Agricultural Policy and Food Security

Food and Agricultural policy
Department of Agricultural Economics

Eshete Bejiga(M.Sc &MA)
eshetebejiga4@gmail.com
Course Outline/content
Chapter 1: Introduction to food security and Agricultural Policy
Chapter 2: Overview of Agricultural and food policy in Ethiopia
Chapter 3:Food and nutrition security and measurement
Chapter 4:Driving forces of food security
Chapter 5: Relationship between stabilizing Agricultural markets Policy and

food security
Chapter 6:Impact of Agricultural Policies on food security

The 5th Annual Agricultural Policy Conference (AAPC)
Theme: Prioritizing Agriculture in the Industrialization Agenda for Tanzania under ASDP-2
Chapter 1
Introduction to food security and Agricultural Policy
Chapter objective
At the end of this chapter the students will able to understand;
• Foundation, Definition and dimensions food security
• Principles and objectives of agricultural policy
• Agricultural and food problems in developing country
• Role of agriculture in poverty and food insecurity reduction
• Role of agriculture in economic development of developing countries

Brainstorming question
• What mean by food security or agricultural policy mean for you?

Foundation, Definition and dimensions food security
Food security is a flexible concept as reflected in the many attempts at definition in

research and policy usage
The Food security was defined in the 1974 World Food Summit as:
“availability at all times of adequate world food supplies of basic foodstuffs to sustain a
steady expansion of food consumption and to offset fluctuations in production and prices”
In 1983, FAO expanded its concept to include securing access by vulnerable people to
available supplies, implying that attention should be balanced between the demand and
supply side of the food security equation

“ensuring that all people at all times have both physical and economic access to the
basic food that they need
According to 1986, World Bank report food security is “access of all people at all
times to enough food for an active, healthy life”

By the mid-1990s food security definition was broadened to incorporate food safety and
also nutritional balance, reflecting concerns about food composition and minor nutrient
requirements for an active and healthy life
The 1996 World Food Summit adopted a still more complex definition, Food security, at the
individual, household, national, regional and global levels is achieved;
when all people, at all times, have physical and economic access to sufficient, safe and
nutritious food to meet their dietary needs and food preferences for an active and healthy
life

The definition is again refined in the State of Food Insecurity 2001:
“Food security is a situation that exists when all people, at all times, have
physical, social and economic access to sufficient, safe and nutritious food that meets
their dietary needs and food preferences for an active and healthy life”
Food security is the nutritional status of the individual household member that is the
ultimate focus, and the risk of that adequate status not being achieved or becoming
undermined

• Household food security is the application of the concept to the family level, with
individuals within households as the focus of concern
• Food insecurity exists when people do not have adequate physical, social or

economic access to food as defined above.

Dimensions of food security
The four dimensions of food security

1. Availability
2. Access
3. Utilization
4. Stability

 Food Availability refers to the physical existence of food, be it from own production or on the
markets
 Food availability relates to the food supplied through production, distribution, and exchange
 Food production is determined by a variety of factors including land ownership and use; soil
management; crop selection, breeding, and management; livestock breeding and management;
and harvesting.
 Food Access is refers to the affordability and allocation of food, as well as the preferences of
individuals and households
 It Ensure when all households and all individuals with those households have sufficient
recourses to obtain appropriate foods for a nutritious diet
• Access depends on whether the household has enough income to purchase food at
prevailing prices or has sufficient land and other resources to grow its own food
• Households with enough resources can overcome unstable harvests and local

food shortages and maintain their access to food
• There are two distinct types of access to food: direct access, in which a household produces
food using human and material resources, and economic access, in which a household
purchases food produced elsewhere
• Location can affect access to food and which type of access a family will rely on

• The assets of a household, including income, land, products of labor,
inheritances, and gifts can determine a household’s access to food
• However, the ability to access to sufficient food may not lead to the purchase
of food over other materials and services

Food utilization
• The final pillar of food security is food utilization, which refers to the metabolism of food by
individuals. Once food is obtained by a household, a variety of factors impact the quantity
and quality of food that reaches members of the household.
• In order to achieve food security, the food ingested must be safe and must be enough to
meet the physiological requirements of each individual.
• Food safety impacts food utilization, and can by impacted by the preparation, processing,

and cooking of food in the community and household.
• Nutritional values of the household determine food choice

It has a socio economic and biological aspect
Socio-economic aspect
• Household make decisions/choices on what food consume (demand and how the food is
allocated within the household)
• Unequal distribution leads to suffering from food suffering from food deficiency
• The same is true if the composition of the consumed food is unbalanced
Biological utilization of food; focused at the in individual level food security, which reference to
the ability of the human body to take food and translate it into either energy that is used to
undertake daily activities or is stored

• Access to healthcare is another determinant of food utilization, since the health of
individuals controls how the food is metabolized
• For example, intestinal parasites can take nutrients from the body and decrease food
utilization
• Sanitation can also decrease the occurrence and spread of diseases that can affect food
utilization
• Education about nutrition and food preparation can impact food utilization and improve
this pillar of food security

Utilization requires not only an adequate diet, but also;
A healthy physical environment, including safe drinking water and adequate

sanitary facilities
An understanding of proper health care, food preparation and storage processes

Stability
• Food stability refers to the ability to obtain food over time refers or the temporal dimension
of nutrition security i.e. the time frame over which food security is being considered
• Food security can be transitory, seasonal, or chronic
• In transitory food insecurity, food may be unavailable during certain periods of time.
• At the food production level, natural disasters and drought result in crop failure and
decreased food availability.
• Civil conflicts can also decrease access to food.
• Instability in markets resulting in food-price spikes can cause transitory food insecurity.

• Other factors that can temporarily cause food insecurity are loss of employment or
productivity, which can be caused by illness.
• Seasonal food insecurity can result from the regular pattern of growing seasons in food
production.
• Chronic (or permanent) food insecurity is defined as the long-term, persistent lack of adequate
food.
• In this case, households are constantly at risk of being unable to acquire food to meet the
needs of all members.
• Chronic and transitory food insecurity are linked, since the reoccurrence of transitory food
security can make households more vulnerable to chronic food insecurity.
Principles and objectives of agricultural policy
Policy is the course of action chosen by government towards an aspect of the

economy, including the goals that the government seeks to achieve, and the
choice of methods to pursue those goals
Agricultural policy describes a set of laws relating to domestic agriculture and

imports of foreign agricultural products.

