First Quarter 2003 A publication of the CHOICES American Agricultural The magazine of food, farm and resource issues Economics Association in the World: Costs and Benefits of Remedies By William H. Meyers

On World Food Day— 16, 2002—the 2015, in addition to the number of hungry added Food and Agriculture Organization of the United each year by population growth. Nations (FAO) issued its annual assessment of These figures are consistent with related mea- world food insecurity in its annual report entitled sures of poverty, health, and mortality status, so “The State of Food Insecurity in the World.” Food fine-tuning the estimates would not change the pic- security and food insecurity have different mean- ture. How could the world hunger situation be so ings for different people, times, and places. How- dismal in a world of plentiful food supplies and ever, in the context of this report, food insecurity is after all the declarations and commitments made in not about food safety or national self-sufficiency in various world summits on food and poverty? Dec- food production. Rather, it is about chronic hun- larations and commitments without concerted ger. action will not solve the problem. It is what hap- The conclusion of this report is that “progress pens after these declarations that could make a dif- in reducing hunger in the developing world has ference. Is it a problem of not knowing what to do, slowed to a crawl and in most regions the number or poor implementation, or a lack of political will of undernourished people is actually growing.” to do what is needed? Most likely all of these are Only in China, Southeast Asia, South America, and contributing factors, but the remedy lies in reach- West Africa did both the number and the share of ing greater consensus on the actions and resources the undernourished population decrease. In every needed for faster progress and fostering political other region of the developing world the number of will among those who could make a difference. undernourished increased, and in most of these the proportion of undernourished in the population From Numbers to Issues also increased. Knowing the numbers helps to define the issue. The figures published by FAO are the number and Hunger in Numbers proportion of people in the world (and in specific The stark numbers are that for the period 1998- regions and countries) whose access to food is 2000 there were, on average, 799 million under- “insufficient to continuously meet dietary energy nourished in developing countries—nearly one of requirements.” In other words, people who are every seven persons. This is only 20 million fewer chronically below the cutoff level of calories used in than in the 1990-92 benchmark period used at the these estimates do not consume enough to work a World Food Summit of 1996. At that summit the normal day, to learn normally at school, or develop global commitment was made to reduce the num- normally as a child. They are also more susceptible ber by half by the year 2015. This goal was reaf- to illness, have higher mortality rates, and are more firmed by 180 countries at the World Food vulnerable to natural and man-made calamities. In Summit: Five years later in June 2002. (postponed 22 of the countries (mostly in Sub-Saharan Africa), from November 2001 for security reasons). Having the estimated share of the population chronically progressed by only 20 million in the first few years, hungry is 35% or more, and for several countries it the global community now has a huge uphill battle is 50% or more. to lift an additional 390 million out of hunger by

