11177 FILE COPY Report No.:11177 Type: (PUB) Title: FOOD POLICY ANALYSIS Author: TIMMER, C. PETER Ext.: 0 Room: Det.: Public Disclosure Authorized .. OLD PUBLICATION C 19=832 C. Peter Timmer Public Disclosure Authorized Walter P. Falcon Scott R. Pearson Public Disclosure Authorized A ~~~ A WORLD BANK PUBLICATION ,nPapE~~~~~~~~~~T 6t Public Disclosure Authorized I l INTERNhAL DOCUMEENTS UNIT (mi. crogr-aphi cs) Indi. vidti..ta. reqUest f or microf i che production DOCcument number: 111L77 Box Nc. 229 Report Type.:PUB . (FINAL) SA(MPLE FICHE HE(ADING BOLIVIA -- PUBLICATION L1102-FBO STUDIEES IN EMPLOYMENT FAND RURAL DEEVELOF:MENT SMALL SCALE RUJRAL I NDlUSTRY I N BOL IVI A. JUNhlE 4., 1985. C(ARD 1 OF 1 No. oa Silver: 1 Master: I Diazo: 1 T-otal: 3 FOOD POLICY ANALYSIS A WORLD BANK PUBLICATION FOOD POLICY AN ALYS I C. Peter Timmer Walter P. Falcon Scott R. Pearson Published for The World Bank The Johns Hopkins University Press Baltimore and London Copyright X) 1983 by the Intemational Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. First printing June 1983 All rights reserved Manufactured in the United States of America The Johns Hopkins University Press Baltimore, Maryland 21218, U.S.A. The views and interpretations in this book are those of the authors and should not be attributed to the World Bank, to its affiliated organizations, or to any individual acting on their behalf. Figures Pensri Kimpitak Binding design Joyce Eisen Library of Congress Cataloging in Publication Data Timmer, C. Peter Food policy analysis. "Published for the World Bank." Bibliography: p. Includes index. 1. Food supply-Govemment policy. 2. Underdeveloped areas-Food supply-Government policy. 1. Falcon, Walter P., 1936- 11. Pearson, Scott R. Ill. Title. HD9000.6.T48 1983 338.1'9 83-4389 ISBN 0-8018-3072-9 ISBN 0-8018-3073-7 (pbk.) Contents Preface vii 1. Introduction to Food Policy Analysis 3 The Global Food Problem 4 The Human Problem of Hunger 5 Food Policy 9 Bibliographical Note 17 2. Analysis of Food Consumption and Nutrition 19 Understanding the Hunger Problem 19 Food Consumption Analysis 35 Using Consumption Parameters 60 Bibliographical Note 73 3. Analysis of Food Production Systems 77 Understanding Food Production Issues 78 Food Production Analysis 91 Understanding Farming Systems 109 Forming a Production Strategy 141 Bibliographical Note 147 4. Marketing Functions, Markets, and Food Price Formation 150 Marketing Issues 151 Understanding the Marketing System 164 Domestic Markets and Price Policy 189 Bibliographical Note 211 5. Macroeconomic Policies and the Food System 215 The Macro Economy and Macro Policies 218 Macro Prices and the Food Sector 228 Rural-Urban Terms of Trade 247 Bibliographical Note 255 V Vi CONTENTS 6. Macro Food Policy 260 The Macro Food Policy Perspective 262 Managing a Food Policy 269 An Effective Food Policy: Lessons and Perspectives 283 Bibliographical Note 293 Index 297 Preface Food policy will be of paramount concem to economic development efforts for at least the next two decades. Govemments are trying to confront their food problems, and they need good analysis and good analysts to do so. This book attempts to show that food problems are immersed in the broader problems of economic development and that solving food problems is a complex task involving a long-run vision of how food systems evolve under altemative policy environments. Our goal is to establish for the reader a sense of that vision. The book presents the tools and analytical frameworks for doing the sectoral analyses that are the foundation of a consistent domestic food policy. Both the vision of the system and the analytical steps needed to understand it have been fermenting in our minds for the past several years, partly because we have been doing food policy analysis in various settings, partly because we have been trying to teach a variety of audiences how to do it. Indeed, in many ways this book has emerged from the exhilaration and frustration of teaching food policy analysis to diverse groups of students scattered around the world. The students provided a major stimulus to write this book and also a complex, composite image of our ideal audience. Our classes on food policy analysis have been attended by students from a wide variety of backgrounds. Economics students, along with students in the allied fields of agricultural economics, economic development, and economic history, are interested in applying the theory and tools of economics to real-world settings. The nature of the topic-the problems of food and agriculture-also draws a range of specialists, from public health professionals to political scientists, who find parts of the approach to these problems relevant to their own disciplines. Civil servants from developing countries have enriched the classes with their experience and insights. What brings all these students, plus a sprinkling of urban planners, art history majors, and