Agricultural policies use predetermined goals, objectives and pathways set by an individual
or government for the purpose of achieving a specified outcome, for the benefit of the
individual(s), society and the nations' economy at large
• Agricultural policy is a complex and evolving web of governmental interventions in output

markets, input markets, trade, public-good investments, renewable and exhaustible natural
resources, regulation of externalities, education, and the marketing and distribution of food
products
Objectives of agricultural policy
Objectives of agricultural policy can be divided in to two broad categories
1. National and 2.Sectoral Objectives
Agriculture is not an island in the economy.
Its ultimate objective should be to support national development.
In agriculture, as in other areas, economic policy responds to national imperatives and
to a social and political vision
It is designed to promote the achievement of societal aims that are not exclusively
economic in character

•The basis of a strategy, or set of policies, should be the enunciation of broad social, or
societal, goals for agricultural and the rural sector.
•Fundamentally, they should be related to the promotion of human development.
•Specific objectives for the agricultural sector can be derived from this overarching goal.
•In most economies, the ways in which agriculture can most effectively support human
development are:
(a) Ensuring that nutrition and other basic material needs are met in rural areas, and
(b) Contributing indirectly to the satisfaction of those needs in urban areas.

•In many parts of the world, it has long been the practice to define the aim of agricultural
development strategy as increasing production levels.
•Frequently, that objective has been stated in narrower terms, as increments in the
production of staple food crops, usually grains and sometimes principal root crops.
•However, while producing more staple foods can be important, a physical target of that
nature is not sufficient for promoting the goal of human development, or even the
objective of raising levels of material well-being.
•Production alone is not necessarily the best indicator of the economic status of rural
households.
• Income is a better indicator, for it takes into account the prices farmers receive and
their costs of production.
• Even more relevant is real income, which adjusts net income levels for the rate of
inflation, in order to measure the purchasing power of rural households.
• Therefore, agriculture can make its most effective contribution to nutrition and other
basic material needs by generating more real income for rural households.
• This contribution depends on three factors, namely production, real farm gate prices,
and non-farm employment in rural areas.

• Real prices are almost always beyond the control of farmers themselves but can be
influenced by policies
• Production is a function of the land area cultivated (including that in pastures) and
productivity, or unit yields
• As limits on the availability of cultivated land are being reached, and sometimes
exceeded, in many places in the world, production increases in the future will increasingly
depend on technology to deliver improvements in productivity
• It should not be overlooked that the level of nutrition of a rural family can also depend on
the degree of control over production exercised by women in the household
Summary of objective of AP
To improve the competitiveness of Union agriculture on both domestic and external markets
• To guarantee the safety of food to consumers both inside and outside the Union and to support quality
products
• To safeguard the environmental friendliness of production methods and animal welfare
• To ensure a fair standard of living for the agricultural community and to contribute to the stability of farm
incomes
• To develop the role farmers play in terms of the management of natural resources and landscape
conservation
• To create complementary or alternative income and employment opportunities for farmers and their
families, on-farm and off-farm
• To contribute to economic cohesion within the Union

Principles of Agricultural Policy
The principles represent conditions or limits on the kinds of actions that will be
employed in attempting the fulfill the strategic objectives
There are five basic principles for making an agricultural strategy sustainable over the
long run
Economic sustainability: The strategy must find ways to deliver real economic benefits
to the rural sector.
Although fiscal discipline is important, this means, among other things, not simply
subjecting the sector to the fiscal retrenchment of a structural adjustment program.
Social sustainability: The strategy also must improve the economic well-being of
lower income groups and other disadvantaged groups, including women.
Otherwise, it loses social viability
Fiscal sustainability: Policies, programs and projects whose complete sources of

financing are not identified should not be undertaken.

In an era of increasing budgetary stringency in all governments, application of

this principle encourages a search for new sources of fiscal revenue and ways in
which beneficiaries of the policies, programs and projects can contribute to their
financing, i.e. ways to foster cost recovery.

 Institutional sustainability: Institutions created or supported by policy should be

robust and capable of eventually standing on their own.
 For example, financial institutions which are just credit channels to
farmers and ranchers, and which do not have deposit-raising capabilities
of their own, are not likely to survive over the longer term.
 Equally, research and extension services that are supported mainly by
international loans and grants are not sustainable in the long run.
Environmental sustainability. Policies should be developed to bring about

sustainable management of forests and fisheries stocks and reduce to
manageable levels agricultural pollution of water sources and degradation of
soils.
A major challenge for agricultural policy in some countries is to slow or stop the
expansion of the ‘agricultural frontier’, the zone in which cultivation is possible
only by felling trees
summary of Principle of agricultural policy
• The principle of agricultural policy is to ensure that farmers and their families have access
to the necessary resources and support to produce safe, affordable, and quality food and
agricultural products.
• This includes providing assistance to farmers in the form of subsidies, research, and
infrastructure support
• And involves promoting sustainable agricultural practices through incentives and

regulations
 Promote sustainable and equitable agricultural production and support rural livelihoods
 Increase access to markets and value-addition opportunities

 Enhance food security and nutrition
 enhance agricultural research, innovation and investments
 Promote responsible natural resource management
 Support rural financial markets, rural infrastructure, and access to inputs and services
 Strengthen governance and institutional capacity
 Improve risk management and climate change adaptation
 Encourage gender equality in all aspects of agricultural development
 Foster regional cooperation

