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Poverty and hunger with their complex and interconnected root causes remain at the heart of the new Sustainable Development Agenda 2030, and limiting food price volatility is one of the central targets in the Sustainable Development Goals. Advancing the understanding of the causes and effects of food price volatility has as much relevance among policy makers as in the scientific community. As yet, the causal mechanisms linking global food price volatility and local food insecurity lack theoretical foundation and remain understudied. It is further unknown how different types of trade policy measures, which are a frequent political response to food shortages, affect global food price volatility, and it remains to be tested whether improved on-farm storage may be an alternative decentralized option to reduce price volatility where it matters most – at the local level in developing countries. The project therefore aims to:
The consortium behind the project is multidisciplinary, involving scientists with disciplinary backgrounds in economics, law, political science, and geography. The highly international composition of the research team involves university institutes in Switzerland and Vietnam, two major Swiss development organisations (Swiss Agency for Development and Cooperation, and Helvetas) and the Food and Agriculture Organisation of the United Nations (FAO).
The project “Food Price Volatility” is an interdisciplinary research project implemented by the University of Zurich in collaboration with academic partners (WTI at the University of Berne, IPSARD in Hanoi), development agencies (SDC, Helvetas), and the United Nations (FAO). The project offers three major contributions. First, the project results suggest that trade policy measures that aim to limit national food price volatility have a limited, and rather short-lived impact on global food price volatility, in particular when contemporaneous stocks are high. These results do not lend empirical support to the common concern that trade policy measures amplify global food price volatility and thereby cause “beggar-thy-neighbour” effects. Second, rising food prices, and higher food price volatility generally impose adverse effects on the food insecurity of the urban population in low-income countries, while the impact on food insecurity of the rural population is conditional on the harvest cycle. For this part of the population, food insecurity is reduced when prices increase during harvest time, while the opposite is observed during the rest of the year. These results highlight that the effects of rising global food prices on food insecurity are different between and within countries. Finally, we find that improved on- farm storage significantly reduces food insecurity of adopting smallholder farmer’s households, and significantly dampens seasonal food price fluctuations in local markets. This result calls for increased attention to the promotion of improved on-farm storage as part of efforts to achieve the Agenda 2030 for Sustainable Development.
Ending hunger is a key goal of the 2030 Agenda for Sustainable Development, adopted in 2015. This goal notwithstanding, the prevalence of severe food insecurity of the world’s population has increased. It is highest in Sub-Saharan Africa, where the seasonality of harvests leads to fluctuations in food insecurity, particularly in the lean season, the time before the harvest is brought in. We posit that addressing seasonal food insecurity requires not only increased food production, as is commonly argued, but also consideration of post-harvest losses during storage. Here we present the results of a randomized control trial on the effects of improved on-farm storage on seasonal food insecurity. Our intervention provided farming households from two districts in Tanzania with hermetic storage bags that can help reduce storage losses. Seasonal food insecurity was measured via multiple rounds of SMS-based surveys. The results show that the intervention reduced the proportion of severely food insecure households by 38% on average in the lean season, and by 20% in the full seasonal cycle. These findings demonstrate that a simple and inexpensive technology could contribute strongly to reducing seasonal food insecurity and improving smallholder farmers’ year-round access to food.
Seasonal food price gaps, which are the differences between the highest and lowest prices in a harvest cycle, have important welfare consequences in Sub-Saharan Africa. In a region where income from agricultural production and expenditure for food both have considerable shares in household’s budgets, poverty and food security are closely linked to food prices and their seasonal changes. The extent of seasonal price gaps in the region suggest that intertemporal arbitrage is constrained. This paper argues that high post-harvest losses during storage limit farmer’s intertemporal arbitrage, and thereby contribute to seasonal price gaps. The argument is tested by randomly allocating an improved on-farm storage technology to smallholder farmers groups in two districts of Tanzania. The technology, hermetic storage bags, can minimize storage losses even under extended periods of storage. Local market prices are tracked on a weekly frequency over the course of two harvest cycles. The results document significant effects of improved on-farm storage on local market prices in both harvest cycles, with most pronounced effects in the lean season, the time shortly before a new harvest is brought in. The results further show a significant reduction of seasonal food price gaps in the first harvest cycle by 16%, as well as in the second harvest cycle (albeit not significantly so in the second cycle). The results suggest that the absence of suitable storage technologies is an important limiting factor for smallholder farmers to make use of intertemporal arbitrage opportunities. The results thus highlight the need to consider improved on-farm storage as policy and development option to counter seasonal food price gaps and their adverse effects on poverty and food security.
Many countries use trade policy to insulate their domestic markets from price volatility. However, there is a widespread concern that such policies— particularly export restrictions—may amplify global price volatility, adversely affecting other countries. Here, using an original dataset on trade policy announcements on wheat and maize encompassing the food price crises of 2007–2008 and 2010–2011, we show that the announcement of trade policy changes can increase global price volatility. This effect applies not only to export restrictions but also to import liberalization measures and is most pronounced when markets are tight (stocks are low). Policymakers should work towards increasing stock levels to mitigate price volatility effects of trade policy changes. When markets are tight, export restrictions and import liberalizations should be avoided.
This Policy Brief has two purposes:
(1) It informs regulators, negotiators, and national and global stakeholders engaged in policy processes around sustainable development, namely the implementation of Agenda 2030 adopted in September 2015, and of the Sustainable Development Goals #2 (ending hunger) and #12.3 (halving per capita global food waste). At the first UN Summit on the SDGs, heads of states and governments will examine progress in attaining these goals.
(2) It will also contribute to the work of the Committee on World Food Security (CFS) on the Voluntary Guidelines on Food Systems and Nutrition, particularly on the price volatility reduction achievable by improved storage for small farmers.
Matthias Huss
Coordinator
Universität Zürich
Joachim Scholderer
Co-Coordinator
Universität Zürich
Philipp Aemi
Principal Member
Universität Zürich
Michael Brander
Principal Member
ETHZ
Raphael Dischl
Principal Member
Helvetas Swiss Intercooperation
Marco Haase
Principal Member
Universität Zürich
Christian Häberli
Principal Member
Universität Bern
Khoi Dang Kim
Principal Member
Other
Le Thi Ha Lien
Principal Member
Other
Trang Cong Than
Principal Member
Other
Nguyen Thi Ha Trang
Principal Member
Other
Friederike Greb
Associated Member
Food and Agriculture Organisation of the United Nations
Adam Prakash
Associated Member
Food and Agriculture Organisation of the United Nations
George Rapsomanikis
Associated Member
Food and Agriculture Organisation of the United Nations
Simon Zbinden
Associated Member
Swiss Agency for Development and Cooperation
Swiss Network for
International Studies