First Quarter 2003 CHOICES 1 Given this definition of hunger, the persistence increase food availability and, even more impor- of widespread hunger is both a moral issue and an tantly, increase incomes of the rural poor. economic one. Hunger stunts the physical and mental development of children and the productiv- Investment in Hunger Reduction ity (and earning potential) of adults. Though less With many competing agendas vying for scarce conclusive, studies on the aggregate impact of hun- resources both in national governments and inter- ger and indicate that the economic national agencies, significant increases of resources growth of communities and nations is also stunted are unlikely without a cost-benefit analysis of when hunger in the population is widespread. investments in hunger reduction. Fortunately, such Thus, investment in hunger reduction has an eco- work is in progress. Inspired by the 2001 World nomic benefit not only to the individuals in need Health Organization study “Macroeconomics and but also to their communities and nations and the Health: Investing in Health for Economic Develop- global economy. ment” led by Columbia University economist Jef- Framing the issue in economic terms may seem fery Sachs, FAO conducted a preliminary cost- crass, but the moral outrage argument has not benefit study in a document entitled “Anti-Hunger proven to be very effective. The most telling indica- Programme” (AHP) for the World Food Summit: tion of a disconnect between declarations and Five years later held in June 2002. A revised and action is that by FAO estimates, concessional offi- expanded second draft of this document was pre- cial development assistance for agricultural and sented at the Johannesburg (Sustainable Develop- rural development (broadly defined) has declined ment) Summit in August 2002. In this document, by more than 30% in real terms during the 1990s, the benefits of a drastic reduction (but not total even though about three-fourths of the poor and eradication) of hunger are estimated at $120 billion hungry live and work in rural areas. The decline is of additional Gross National Product per year. nearly 50% if the definition of agriculture is nar- Those benefits come about as a result of longer, rowed to include only crop and livestock produc- healthier, and more productive lives. tion, land and water, inputs and services, fisheries, What would a business plan to fight hunger and forestry. During this same period, the volume include? In the Anti-Hunger Programme, FAO sets of lending to developing and transition countries out priority areas for investment and estimates the for agriculture projects by the World Bank and incremental public investment costs of each, with other international financial institutions also suggested cost sharing between national govern- declined by 40% in real terms, and the share of ments and international donors. In brief, the prior- agriculture in total lending to these countries ity areas are: (a) raising farm productivity in poor declined from 20% to less than 10%. rural communities; (b) promoting sustainable use Many factors contribute to hunger, a principal of natural resources; (c) improving rural infrastruc- one being poverty. But the debilitating effects of ture and market access; (d) increasing agricultural hunger also contribute to poverty by depriving the research, extension, and nutrition education; and poorest of their main, and sometimes only, asset— (d) enhancing direct access to food for the most labor. It is unlikely that the most undernourished needy. These priorities follow from the assessment can escape poverty without increased access to that investments in agricultural and rural develop- food. So hunger and poverty are inevitably interde- ment have the highest payoff and that direct access pendent. to food is an essential priority for the most needy. Hunger and poverty are still primarily a rural The estimated additional public resources phenomenon in developing countries, although needed for the first four priorities total $18.6 bil- rural poverty also induces migration to urban areas, lion annually. In the spirit of partnership between where poverty is increasing. The majority of poor developed and developing countries, it is suggested and hungry people depend directly or indirectly on that this amount be shared about equally between agriculture for their livelihoods. Making invest- recipient countries and official development assis- ment in agricultural and rural development the key tance (ODA) from donor countries. The estimated strategy in reducing hunger and poverty will additional public cost of food access programs,

2 CHOICES First Quarter 2003 such as school meals, is $5.2 billion annually, which definite commitments to priorities and resources, would mostly be provided by ODA. These figures especially by national governments and interna- would mean a 20% increase in the national budget tional donors. expenditures for agriculture in developing countries and a doubling of ODA to agricultural and rural For More information development in donor countries. Although dou- The Anti-Hunger Programme—Second Draft can bling ODA to agriculture and rural development is be accessed at http://www.fao.org/DOCREP/ a tall order, it would restore only what was lost 004/Y7151E/Y7151e00.HTM. Comments can since 1988. be sent to [email protected]. The Secretary-General, Kofi The Millennium Project and its Hunger Task Force Annan, has launched a comprehensive effort on can be found at http://www.earthinsti- this issue, aimed at proposing modalities, resource tute.columbia.edu/millennium_project.html. requirements, and necessary actions to reduce hun- ger. This study is being conducted by the Hunger William Meyers ([email protected]) is Professor Task Force, one of several task forces in the Millen- of Economics at Iowa State University and recently nium Project led by Jeffrey Sachs. In the interim, returned from leave at the Food and Agriculture the FAO Anti-Hunger Programme provides a basis Organization of the UN in Rome, where he was for discussion and debate on priorities for and net Director of the Agriculture and Economic Develop- benefits of taking action against world hunger. In ment Analysis Division. The author is grateful for fact, FAO invites comments on the second draft, valuable comments from former FAO colleague which is found on their web site. Such interactions Kostas Stamoulis. and refined analyses should form the basis for more

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