Agricultural and food problems in developing country
• Problems for agriculture in developing countries include production problems like drought
and floods that destroy crops in the field and stunt the growth of forage that livestock
need to survive.
• There are also market problems like an uncertainty in prices for agricultural yields
• The farming systems are facing constraints such as small land size, lack of resources, and
increasing degradation of soil quality that hamper sustainable crop production and food
security
• The effects of climate change (e.g., frequent occurrence of extreme weather events)
exacerbate these problems.
The major problems of food security in Ethiopia(DC) are classified as:
 backward agricultural production technologies,
Population pressure,
Environmental and resource degradation,
Poverty,
weak institutional capacity to uproot the causes of food insecurity,
inadequate infrastructure and social service and inappropriate

• In developing countries drought and other crises significantly decrease food supplies in
farming areas because fewer crops have been grown and harvested
• According to the World Bank, Ethiopia is one of the poorest countries in Africa, with
around a quarter of its population living in extreme poverty
• Drought and other crises significantly decrease food supplies in farming areas because
fewer crops have been grown and harvested

• The main threats to food security are;
(1) World population growth
(2) The increase demand for food,
(3) Food price,
(4) The disappearance of the variety of agricultural plant species
(5) The increase in the area of scarcity water and the limitation of the availability of land
(6) The food losses and food waste

Role of agriculture in poverty and food insecurity reduction
• Agricultural progress is a potent force in reducing poverty in developing
countries.
• Rapid and sustainable progress to reduce extreme poverty is increasing

agricultural productivity and incomes of poor farmers
• Agriculture dominates non-agricultural activities by its potential to reduce

poverty, whether the comparison is within or between countries.

• Agricultural productivity growth reduces poverty and food insecurity through a number of
channels:
• Raises farm and off-farm incomes.
• Improves health and nutrition.
• Reduces food poverty by lowering food prices.
• Increases wage employment in rural and urban sectors
• Transforms agriculture into a surplus generating sector through rural-urban migration

Role of agriculture in economic development of developing
countries
• Agriculture plays a crucial role in the development of an economy.
• In the past, this role has been incorrectly intended simply as that of a provider of surplus
labor and capital to the industry, which was seen as the real engine of economic
development.
• The progress in agriculture productivity could allow workers to leave the sector without
penalizing agricultural production.
• Moreover, at early stages of economic development, agricultural products are the only
products that can be exported to earn foreign exchange needed for investments in the
industrial sector.
countries
• Trying to accelerate the growth of the industrial sector has led to an implicit taxation
on the agricultural sector, and the level of real prices for agricultural product have
been declining to the point that, today, many countries are struggling to try and arrest
such decline.
• Sometime agricultural incomes have declined to the point that farmers have been
brought into poverty conditions.

countries
• In fact, by directly supporting agriculture growth, the entire economy can benefit,
• first, towards alleviation of poverty in both the rural and urban sectors, and
• second, because income in rural sector has a higher multiplier that income in the
urban sector, given the higher propensity to spend of rural populations and the
composition of their expenditure, oriented towards domestic products

Role of agriculture in economic development of developing countries
The relative weight of the agricultural sector in the economy varies from country
to country
It is between 3 and 40 % of the total value of production, and may count for as
much as 70% of total labor
Engel’s law
“the poorer a family is, the greater the proportion of the total expenditure which
must be used to procure food”
countries
• At very low income levels, all of the income must be spent in providing for basic needs
(such as food, basic clothing and housing)
• As personal income increases, a smaller proportion of it will be devoted to basic needs,

and part of it will be diverted to more luxurious goods (for example education,
communication, transportation, personal care, travel, etc.)

• The other point is the incidence of agriculture in terms of labor force is
always higher than the incidence in terms of GDP.
• It is only when agriculture is able to provide abundant food for the entire
population of a country that the country can start a process of economic
development.

• Moreover, modern agriculture is usually an important component of the demand
for industrial products and for other services.
• Finally, agriculture provides inputs to the food industry.
• When studying agricultural policies, it is very important to understand the

characteristics of the agricultural system.

• Production is organized in terms of number and size of farms, availability of
infrastructures, technology level, institutional settings, marketing arrangements,
availability of reliable outlets for farm’s resources, etc.
• The reason why it is so important to understand the structure of the agricultural

sector, is that the same policy action can have very different effects depending
upon how the production sector is organized.
• For example, if there are limited infrastructures for processing and transporting
vegetables product, high prices for vegetables may not be sufficient in effectively
stimulating vegetable production.
• Two main aspects are common to many traditional agricultural systems across the World:
• Family production organization
• Size of operations
• Family production organization (peasant organization) means that agriculture gives

employment opportunities to members of the household,
• which may or may not have other employment opportunities available to them,
and the output of the production process can be self consumed before being
destined to the market for sale.

• Self-consumption is a relevant share of production,
• output price policies may be less effective in enhancing farmers’ income
• Economy wide policies or industrial sector policies aimed at developing other sectors,
such as industry or services, may have the indirect effect of releasing labor force from
the farm sector and thus increase incomes for those who remain
• Reaction to price policies may be different by peasants when compared to fully
commercial farms

END OF THE CHAPTER

CHAPTER 2
Overview of Agricultural and Food policy in Ethiopia
Chapter objective
At the end of this course you will able to;
• Understand and differentiate Agricultural and Food Security Policy Policies in

Ethiopia

Brainstorming question
What are agricultural and food security policy you know or heard before?

Agricultural Policy in Ethiopia
o Agricultural policy describes a set of laws relating to domestic agriculture and

imports of foreign agricultural products.
o Agricultural policies use predetermined goals, objectives and pathways set by an

individual or government for the purpose of achieving a specified outcome, for the
benefit of the individual(s), society and the nations' economy at large

o Agricultural policy is a complex and evolving web of governmental interventions in;
• output markets,
• input markets,
• trade,
• public-good investments,
• renewable and exhaustible natural resources,
• regulation of externalities,
• education, and
• the marketing and distribution of food products
• Agricultural Policies can be classified in to three categories:
1.Policies that affect producer’s incentives, which include:
o Output price policies
o Trade and exchange rate policies
o Other policies that influence incentives
2. Policies that grant producers access to resources, among which we can identify:
o Food policy and food security
o Land tenure policies

o Water access policies and irrigation
o Agricultural technology policies
3.Policies that influence access to factors’ markets, most importantly:
o Labor market
o Credit market

