EIU Proposal

Global Food Security Index 2013: An annual measure of the state of global food security Sponsored by

2 July 2013

Agenda

. Overview

. Methodology

. Results Overview

. In 2012 the Economist Intelligence Unit was commissioned by DuPont to produce the innovative Global Food Security Index designed to develop a common framework for understanding the root causes of food insecurity. . This year’s first annual update of the index reveals food security challenges countries face over the course of a year. Two new countries—Ireland and Singapore—and two new indicators—corruption and urban absorption capacity were added to deepen the analysis. Defining food security  Food security exists when people at all times have physical, social and economic access to sufficient and nutritious food that meets their dietary needs for a healthy and active life. The Global Food Security Index: . ranks 107 countries . according to their relative levels of food security . using 27 indicators divided into three categories: Affordability; Availability; Quality and Safety. Objectives

. To provide a rigorous, structured framework for understanding the drivers of food security.

. To enhance the understanding of food security in a global context.

. Specifically, the index seeks to identify:

. The factors affecting food security

. The relationship between these factors

. Leading and lagging countries

. How countries can improve food systems to reduce food insecurity

. Priority areas for each country (eg. trade policy, infrastructure, agricultural R&D)

4 What are we measuring?

This index is the first to examine food security comprehensively across the three internationally established dimensions of food security:

 Availability,  Affordability, and  Utilisation – called “Quality and Safety” in the index

. It looks beyond hunger to the underlying factors that influence the ability of consumers to access sufficient amounts of safe, high-quality and affordable food.

. It employs a quarterly adjustment factor for food price fluctuations to examine the risks countries face throughout the year.

. It includes several unique qualitative indicators, developed and scored by Economist Intelligence Unit analysts, to capture drivers of food security not currently measured in any international dataset.

. This year’s update includes two new indicators that aim to capture the effects on food security of corruption and an economy’s ability to cope with urbanisation.

Agenda

. Overview

. Methodology

. Results

6 Geographic coverage: 107 countries

Austria, Belarus, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Canada, Netherlands, Norway, Poland, Portugal, Romania, Russia, United States of America Serbia, Slovakia, Spain, Sweden, Switzerland, Ukraine, UK

Australia, Azerbaijan, Bangladesh, Argentina, Bolivia, Brazil, Algeria, Benin, Botswana, Burkina Faso, Cambodia, China, India, Indonesia, Israel, Chile, Colombia, Costa Rica, Burundi, Cameroon, Chad, Cote d’Ivoire, Japan, Jordan, Kazakhstan, Malaysia, Dominican Republic, Ecuador, Congo, Egypt, Ethiopia, Ghana, Guinea, Myanmar, Nepal, New Zealand, Pakistan, El Salvador, Guatemala, Haiti, Kenya, Madagascar, Malawi, Mali, Morocco, Philippines, Saudi Arabia, Singapore, Honduras, Mexico, Nicaragua, Mozambique, Niger, Nigeria, Rwanda, South Korea, Sri Lanka, Syria, Tajikistan, Panama, Paraguay, Peru, Senegal, Sierra Leone, South Africa, Sudan, Thailand, Turkey, Uzbekistan, Vietnam, Uruguay, Venezuela Tanzania, Togo, Tunisia, Zambia Yemen

7 Index framework

. Food consumption as a share of household . Sufficiency of supply expenditure . Public expenditure on agricultural R&D . Percent of population under global poverty line . Agricultural infrastructure . GDP per capita, $US, PPP . Volatility of agricultural . Agricultural import tariffs production Affordability Availability . Presence of food safety nets . Political stability risk . Access to finance for farmers . Corruption . Urban absorption capacity Index

Food Price Adjustment Factor . Diet diversification

. Nutritional standards Quality and External . FAO global food price index Safety Adjustment . Micronutrient availability adjusted for income growth and pass-through coefficient of . Protein quality global to national food prices . Food safety on a quarterly basis . Applied to Affordability score

 Next update in October 2013

8 * Composite indicators are bolded. Agenda

. Overview

. Methodology

. Results

9 Overall results: 2013 GFSI

Score 0-100, 100=best environment

Score 69.5 to 86.8 Score 52.3 to 69.4 Score 35.9 to 52.2 Score 20.8 to 35.8

10 Results: Top and bottom performers

BEST ENVIRONMENT . The most food-secure countries still share these 1 United States 86.8 characteristics: 2 Norway 86.5 . Ample food supply 3 France 83.7 4 Austria 83.4 . High incomes =5 Switzerland 83.2 . Low spending on food relative to other outlays =5 Netherlands 83.2 7 Belgium 82.4

