FOOD SECURITYConcepts, Basic

Facts,and Measurement

Issues

June 26 to July 7, 2006Dhaka, Bangladesh

Rao 2a: Analytics 1: Food

Availability and Food Deficits

Learning: Based on the concepts of the basics of the aggregative models and of the different types of food deficit, trainees will develop facility with graphical representations in the analysis of any given real-life situation.

Brief Contents• three analytical approaches relating

to availability, access and nutrition• an aggregative model of the basics:

requirements, demand and supply• three types of deficit: production

deficit, supply deficit, demand deficit• market imbalances versus food

deficits• graphical representation of the

basics and of deficits

Analytic Approaches• Food Availability Approach

– Aggregate Level– Key Concepts: Production, Supply,

and types of Food Deficit • Food Access Approach

– (Mainly) Individual or HH Level– Key Concepts: Economic and Social

Access, Effective demands or Entitlements

• Food Utilization Approach– (Mainly) Individual or HH Level– Concepts: Nutrition, Health, and

valued or functional Outcomes

Factors DeterminingFood Availability

• the volume and stability of food production (whether subsistence or market oriented)

• available food stocks (farm-level, commercial, government stocks)

• food imports (commercial and concessional).

Factors Determining Access to Food

• For the market-dependent: the purchasing power, or level of real income– At HH Level: wage levels, employment,

prices, etc. – At National Level: availability of F/E for

food imports• For subsistence producers:

productive assets available & non market transfers – [At National Level: resource

endowments & food aid respectively)

Factors DeterminingUtilisation of Food

• Basic (physical) Factors– Dietary intake– Body metabolism

• Complementary (socio-environmental) Factors– Water, sanitation and food safety– Health care, disease prevention and

control– Education and awareness of food-

nutrition factors– Food culture and food norms

An Aggregative Modelof Food Deficits

• To analyze FS of a country (both at point in time and changes over time) we use the following REQUIREMENTS--DEMAND--SUPPLY graphs

Fig. 2.1: Closed Economy Case

(w/ neither food imports nor exports)• Basic model of aggregate food situation in

closed economy

Note: real economies will be neither completely closed nor completely open

Fig. 2.2: Open Economy w/ Imports

• Basic model of aggregate food situation in open economy

Note: real economies will be neither completely closed nor completely open

5 Basic Elements of the Model

• 1. Production Curve

– shows the volume of aggregate food production at varying market prices of food

– food production includes subsistence production as well as production for sale on the market

5 Basic Elements of the Model

• 2. Supply Curve– shows total food supplies at varying

market prices; incorporates food production (see previous), modified by stock changes and food imports/exports.

– For a closed economy with NO stock changes, Supply Curve = Production Curve

– For open economy, this is so only until domestic price reaches world price level

5 Basic Elements of the Model

• 3. Demand Curve– shows total food demand (effective

market demand plus home consumption from subsistence output)

– Why negative slope? Real income effects.

• 4. Food Requirements– approximately given by calorie or

staple food requirements on the basis of food balance sheets

– IMP. NOTE: more unequal is food distribution, higher will be requirements

5 Basic Elements of the Model

• 5. Market Prices– major factor determining food

production, supply and demand.

– In closed economy, regulated OR competitive OR quasi-competitive

– In a free, open economy: price is world-market determined (CIF or FOB)

Food Deficits• The following types of food deficits

can arise:– in PRODUCTION

– in SUPPLY

– in DEMAND

– MARKET IMBALANCES (deficit or surplus)

Types of Food Deficit (defined)

A production [or structural] deficit

production insufficient to meet total food requirements

FP < FR [does not necessarily mean FIS e.g.,

Japan]

Types of Food Deficit (graphs)2.3a: Areas of production deficits

(& supply deficits in a closed economy)

•

Types of Food Deficit (graphs)2.3b: Area of supply deficits

in an open economy

•

Types of Food Deficit (graphs)

2.3c: Area of demand deficits

•

Types of Food Deficit (graphs)

2.3d: Areas of market imbalances (surpluses & deficits)

in a closed economy•

Market Imbalances• Market imbalances (deficits or

surpluses)– ←→ market price differs from equilibrium price – [set below (market supply deficit) or above

(market demand deficit) "market-clearing" P]

• Question: Is this statement true?If the market price is fixed below equilibrium

price … food demand would rise, so demand deficit would diminish.

However, food supplies from domestic production as well as food imports (in the open economy case) would go down.

• Market imbalances either require Government Regulation or Market Collusion.

Table 2.1: Types of Food Deficits

Type of deficit Definition Examples referring to   

 Closed

economy Open

economy Production deficit food production < food requirements R-A R-C

Total supply deficit total food supplies < food requirements R-A R-B

Demand deficit effective demand < food requirements R-A R-B

Import deficit market production < effective demand - B-C

Market imbalances:* IF market prices are set:*- Market (-supply) deficit

market supplies < effective demand below po above pm

- Market surpluses market supplies > effective demand above po below pm

* Prices set apart from equilibrium prices lead to an overall change of the deficit structure, see above.