Policies that influence producer incentives
• Economic activities are guided by prices
• one of the most important ways of trying and affect economic activity is
through the modification of prices and the policies that aim at modifying
producer incentives can be described as price policies
• The result of any firm is measured by profits, which depends on both

outputs’ and inputs’ prices

• The most obvious determinant of prices is the balance of demand and supply
• In agriculture a shortage in supply (as for example as a consequence of bad

harvests) for a product which is mainly oriented towards domestic markets, will
necessarily cause an increase in prices
• Changes in supply and demand due to seasonal variation or to the weather usually
determine short-run fluctuations, which have effects on the stability of income

• The effect on prices depends on how fast is the growth of agricultural production,
and on whether or not import can compensate for the higher demand
• If productivity of agriculture grows by more than 3 – 3.5%, the result will be that
of declining agricultural prices
• The most fundamental determinants of increase in the demand for basic

agricultural products is population growth, whereas the force that drives increase
in productivity is technological progress
• The decline of agricultural relative prices on the world market has been
exacerbated by the high levels of subsidies that large developed economies have
granted to their producers
• A developing country open to international trade, thus, finds itself in the

conditions of high dependence on import and lack of incentives for domestic
agriculture.
• Agricultural price policies are one of the instruments that could be used to break
such a spiral, which should thus be considered as one the main objective of a
strategy based on this kind of policies.

objectives of price policies
In principle, price policies could be aimed at:
• increasing prices
• decrease prices
• stabilize prices
The objectives are always related to more general economic growth and income
distribution objectives which can be reached by a combination of different
instrumentss on different markets
Ethiopian agricultural policy between 1991 to 2016
The government in Ethiopia has implemented various agricultural policies such as;
• market liberalization,
• structural adjustment,
• Agricultural-Led Industrialization,
• Sustainable Development and Poverty Reduction Program,
• Participatory and Accelerated Sustainable Development to Eradicate Poverty and

successive Growth
• Transformation Plans I and II to raise productivity
Current Ethiopian agricultural policies
1. Achieve a sustainable increase in agricultural productivity and

production;
2. Accelerate agricultural commercialization and agro industrial
development;
3. Reduce degradation and improve productivity of natural resources;
and
4. Achieve universal food security and protect vulnerable households
from natural disasters

Food Security Policy in Ethiopia
• Ethiopia’s food security strategy highlights the government’s plans to address the
causes and effects of food insecurity in Ethiopia.
• The food security strategy has two major approaches towards achieving food
security in Ethiopia:
1.Enhancing agricultural productivity
2.Asset building/productive safety net programmes (PSNP)
 PSNP aim to build the assets of the poorest of the poor to enable them to
develop means of living (livelihood).
Focus areas of Ethiopian food security policy
• Environmental rehabilitation: Measures to reverse the level of land degradation and create a source of
income generation for food-insecure households through a focus on biological measures, such as re-
forestation and land preservation.
• Water projects: Water harvesting and the introduction of high-value crops, livestock and agro-forestry
development.
• Enhancing agricultural productivity: Agriculture is considered to be the starting point for initiating the
structural transformation of the economy.
• Controlling population growth: High population growth rates continue to undermine Ethiopia’s ability to be
food secure and provide effective education, health and other essential social and economic services.
• The central elements of the policy focus on a multi-sector approach, improving family planning services and
expanding education.
• Prevention and control of HIV/AIDS: HIV/AIDS is a formidable challenge to the pursuit of food
security in Ethiopia as it reduces and debilitates the productive population and society as a
whole.
• The government has put in place a national policy and countrywide programme for the whole
population to control and reduce the spread of the disease.
• Gender: Women have a substantive productive role in the rural sector, including participation
in livestock maintenance and management, crop production, and the marketing of rural
produce.
• Integration of gender perspectives in the design and implementation of economic and social
policies, programmes and projects is considered central to the national food security strategy.
• Environmental sustainability: This is critical to the pursuit of food security and
economic development
• Development depends on the appropriate and sustainable use of the environment and
the management of natural resources.
• Given the high environmental degradation in drought-prone and pastoral areas,

environmental rehabilitation (soil and water conservation) is an essential element

End of the chapter

Chapter 3
Food and Nutrition security and measurement

At the end of this chapter the student should able to;
• Understand the Hunger, food and nutritional insecurity and poverty
• Differentiate Types of Food Insecurity
• Distinguish Food Security Indictors
• Evaluate Methods of measuring food security
• Understand Food Consumption Patterns
• Know Food Balance Sheets (FBS)
• Differentiate Measurement approaches of poverty

Understanding the Hunger, food and nutritional insecurity and poverty
• Hunger is an uncomfortable or painful physical sensation caused by insufficient

consumption of dietary energy.
• It becomes chronic when the person does not consume a sufficient amount of
calories (dietary energy) on a regular basis to lead a normal, active and healthy
life.
• “hunger” may also be referred to as undernourishment

Food insecurity; A person is food insecure when they lack regular access to
enough safe and nutritious food for normal growth and development and an
active and healthy life.
This may be due to unavailability of food and/or lack of resources to obtain food.
Food insecurity can be experienced at different levels of severity.
 FAO measures food insecurity using the Food Insecurity Experience Scale (FIES)
Food and nutrition insecurity is a term to describe when someone is unable to

access or afford enough food or enough nutritious food for their overall health
and well-being.
Understanding the Hunger, food and nutritional insecurity and poverty

How are hunger and food insecurity related?

Hunger and food insecurity
• When someone is severely food insecure, they have run out of food and gone a day or more
without eating. In other words, they have most likely experienced hunger.
• Severe food insecurity is one extreme of the scale, but even moderate food insecurity is worrisome
• For those who are moderately food insecure, access to food is uncertain.
• They might have to sacrifice other basic needs, just to be able to eat.
• When they do eat, it might be whatever is most readily available or cheapest, which might not be
the most nutritious food.
• The rise in obesity and other forms of malnutrition is partly a result of this phenomenon.