8 Canada 82.1 . As was the case last year, high income countries 9 New Zealand 82.0 dominate the top of the rankings. They account for all of 10 Denmark 81.8 th the first 28 countries, except for the 26 position, which is WORST ENVIRONMENT held by Chile. =96 Madagascar 29.3 =96 Rwanda 29.3 98 Sierra Leone 29.0 . The bottom of the rankings consists of low income 99 Malawi 28.3 countries, particularly from Sub-Saharan Africa. 100 Zambia 28.1 Myanmar is the highest low income country in the index, 101 Haiti 27.6 th 102 Mali 26.8 at 74 overall, out of 107 countries. 103 Burundi 26.3 104 Sudan 25.2 105 Togo 22.7 106 Chad 22.1 107 Congo (Dem. Rep.) 20.8

11 Results: Year-on-year changes

LARGEST RANK IMPROVEMENTS . Overall food security was little changed from last year. No Ethiopia 90 +11 region’s score improved dramatically, but Sub-Saharan Africa Botswana 43 +7 Dominican Republic 55 +7 showed the biggest gain, climbing by just under one point Niger 91 +7 Israel 17 +6 . Developing countries made the greatest food security gains in Madagascar 96 +6 the past year. Rising incomes and larger average food supplies Malaysia 34 +5 improved food security in many developing countries. Myanmar 74 +5 Senegal 82 +5 . Falling national incomes hurt food security in some Uruguay 32 +5 developed countries over the past year. Income per person dropped in most advanced economies in the past year, the LARGEST RANK DECLINES result of weak economies; although, they remain, for the most Mali 102 -14 Russia 40 -7 part, in the top 20% of the index. Sudan 104 -7

Syria 79 -7 . Political conflict reduced food security in Mali, Yemen and Yemen 93 -7 Syria during the past year. Violent conflict not only reduced El Salvador 63 -6 political stability but also hurt GDP growth, road infrastructure, Greece 25 -6 access to potable water, and curbed the ability of formal Guatemala 68 -6 grocery sectors to provide food. Ukraine 47 -5 Zambia 100 -5

12 Results: Affordability

. The populations of South Asia and sub-Saharan Africa are AFFORDABILITY RANKINGS the most vulnerable to food price shocks. 1 Singapore 93.9 . Food consumption as a share of household expenditure 2 United States 91.7 averages 52% in both regions, versus 20% in high- 3 Switzerland 88.9 income countries. 4 Norway 88.1 . These regions have the highest and second highest 5 Australia 87.8 incidence of those living under the global poverty line. 6 Netherlands 87.3 . After North America, Latin America & Caribbean has the 7 Belgium 86.7 lowest agricultural import tariffs. 8 Ireland 86.6 . The top two Latin American countries, Peru and Chile, 9 Sweden 86.5 respectively rank fourth and seventh overall. 10 Denmark 86.3 . Sub-Saharan Africa lags all other regions in providing … … … adequate access to financing for farmers. 30 Chile 70.8

* Chile ranked higher in Affordability than any other country in the region, just ahead of Brazil (31st) and Argentina (33rd). Chile has particularly low agricultural import tariffs, which contributed to its strong performance in the category. Chile also improved considerably in GDP per capita, which jumped to US$2,330, a 14.4% increase, since last year’s index. Chile ranks the lowest in the category on proportion of people living under the global poverty line. 2.7% of the population lives on les than US$2/day (PPP).

13 Results: Availability

. High income countries performed well in all indicators except volatility of agricultural production and urban AVAILABILITY RANKINGS absorption capacity. 1 Norway 86.6 2 France 82.9 . High political instability, low urban absorption capacity, 3 United States 82.4 and high volatility of agricultural production all contribute 4 New Zealand 81.5 to the moderate performance of the Middle East. 5 Austria 81.2 . While Asia and Latin America & Caribbean face challenges 6 Netherlands 79.1 in food availability, volatility of agricultural production is an 7 Switzerland 78.9 area of strength. 8 Germany 78.7 9 Belgium 78.4 . South Asia and Latin America & Caribbean perform the 10 Canada 78.1 best in the new urban absorption capacity index. Countries … … … in the top-third of the rankings tended to have relatively 22 Chile 69.2 high GDP growth rates and below-average urban growth rates, facilitating easier adaptation to urbanisation.

* Chile also ranked the higher in Availability than any other country in Latin America and the Caribbean. Chile did particularly well on the two new indicators: corruption (10th) and urban absorption capacity (12th), which contributed to its overall rank improvement from last year. Although its overall score did not change, Chile experienced a slight decline in its average food supply, which fell 12 kcal/capita/day.