divinity students, is a desire to know more about the problems of the world, especially the pressing and urgent problems of poverty and hunger. Once the expectation is raised that problems of this magnitude will be dealt with, it then becomes difficult to narrow the investigative focus. Temp- tation and pressures are great to consider all the relevant factors-sociological, vii viii PREFACE political, anthropological, demographic, economic, historical, biological, and medical-so that nothing will be missed. It is especially difficult to talk about poverty and hunger without including the myriad of political factors that so influence the basic choices a society makes, which result, in many countries, in large, dispossessed classes of people. It was beyond the scope of this book to structure meaningfully the political issues of food policy. The interests of different groups may range from those of competing factions within a bureaucracy to those of revolutionaries trying to bring down a government. A reminder to students that a course in food policy analysis is not a course in revolution brings knowing smiles from foreign students, for they are keenly aware of the crucial role of politics and the limitations of incremental change designed to reduce hunger within a par- ticular political context. Political factors, however, do not necessarily dom- inate the formation of effective food policies. For example, three Asian countries mentioned in this book-China, Indonesia, and Sri Lanka-have vastly different political climates, yet each has a core of government and university people genuinely committed to solving the pressing problems of hunger and poverty in their societies. Nearly all countries have a few such people. In many countries they do not form a critical mass or have sufficient access to political power to have an influence on policy. The confidence to proceed with this book draws from experience with these committed individuals and with students around the world, deeply concerned about food problems in their societies, who come to our classes, test the simple models against their own experiences, and depart, they say, with a better understanding of the complex forces at work in their own countries. This book focuses on analysis, its power and its limits for improving food policy. Analysis has an important role in policy design, but it cannot solve all the problems that fall within its vision and grasp. Its most effective contribution is the analytical process itself: the careful thinking through of complex problems within a consistent framework. So it was with this modest and limited approach-building a framework using the theory and tools of economics and applying it to the problems of hunger and poverty-that we set out in 1979 to write a book that would show how to analyze food policies. The most difficult task-which has be- deviled us for three years-was identifying the audience we wanted to reach. Who is this "food policy analyst" who figures so prominently in the book? In a narrow sense, the food policy analyst is the staff member of a food ministry, such as the Indonesian Food Logistics Agency (BULOG). The three authors teach a three-week training course to BULOG staff, most of whom return to provincial centers where defending the "floor price" to farmers and the "ceiling price" to consumers has a very real immediacy. These people are involved in the day-to-day management of a food policy. BULOG staff in larger centers and the capital contribute directly to making policy, a respon- sibility shared by the staffs of the Indonesian National Planning Agency, ministries of agriculture and finance, and the central bank. PREFACE ix But in a broader sense, the analyst is all of our students. The audience includes students who ultimately fan out around the world to staff agriculture ministries, planning agencies, bilateral donor agencies, intemational vol- untary organizations, foundations, research institutes, the World Bank, and the Intemational Monetary Fund. In many countries, former students teach in colleges and universities where they in tum train students to staff gov- emment posts and an equally wide variety of positions. Some in this diverse group join international organizations that provide development assistance to poor countries. The diversity of our audience encouraged us to use an unconventional (some colleagues might say bizarre) approach in writing this book. There are few econometric techniques presented and virtually no recipes to follow that will assure success. Rather, the book relies on simple models to organize the complexity of an interdependent food system and to develop a way of thinking about food and agriculture, and the associated poverty and hunger, that will facilitate solving these problems. By the standards of the economics profession, the analytical techniques seem overly simple. But the book is not meant to train specialists.