• Highly processed foods that are energy-dense, high in saturated fats, sugars and salt are often cheaper
and easier to come by than fresh fruits and vegetables.
• Eating those foods may mean your daily requirement of calories is met, but you are missing essential
nutrients to keep your body healthy and functioning well.
• In addition, the stress of living with uncertain access to food and going periods without food can lead to
physiological changes that can contribute to overweight and obesity.
• Children facing hunger, food insecurity and under nutrition today may have a higher risk of overweight,
obesity and chronic diseases like diabetes later in life.
• In many countries, under nutrition and obesity coexist and both can be consequences of food insecurity.

• Poverty is a relative term, a condition that can only be defined by comparing the
circumstances of one group of people or an entire economy with another one.
• There are two types of poverty, namely, relative poverty and absolute poverty.
• Absolute poverty refers to absolute deprivation of certain basic necessities of life, the
most obvious being food, in order to maintain a minimum level of living.
• It is different from relative poverty, which is concerned with the positions of different
groups of individuals in terms of their income and consumption level.
Poverty can be understood in many senses, but the term rural poverty includes:
1.Description of material needs including necessities of daily living foods, shelter, clothing,
health etc).
• It Can be understood as the deprivation or lack of essentials for a minimum standard of

life.
2.Description of social relationships and needs including social exclusion, dependency,

problem to participate in society, information and education exclusion.

3.Described as a persistent lack of income and wealth.
• World Bank indicator for poverty is 1 or to 2 dollar daily income indicates poverty.
• Disparity in income and wealth indicates poverty.
• The conditions of poverty are linked with a question of resource scarcity, distribution, and
power.
• Extreme poverty is living with less than dollar and moderate poverty is living with less than
2 dollar per day, according to World Bank definition

Types of Food Insecurity
1.Chronic food insecurity
• When individuals or groups of people suffer from food insecurity all of the time, then they
can be said to suffer from chronic food insecurity
2.Transitory food insecurity
• When households face a temporary decline in access to food, it is called as transitory food
insecurity.

• Transitory food insecurity may lead to chronic food insecurity, depending on its
frequent occurrences.
• For example, a two years drought may force the households to sell their assets to
survive.
• Then, this leads to chronic food insecurity from transitory food insecurity
• Transitory food insecurity can be further divided into temporary food insecurity and
cyclical or seasonal food insecurity.

a)Temporary food insecurity occurs when sudden and unpredictable shocks, such as
drought or pest attack, affect a household’s entitlements.
• For urban households, sudden unemployment may also be a cause of transitory food
insecurity.
b)Seasonal food insecurity occurs when there is a regular pattern of inadequate access to
food.
• This is often linked to agricultural seasons, particularly when it is difficult for households
to borrow foods
Food Security Indictors
• A number of indicators have been identified to make monitoring of food situation
possible
• Utilization of household food security varies between the characteristics of the

investigations, procedures and level of aggregation
• The purpose and depth of investigations highly influence the use of indicators. In
some early warning systems, for example, three sets of indicators are
• Indicators at individual and household level can be grouped as generic indicators and
location specific indicators.

•Generic indicators are those indicators that can be collected in a number of different settings
and are derived from a well-defined conceptual framework of food security whereas
•location specific indicators are those indicators typically carried only within a particular study
area because of unique agro climatic, cultural, or socioeconomic factors.
•Location-specific indicators can be identified only from a detailed understanding of local
condition by using qualitative data collection methods,
•while the generic indicators are drawn from the food security literature and tested using
statistical methods.

• Different types of indicators, however, fall under two main categories; 'process'
and ' outcome' indicators.
• Process indicators provide an estimate of food supply and food access situation
whereas outcome indicators serve as proxies for food consumption.

Process indicators
•Process indicators are those indicators that provide an estimation of food supply and access situation
•These indicators in turn can be divided into two:
 those indicators that reflect food supply and
 those that reflect access
Indicators that reflect food supply
•Availability of food in the study area is critical dimension of household food security
•In most cases, food shortages that occurred at regional level strongly affect availability of food at
household level
•Various factors limit options of households for food availability and access

• Supply indicators provide information whether the shock or disaster event will
adversely affect household food security or not
• Things like inputs and measures of agricultural production, food balance sheet
information, and access to natural resources, institutional development,
market infrastructure and exposure to regional conflicts or its consequences
are some of the indicators where supply indicators tries to include

• However, these types of indicators are not mutually exclusive of food access indicators,
and considerable overlapping and interaction between the two categories may exist
Indicators that reflect food access
•As compared to supply indicators, food access indicators are relatively quite effective to
monitor food security situation at a household level
•Their use varies between regions, seasons, and social strata reflecting various strategies in
the process of managing the diversified source of food that shift to sideline activities,
diversification of enterprises and disposal of productive and non-productive assets

Outcome indicators
• We use these indicators to measure the status of food security at a given point in time.
• Often, household food security outcome indicators can be categorized into direct and
indirect indicators.
• As far as direct indicators of food consumption is concerned, they include those indicators
which are closest to actual food consumption rather than to marketing channel
information or medical status.
• Unavailability or high cost of direct measure in terms of money and time leads to
application of indirect indicators to collect the data.

• The direct indicators, household budget and consumption surveys, household perception
of food security and food frequency assessment are the major ones whereas
• storage estimates, subsistence potential ration and nutritional status assessment are
incorporated in indirect indicators

The Food Balance Sheet
⚫ A food balance sheet presents a comprehensive picture of the pattern of a country's food supply during a
specified reference period.
• The food balance sheet shows for each food item i.e. each primary commodity availability
for human consumption which corresponds to the sources of supply and its utilization
• The total quantity of foodstuffs produced in a country added to the total quantity imported
and adjusted to any change in stocks that may have occurred since the beginning of the
reference period gives the supply available during that period

The Food Balance Sheet
⚫ The food balance sheet shows for each food item i.e. each primary commodity availability for human
consumption which corresponds to the sources of supply and its utilization.
⚫ The total quantity of foodstuffs produced in a country added to the total quantity imported and adjusted to any
change in stocks that may have occurred since the beginning of the reference period gives the supply available
during that period.
⚫ On the utilization side a distinction is made between the quantities exported, fed to livestock used for seed, losses
during storage and transportation, and food supplies available for human consumption.
⚫ The per capita supply of each such food item available for human consumption is then obtained by dividing the
respective quantity by the related data on the population actually partaking in it.
⚫ Data on per capita food supplies are expressed in terms of quantity and by applying appropriate food composition
factors for all primary and processed products also in terms of dietary energy value, protein and fat content.