14 Results: Quality and Safety

. Dietary protein consumption increased in 62% of the QUALITY AND SAFETY RANKINGS countries in the index. Average daily protein consumption 1 Israel 88.5 is 1.7 grams greater in this year’s index than it was the 2 France 87.5 prior year. 3 Portugal 87.0 . Low income countries, particularly those in Sub-Saharan 4 Greece 86.8 Africa and the Middle East & North Africa, actually rank 5 United States 86.4 the highest for dietary availability of vegetal iron, while =6 Ireland 85.6 high income countries perform considerably worse. With =6 Spain 85.6 the exception of Greece, the top 13 ranked countries are 8 Australia 85.4 in Africa. 9 Italy 84.7 . South Asia, Latin America & Caribbean, and North 10 Netherlands 84.1 America all had perfect scores for nutritional standards. … … … All countries in these regions had sufficient government 30 Chile 72.2 commitment to increasing nutritional standards.

* In Latin America & Caribbean, Argentina had the highest rank for quality and safety (24th), while Chile and Mexico were tied for second in the region (30th). Protein quality in foods improved since last year, through greater overall consumption of protein. Dietary availability of vegetal iron in Chilean’s food consumption is Chile’s weakest area in this category. In Chile, the average person receives 9.4 mg/capita/day of vegetal iron per day, which is below the average of 11.1 mg/capita/day.

15 Regional results: Latin America and the Caribbean

. LAC made modest improvements to its food security in the Rank 2013 GFSI. While food remains affordable to residents of Score / LAC, its avalability remains a regional concern. Regional Global 100 1 26 Chile 70.3 . LAC residents continue to spend less on food – as share of 2 29 Brazil 67 their income - than other regions with similar income 3 30 Mexico 66.2 levels. 4 32 Uruguay 65.3 . In Brazil, the average household spends only 19.8 5 35 Argentina 63.8 percent of their incomes on food. The sustainability of 6 36 Costa Rica 63.7 these policies is unclear given the mounting 7 41 Venezuela 60.8 inflationary pressures in the country. 8 44 Panama 59.7 . Peru, Colombia, Bolivia, and Panama improved their 9 50 Peru 56 food affordability by decreasing tariffs on agricultural 10 52 Colombia 54.5 products, partly from the implementation on trade 11 53 Paraguay 52.9 agreements with the US and other countries. Dominican . Underinvestment in both Agricultural R&D and 12 55 Republic 51.9 infrastructure persist. Sufficient amounts of healthy food 13 57 Ecuador 51.6 are not available for considerable portions of the region, 14 62 Honduras 48.4 which still depends significantly on external food aid. 15 63 El Salvador 47.5 . On average, residents of Bolivia, Ecuador, Guatemala, 16 65 Bolivia 46.2 and Haiti consume less than 2,300 calories per day – 17 68 Guatemala 45.2 the UN recommended amount for healthy, active 18 72 Nicaragua 41.6 adults. 19 101 Haiti 27.6

16 EIU’s outlook on Chile - Overview

. Chile will continue to stand out as the economy in Latin America with the soundest macroeconomic fundamentals, reflecting decades of good economic management. . The Banco Central de Chile (BCCh, the Central Bank) will continue to preserve the country’s hard-earned reputation for price stability, while seeking to curb peso volatility and shield the economy from external shocks.

Chile’s robust economic fundamentals and political and institutional stability will be supportive of growth in 2013 - 17. Although the economy is expected to cool after GDP growth of 5.6% in 2012, continuing strong consumption and investment will result in GDP growth of 4.7% (down from our previous forecast of 5%) in 2013.

17 EIU’s outlook on Chile – agriculture and prices

. Agriculture, Chile’s second largest source of exports, is expected to grow by 3.5 - 4% annually in 2013 – 17, supported by privileged market access afforded by the country’s large network of FTAs.

. Sound policies will limit inflationary pressures— the monetary policy rate, at 5%, is currently close to neutral—and we forecast that inflation will mostly remain within the 24% official target range over the outlook period.

. Domestic risks to this forecast could emerge from the national electricity grid’s vulnerability to weather shocks (predominantly droughts), which could result in energy price rises. Also, volatility in global fuel and food prices could again exert inflationary pressure, as occurred in 2007-08.

18 Regional results: Latin America and the Caribbean

19 Results: Chile’s strengths

. Chile ranked 1st in the region for affordability and availability and 2nd in quality and safety. . Food in Chile is affordable and available, relative both to the region and globally. . High incomes, low financial outlays on food and robust public expenditure on agricultural research and development all supported strong scores in these categories.

