty. Yet, the FIES [Family Income and Expenditure Survey] data show that poverty incidence in the rural areas (and country) had increased to some extent. The explanation for this paradox lies in the pattern of agricultural growth in that period.

First, nearly half of the increase in the number of the rural poor in the early 1970s occurred in just two regions . . . which had suffered serious typhoons, droughts, and pest attacks;.. . bad weather, and especially a severe calamity, affects the poorer farmer disproportionately ....

Second, the aggregate growth figures do not properly reflect the benefits accruing to the small holder even in areas not subject to natural calamities. A significant part of agricultural growth in the early 1970s was due to commercial crops such as bananas and pineapple. Furthermore, rice yields, which are a better indicator of benefit to the small farmer than output, had actually declined..., and corn yields increased by only one per cent during the whole period from 1970 to 1975.

Between 1970 and 1974 there was a slight increase in the total amount of cereals used, largely due to increased consumption of cheaper corn products. However, consumption of meat, poultry, eggs, dairy products, fish, fruit, and vegetables all fell sharply during the same period [18]. In 1976 the energy intake averaged 1,690 calories per person per day, down 4 per cent from the already meagre 1974 level of 1,765 calories. For the lowest income class, average income increased by 35 per cent from the period 1970-1973 to the period 1974-1976, but consumption levels declined in every food category except root crops [19] .

Other observers have noted that [20]:

The country was exporting rice, after decades of being a chronic rice importer-yet the vast majority of Filipinos were eating less than a decade earlier.

Agricultural growth was averaging 5 per cent a year- yet, according to the Bank, the number of families living below the poverty line increased from 47.8 per cent in 1971 to 54.8 per cent in 1975. Government sources were forced to admit that the trend continued in the second half of the decade: the real income of rice farmers declined by 53 per cent between 1976 and 1979.

Thus, in a pattern very similar to that described earlier for Thailand, rising production was accompanied by declining consumption, particularly among the poor.

Food consumption patterns clearly indicate that the poor generally do not have much of a share in economic growth. Michael Lipton demonstrates that in India, Mexico, and the Philippines, during periods of rapid growth in "average" income, there was only slow growth in calorie intake. The same pattern holds true in the world overall [21!:

Broadly, available income per person in LDCs rose by about 75 per cent from 1950 to 1970; daily calorie intake per head rose by under 20 per cent, as against at least 40 per cent to be expected if growth had been equally distributed; and most of those extra calories were in the more expensive forms of food. So the main gainers from growth have been those who do not need much extra simple, cheap food; not the hungry, not the poor.

IMPACTS ON DEVELOPED-COUNTRY EXPORTERS

According to the IFPRI study, "the data suggest that staple food exporters have little cause to worry about the rapid growth of food production in the developing countries" because of the rapid growth of their imports [1]. It is on the basis of this sort of argument that organizations, such as the USAID-supported Council on World Hunger, Development, and Trade Information, say that it would be in the interest of US farmers to support agricultural development assistance for developing countries [22] .

The IFPRI analysis did show that net imports for the rapid growth countries rose 2.3 times during the period under study. However, it also showed that for the developing market economies as a group, net imports rose more than three times [1]. These observations mean that while the imports for the rapid growth countries did increase, they increased considerably less than they did for the other developing market economies. Contrary to the impression that has been conveyed, it appears that rapid growth in staple food production leads to import levels that are lower than they would be without rapid growth in stable foods.

DISCUSSION

It has been stated that "countries with high rates of growth of staple food production tend to have even faster rates of consumption and hence increasing food imports," based on the finding that the 16 developing countries with the fastest growth rates in food staple production for 1961 to 1976 "more than doubled their net imports of food staples in that same period" [23] . However, table 1 shows that six of the countries actually had a per cent decline in net imports. Most of the increase was attributable to just two countries, Iran and Mexico.

In Iran, growth in cereal production was rapid during Iran's Third Plan from 1963 to 1967, but then faltered during the Fourth Plan from 1968 to 1972. Livestock production- primarily poultry-grew much faster under the Fourth Plan than under the Third Plan, and rapidly increased imports took up the slack and more. After 1973, imports were further fuelled by the country's new-found wealth in petro-dollars [241. The imports also reflected the country's instability.

Mexico had a rapid increase in its oil wealth, but its situation was quite different from Iran's. Mexican wheat and corn production rose steadily from the mid 1940s onward. But corn production peaked in 1965 and then began to fall off. This decline in production was of great importance because of the role of corn as a staple food: close to 98 per cent of the corn crop was consumed in the form of tortillas. According to one analysis, referring to the early 1970s, "Importation of cereal grains into Mexico has increased sharply in recent years, owing to the growing deficit in corn production" [251. Average energy intake from corn declined steadily from 1,035 calories per person per day in 1961-1965 to 970 calories in 1977. The average energy intake from pulses also declined over this period. The average energy intake from all sources increased over the period largely because of increased consumption of animal products, most of which were probably consumed by the middle and upper classes [2, 26, 27]. During the early 1970s Mexico's production of meat for export also increased sharply, based in part on government-subsidized imports of feedgrains, particularly sorghum [28, 291. Thus, the rapid growth in staple imports to the two countries with the most rapid increases in these imports in the period from 1961 to 1975 cannot be attributed simply to successful economic development.