• On the utilization side a distinction is made between the quantities exported, fed to livestock
+ used for seed, losses during storage and transportation, and food supplies available for
human consumption
• The per capita supply of each such food item available for human consumption is then
obtained by dividing the respective quantity by the related data on the population actually
partaking in it.
• Data on per capita food supplies are expressed in terms of quantity and by applying
appropriate food composition factors for all primary and processed products also in terms of
dietary energy value, protein and fat content.
Food Consumption Patterns
It refer to combinations of foods that constitute an individual's usual dietary intake, which includes daily and
longer cyclical variations
The repeated arrangements of consumption, characterized by types and quantities of food items and their
combination in dishes and meals
⚫ Food consumption surveys, also known as food intake surveys or dietary surveys are used to estimate food consumption
patterns at the national, regional, household and individual level.
⚫ The Food Consumption Score (FCS) combines the elements of „quantity‟ and „quality‟ of food.
⚫ It measures food diversity (the types of food consumed), food frequency (the number of days each food group is consumed)
and the relative nutritional importance of different food groups.
⚫ The FCS uses standardized and calibrated thresholds that divide households into three groups: poor food consumption,
borderline food consumption and acceptable food consumption.
⚫ Food consumption surveys, also known as food intake surveys or dietary surveys are used to
estimate food consumption patterns at the national, regional, household and individual level.
⚫ The Food Consumption Score (FCS) combines the elements of „quantity‟ and „quality‟ of food.
⚫ It measures food diversity (the types of food consumed), food frequency (the number of days each
food group is consumed) and the relative nutritional importance of different food groups.
⚫ The FCS uses standardized and calibrated thresholds that divide households into three groups:
poor food consumption, borderline food consumption and acceptable food consumption.

⚫ Individual food consumption patterns are affected by a number of cultural, geographical and
socio-economic factors and can be used to quantify consumption patterns from the household
level to the national level.
⚫ In Ethiopia, the capacity for dietary diversification efforts to improve the nutritional status of
the population is limited in the short term due to issues related to availability, access and
behaviours.
⚫ The burden of under nutrition is very high in both peri-urban and rural areas.
⚫ Nationally, more than one in four households (26%) consume less than acceptable diets: 10% of
households have poor food consumption and 17% borderline.

Levels of food security
National level
• It Can be described as a satisfactory balance between food and food supply at reasonable price.
• There have no major upheavals in food market in the recent past.
• Adequate food should available and most of the population has access to that food.
• A country is food secure when all the individuals in the country are food secured.
• There are countries where the food supply is inadequate to meet its citizen’s needs e. Ethiopia.
Household level
• The household is the basic economic unit which determines the level of consumption by the individual.
• Households are identified as food secure if their entitlements or a demand for food is greater than their needs, which
is the aggregate of individuals’ requirements.
Individual level
• At individual level the definition of food security is much more straightforward.
• An individual is food secure if his or her food consumption is always greater than needs, as
defined by physiological requirements
• A food insecure countries may certainly contain group of population who are food secure
• A food secure countries at national level may contain group of population who suffer from sever
food insecurity
• food security at household level does not imply that all members of the household are food
secure a food insecure household may equally contain food secure members
• food insecurity is the result of poverty

Methods of measuring food security
Household Food consumption score
The Food Consumption Score (FCS) is an index that was developed by the WFP in 1996.
The FCS aggregates household-level data on the diversity and frequency of food groups consumed
over the previous seven days, which is then weighted according to the relative nutritional value of the
consumed food groups.
For instance, food groups containing nutritionally dense foods, such as animal products, are given
greater weight than those containing less nutritionally dense foods, such as tubers.
Based on this score, a household’s food consumption can be further classified into one of three
categories: poor, borderline, or acceptable.
The food consumption score is a proxy indicator of household caloric availability

Household Dietary diversity
One or more persons within the household are asked about different items they have consumed in a
specified period.
Dietary diversity is intended as a proxy of access to food (household level), intake of energy and
macronutrients intake of micronutrients
According to (FAO, 2011) defined that Dietary diversity is a qualitative measure of food consumption that
reflects household access to a variety of foods data on household dietary diversity was collected using 24
hours of recall dietary intake.
The information collected on dietary consumption allowed to calculate a dietary diversity score, defined
as the number of different food groups consumed by household members over 24 hours.
A list of meals, all food items and beverages consume in the last 24 hours was recorded
Household Coping strategy index
• The CSI is providing an insight into how households manage and cope in times of limited access to
food.
• The CSI is based on the frequency and severity of different types of coping strategies.
• The higher the CSI score, the more likely it is that the household is affected by food insecurity.
• It has two types which is country-specific CSI and reduced CSI
• Country-specific CSI is based on a series of context-specific strategies and context-specific severity
scores while reduced CSI relies on same short list of five coping strategies and the same severity
weights and allows comparison among areas and countries

Household caloric acquisition
Here the person responsible for preparing meals is asked how much food was prepared for
consumption over a period of time
The most knowledgeable person in the household is asked a set of questions regarding
food prepared for meals over specific period of time usually seven or fourteen days.
After accounting for processing, this is turned into a measure of the calories available for
consumption by the household

Expenditures (access)
• Household expenditures provide an insight into how households allocate scarce resources
and give priority to competing needs.
• “Households that spend a large proportion of their income on food are vulnerable to food
deprivation because, regardless of their current food consumption status, if they were to
experience a reduction in income it would likely be accompanied by a reduction in food
consumption or the quality of food eaten.