. Food availability – a regional weakness – continues to improve in Chile. Continued foreign investment has improved road infrastructure improving the transportation and delivery of food throughout Chile. . In late 2012, the Chilean Foreign Investment Committee (CFIC) announced a series of foreign investments in infrastructure. The projects included: terminal upgrades at Arturo Merino Benítez International Airport in Santiago and El Tepual Airport in Puerto Montt; railroad investments in the Transandino Central Railway several others. . In its most recent report, the CFIC offers foreign investors • Overall rank: 26/107 7.9 billion in concessions for transportation projects, targeting highways, ports and railways, investments. • Overall score: 70.3/100 . Chile is the highest ranked upper-middle income country in the GFSI, ahead of multiple high income countries. Chile ranks 26th overall in food security.

20 Results: Chile, cont’d.

. Chile ranks 2nd overall in the region for food Quality and Safety, but needs greater diet diversification • The presence of nutritional institutions and strong food safety support Chile’s overall score in the category. • Chile’s greatest weakness is in diet diversification. While food consumption is relatively rich in micronutrients and protein, it has less non-starchy foods than in many other countries in the region. Diet diversification Micronutrient availability 1 Dominican Republic 69.00 1 Mexico 63.4 =2 Argentina 67.00 2 Peru 58.2 =2 Costa Rica 67.00 3 Chile 56.5 4 Brazil 64.00 4 Argentina 56.0 5 Ecuador 63.00 5 Venezuela 50.5 =6 Colombia 60.00 6 Uruguay 49.7 =6 Venezuela 60.00 7 El Salvador 38.5 8 Paraguay 58.00 8 Paraguay 37.5 9 Chile 56.00 9 Brazil 36.9 =10 Honduras 55.00 10 Costa Rica 35.7 =10 Mexico 55.00 11 Honduras 34.3 =10 Panama 55.00 12 Panama 32.6 13 El Salvador 54.00 13 Guatemala 32.5 14 Uruguay 53.00 14 Colombia 31.7 =15 Guatemala 48.00 15 Bolivia 29.3 Dominican =15 Nicaragua 48.00 16 28.8 Republic 17 Bolivia 46.00 17 Ecuador 25.3 18 Haiti 45.00 18 Nicaragua 17.0 19 Peru 41.00 19 Haiti 8.9

21 Results focus: Nutrition and obesity in Chile

. The problem: According to the World Health Organization, being obese or overweight is now the fifth leading risk for death in the world, surpassing underweight as a global public health issue.

. The rapid modernisation and urbanisation, of the 1980s and 1990s changed the lifestyles of many Chileans and thus the country’s health profile. By the end of the 1980s, undernutrition had virtually vanished, but obesity was on the rise.

. Results of the 2010 National Health Survey found that 25.1% of Chileans are overweight, an increase of 3.2 percentage points from the last survey in 2003. Compared with other countries, Chile’s nutritional transition has been particularly rapid. Chile’s ranked 6th in a survey of infant and child obesity rates in OECD countries, and it has one of the highest infant and child obesity rates in Latin America, outside of Mexico.

22 Results focus: Nutrition and obesity in Chile

. The response: In 1998, the newly-created Results: Chile National Board for Health Promotion (VIDA Chile) introduced a calorie reduction policy in Chilean schools. The program focused on decreasing fat, sugar, and salt consumption while incorporating greater amounts of fruits, vegetables, fish, and legumes. The Ministry of Health launched additional initiatives in 2005 and 2010 to reduce obesity prevalence, including the Global Strategy Against Obesity (EGO Chile) and Choose to Live Healthily program (Elige Vivir Sano).

. Elige Vivir Sano increased physical activity requirements in schools from 2 to 4 hours per week, “active plazas” were created through the installation of exercise equipment, and media campaigns encouraged exercise at home using household items like a kilo of rice.

23 Results focus: Nutrition and obesity in Chile

. The results: It is too early to know the population level impacts of these programs, but there is reason for optimism. Although obesity continues to rise, the rate of its ascent is slowing. A recent consumer survey in Chile showed increased interest in healthy food, opening the door for private companies to develop and market healthy, tasty products. . Global problems, local solutions: Although the problem of obesity is global, each country needs to develop strategies and solutions appropriate to its local context. Food-security experts in Chile face a new challenge today: developing complementary strategies to ensure that people get enough to eat in a way that fits individual lifestyles, while not eating too much of the unhealthy foods that lead to obesity.

24 Contact information

David Humphreys Director, Custom Research, Americas Economist Intelligence Unit Email: [email protected]

Irene Mia Regional Director, Latin America and Caribbean Economist Intelligence Unit Email: [email protected]

The 2013 GFSI can be found at: http://foodsecurityindex.eiu.com