Agriculture-led development is both feasible and attractive [30] . It can bring about not only economic growth but also the alleviation of malnutrition. Careful distinctions, however, need to be made between different types of agriculture-led development. Some agricultural growth bypasses the poor, both in the disposition of the food products themselves and in the disposition of the wealth that is generated from their sale.

REFERENCES

1. L. Bachman and L. A. Paulino, Rapid Food Production Growth in Selected Developing Countries: A Comparative Analysis of Underlying Trends, 1961-1976 (lnternational Food Policy Research institute, Washington, D.C., 1979).

2. FAO, Food Balance Sheets, 1975-77 Average. Per Caput Food Supplies, 1961-65 Average and 1967 to 1977 (FAO Rome, 1980).

3. C. Payer, "The Debt Crises: An Introduction", NACLA Report on the Americas (North American Congress on Latin America, New York, March 1985).

4. "Us Prosperity and the Developing Countries," GIST (US Department of State, Washington, D.C., 1985).

5. AID Highlights, 1(2): 4 (1984).

6. Food for Peace: 1977 Annual Report on Public Law 480 (Us Department of Agriculture, Washington, D.C., 1978).

7. P. Ensor, "Grains of a Secret," Far Eastern Economic Review, 128(13): 54-56 (1985).

8. R. U. Qureshi, Nutrition Considerations in Agriculture ( FAO Regional Office for Asia and the Pacific, Bangkok, Thailand, 1982).

9. A. Ganganapan, "'The Partial Commercialization of Rice Production in Northern Thailand, 1900-1981," doctoral dissertation (Cornell University, Ithaca, N.Y., 1984), p.395.

10. A. Schnittker and M. E. Abel, "Food Aid and Food Trade," Society, 17(6): 19-25 (1980).

11. A. Chavez, "Food Distribution, Consumption, and Price Policies in Mexico, Food Price Policies and Nutrition in in Latin America (United Nations university, Tokyo, 1980).

12. J. Freivalds, "Frango Frenzy: Brazils Booming Pouitry Export," Agribusiness Worldwide, 3(2): 34-38 (1982).

13. G. Kent, "Food Trade: The Poor Feed the Rich," Food Nutr. Bull., 4(4): 25-33 (1982).

14. C. Christensen, "World Hunger: A Structural Approach," in R. F. Hopkins and D. J. Puchala, eds., The Global Political Economy of Food (University of Wisconsin Press, Madison, Wis., 1978).

15. I. Adelman and C. T. Morris, Economic Growth and Social Equity in Developing Countries (Stanford University Press, Stanford, Calif., 1973).

16. H. Chenery, M. S. Ahluwalia, C. L. G. Bell, J. H. Duloy, and R. Jolly, Redistribution with Growth (Oxford University Press, Ox ford, 1974),

17. World Bank, Aspects of Poverty in the Philippines: A Review and Assessment (World Bank, Washington, D.C., 1980).

18. Summary of 11 Economic Surveys of Food Consumption (Department of Agriculture, Diliman, Quezon City, Manila, Philippines, 1975).

19. A. Ravenholt, Malnutrition in the Philippines (Universities Field Staff International, Inc., Hanover, N.H., 1982).

20. W. Bello, D. Finley, and E. Elinson, Development Debacle: The World Bank in the Philippines (Institute for Food and Development Policy, San Francisco, 1982).

21. M. Lipton, Why Poor People Stay Poor: A Study of Urban Bias in World Development (Harvard University Press, Cambridge, Mass., 19771.

22. US Council on World Hunger, Development, and Trade (USCWHDT), Hunger: A Poverty Problem, Agriculture Development: Key to Income Growth, Development and Trade: The Export Opportunity (USCWHDT, Washington, D.C., 1984).

23. J. W. Mellor, "The Changing World Food Situation," Food Policy Statement (International Food Policy Research Institute, Washington, D.C., 1985).

24. O. Aresuik, The Agricultural Development of Iran (Praeger, New York, 1976).

25. E. J. Wellhausen, "The Agriculture of Mexico," Scientific American, 235(3): 129-150 (1976).

26. C. Hewitt, Modernizing Mexican Agriculture (United Nations Research Institute for Social Development, Geneva, 1977).

27. U. Oswald, "Agribusiness, Green Revolution, Cooperativism and Hunger," in L. Herrera and R. Vayrynen, eds., Peace, Development and New International Economic Order, Proceedings of the International Peace Research Association, 7th General Conference, Tampere (IPRA, Tampere, Finland, 1979).

28. E. Feder, "The Odious Competition between Man and Animal over Agriculture Resources in the Underdeveloped Countries," Review, 3(3): 463-500 (1980).

29. J. Freivalds, "Translating Words into Action: DESC's Entry into Agribusiness," Agribusiness Worldwide, 3(2): 42-46 (1982).

30. I. Adelman. "Beyond Export-led Growth," World Dev., 12(9): 937-949 (1984).

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