Household Food Insecurity Access Scale (HFIAS)
• This scale measures food insecurity using experience as a construct.
• The HFIAS questions were asked of the mother with respect to her experience of food
security with a recall period of four weeks (30 days).
• There are nine occurrence and frequency-of-occurrence question pairs measuring the
perception or experience of food insecurity with a focus on quantity of food accessed
• The respondent was first asked an occurrence question that is, whether the condition
in the question happened at all in the past four weeks (yes or no).
• If the respondent answers “yes” to an occurrence question, a frequency of-occurrence question
is asked to determine whether the condition happened rarely (once or twice), sometimes (three
to ten times) or often (more than ten times) in the past four weeks.
• If the respondent answers “no”, the frequency of occurrence question is skipped.
• All of the occurrence questions ask whether the respondent or other household members
either felt a certain way or performed a particular behavior due to a certain food security
situation over the recall period (Baker-French, 2013).
• The HFIAS occurrence questions relate to three different domains of food insecurity (access)
namely anxiety and uncertainty about the household food supply, insufficient quality (including
variety and preferences of the type of food.
Chapter 4: Driving forces of food security
After the end of the chapter you will able to;
• Understand some driving force of food security and their relationship with food security

Food production efficiency, productivity and food security
• Agriculture aid, agricultural sector infrastructure, sanitation, and good governance serve
the main drivers of agriculture efficiency and its growth
• To estimate the efficiency, we focus on the efficiency of the natural inputs in the
production process, including agricultural land (percentage of land area), land under
cereal production, arable land (hectares/person), average precipitation (mm per year),
rural population (percentage of total population), economically active population in
agriculture, and the agricultural area (ha).

Nature of farming system and food security
• Global food security in the future depend on growth in production of the world
with favorable soils, adequate water resources, and high yields from wheat and
rice cropping.
• To achieve the needed increases in yields of basic food grains, a broad range of
constraints facing existing production systems must be removed.
• Additional inputs for crop production are needed, and new technologies, which
have yet to be developed, are essential for managing crop nutrients, pests and
diseases.

Nature of farming system and food security
• Most of the agricultural land in the developing world has less-favourable

endowments of soil and water resources than do the high-productivity farming
areas
• Developments in production ecology suggest that significant improvement is

possible in the management of biological processes that govern the efficiency
and sustainability of the agricultural systems that dominate in these poorly
endowed areas
Resource degradation, Climate Change and food security
• Extreme weather is a driver of world hunger.
• As global temperatures and sea levels rise, the result is more heat waves, droughts,
floods, cyclones and wildfires.
• Those conditions make it difficult for farmers to grow food and for the hungry to get it.
• Land becomes degraded when poor farming practices lead to soil erosion, declining
crop yields and a loss of biodiversity.
• This is contributing to global food insecurity, at a time when the war in Ukraine has led
to surging food, fertilizer and energy prices
Gender in food production and food security
• Women are responsible for half of the world’s food production, and in most developing
countries they produce between 60 and 80 percent of the food
• Empowering women farmers is vital to lifting rural communities out of poverty,

especially as many developing nations face economic crisis, food insecurity, HIV/AIDS,
environmental degradation and increasing
• Women are responsible for nutrition in most homes, including the purchase and
preparation of food
• However, because of traditional norms, they often have limited access to education
and control over resources.
Gender in food production and food security
• When given the opportunity to manage household finances, studies show that
women are more likely than men to spend on their family’s nutritional needs,
healthcare, and school fees for children.
• Therefore, empowering women to increase access to and control over resources is

critical to attaining food security in the developing world

Political instability and food security
• As greater political instability leads to greater uncertainty concerning future

economic policies and, consequently, to lower economic growth.
• Inflation rate as high inflation has been found to negatively affect growth.
• Food security can be upset by a lack of political or social stability.
• Similarly, the lack of food security resulting from a sudden jolt can lead to
political instability.

Biotechnology (GMOs) and food security;
• Genetic engineering can improve crop yield, resulting in greater production of the target crop.
• Scientists can also engineer pest-resistant crops, helping local farmers better withstand environmental challenges
that might otherwise wipe out a whole season of produce
• GMOs are not the only solution for food security but they are an important one. “Combined with improved
farming conditions, better use of water and reducing waste, GMOs can help to create better food options
• Therefore, biotechnology can:
1) increase the crops yield through introducing high-yielding varieties resistant to biotic and abiotic stresses;
2) reduce pest associated losses; and
3) increase the nutritional values of foods which is a very important factor in rural areas or developing countries

Globalization and food security.
• The phenomenon of globalization is having a major impact on food systems around the
world.
• Food systems are changing, resulting in greater availability and diversity of food, although
access to this food is by no means universal.
• Globalization creates greater opportunities for firms in less industrialized countries to tap
into more and larger markets around the world.
• Thus, businesses located in developing countries have more access to capital flows,
technology, human capital, cheaper imports, and larger export markets
Migration and food security
• The linkages between migration, agriculture and food security can be direct with rural
people migrating because they do not see viable options for overcoming poverty,
hunger and malnutrition within their own rural communities.
• However, migration is complex and caused by several interrelated factors
• Overall, the results show that migration, including labour migration, has a negative
effect on household per capita calorie intake,
• In other words, migration leads to a deterioration of households food access while

improving their dietary diversity

Food safety and food security
• Food safety is the need for people to have food that is free of contamination.
• Food security is the need for people to have access to food.
• Who has access to safe, nutritious food depends a lot on where they live and how
much money they make.
• Improving food safety is an essential element of improving food security, which exists
when populations have access to sufficient and healthy food.
• At the same time, as food trade expands throughout the world, food safety has
become a shared concern among both developed and developing countries.
END

CHAPTER 5
Relationship between Stabilizing Agricultural Markets Policy
and food security

Chapter objective
At the end of this course the students will be able to:
• Know the relationship between Stabilizing Agricultural Markets Policy and food security
• understand ways to Stabilize Agricultural Markets Policy

• Minimum Support Prices
• Procurement Prices
• Public Distribution System
• Buffer Stock and Buffer fund
• Food Stamps and Rationing
• Export-import taxes and Subsidy

Minimum Support Prices
• Minimum Support Price (MSP) is the minimum price set by the government for certain
agricultural products, at which the products would directly be bought from the farmers if
the open market prices are less than the cost incurred.
• Minimum Support Price is the price set by the government to purchase crops from the
farmers, whatever may be the market price for the crops.
• The MSP helps to incentivize the framers and thus ensures adequate food grains
production
• Sufficient remuneration is given to the farmers, provides food grains supply to buffer stocks
and supports the food security programme through PDS and other programmes.
Objectives of MSP
• The objective of the MSP is to ensure remunerative prices to the growers for by encouraging
higher investment and production.
• It also aims to bring a balanced realization of sufficient food production and consumption
needs at the same ensuring adequate and affordable food grains to all the people
Thus the minimum support price is aimed to:
(i)Assure remunerative and relatively stable price environment for the farmers by inducing
them to increase production and thereby augment the availability of food grains.
(ii)Improve economic access of food to people.
(iii)Evolve a production pattern which is in line with overall needs of the economy.
Procurement Prices
• Sometimes, the government procures at a higher price than the MSP. Here, the price will
be referred as procurement price.
• The procurement price will be announced soon after the harvest.
• Normally, the procurement price will be higher than the MSP, but lower than the market
price.
• The price at which the procured and buffer stocke food grains are provided through the
PDS is called as issue price.

Public Distribution System
• The Public Distribution System (PDS) evolved as a system of management of scarcity
through distribution of food grains at affordable prices.
• Over the years, PDS has become an important part of Government’s policy for
management of food economy
• PDS is supplemental in nature and is not intended to make available the entire
requirement of any of the commodities distributed under it to a household or a section
of the society
• PDS is operated under the joint responsibility of the Central and the State Governments
Public Distribution System
• The Central Government, through Food Corporation, has assumed the responsibility for
procurement, storage, transportation and bulk allocation of food grains to the State
Governments.
• The operational responsibility including allocation within State, identification of eligible

families, issue of Ration Cards and supervision of the functioning of Fair Price Shops (FPSs)
etc, rest with the State Governments.
• Under the PDS, presently the commodities namely wheat, rice, sugar and kerosene are
being allocated to the States/UTs for distribution.

Buffer Stock and Buffer fund
⚫ The prices of agricultural products such as wheat, cotton, cocoa, tea and coffee tend to fluctuate
more than prices of manufactured products and services.
⚫ This is largely due to the volatility in the market supply of agricultural products coupled with the
fact that demand and supply are price inelastic.
⚫ One way to smooth out the fluctuations in prices is to operate price support schemes through the
use of buffer stocks.
⚫ Buffer stock schemes seek to stabilize the market price of agricultural products by buying up
supplies of the product when harvests are plentiful and selling stocks of the product onto the
market when supplies are low.

Advantages of a successful buffer-stock scheme:
1.Stable prices help maintain farmers' incomes and improve the incentive to grow legal crops
2.Stability enables capital investment in agriculture needed to lift agricultural productivity
3.Farming has positive externalities it helps to sustain rural communities
4.Stable prices prevent excess prices for consumers – helping consumer welfare

Problems with buffer stock schemes
⚫ In theory buffer stock schemes should be profit making, since they buy up stocks of the product when the price is low
and sell them onto the market when the price is high.
⚫ However, they do not often work well in practice.
⚫ Clearly, perishable items cannot be stored for long periods of time and can therefore be immediately ruled out of
buffer stock schemes.

⚫ The success of a buffer stock scheme however ultimately depends on the
ability of those managing a scheme to correctly estimate the average price
of the product over a period of time.
⚫ This estimate is the scheme's target price and obviously determines the maximum and minimum price boundaries.
Buffer fund
⚫ Buffer funds typically invest in a broad market index along with a standard options collar to
limit downside risk.

⚫ The idea is to provide a shock absorber against a certain level of market losses over a
defined-outcome period (typically one year).

⚫ The buffer funds have characteristics unlike many other traditional investment products
and may not be suitable for all investors

⚫ These strategies could limit the upside participation of the buffer fund in rising equity
markets relative to other funds.

Buffer fund
⚫ The buffer provides limited protection in the event of a market downturn; the buffer
fund does not provide principal protection, and an investment may experience
significant losses on its investment, including the loss of its entire investment
⚫ The potential return an investor can receive is subject to the upside cap and the
partial participation beyond the cap.
⚫ If the index grows beyond the cap, the investor will not experience the full gains
⚫ The investor will receive a percentage of any gains beyond the cap.
⚫ This amount, net of fees and expenses, is the maximum return an investor can achieve
over its outcome period

Food Stamps and Rationing
⚫ Food stamps have been widely used in the UnitedStates as the main
government program for reducing hunger among poor people.

⚫ Nearly 20 million people received a net value of over $6,000 million in food stamps in 1981
⚫ Despite the theoretical efficiency of food stamps in providing food subsidies targeted
precisely to those most in need, the actual implementation record so far is quite mixed.
⚫ Where serious attempts are made to limit food stamps to the most impoverished/poor
households, all the problems of implementing an honest and efficient means test arise.

Food Stamps and Rationing
⚫ Many relatively well-off households slip into the system, many of the
most destitute fall outside, and the bureaucratic costs become very large.
⚫ Food stamp programs as an efficient targeting mechanism for food subsidies can probably be used
effectively only in middle-income countries with a skilled civil service and accurate statistical
records on at least the urban population.
⚫ For poorer countries and in the rural areas of even the middle-income
countries food stamps are not likely to be effective.

Export-import taxes and Subsidy
• Export subsidy is a government policy to encourage export of goods and discourage sale of goods
on the domestic market through direct payments, low-cost loans, tax relief for exporters, or
government-financed international advertising.
• An export subsidy reduces the price paid by foreign importers, which means domestic consumers
pay more than foreign consumers.
• The World Trade Organization (WTO) prohibits most subsidies directly linked to the volume
of exports, except for LDCs.
• Incentives are given by the government of a country to exporters to encourage export of goods.
• Export subsidies are also generated when internal price supports, as in a guaranteed minimum
price for a commodity, create more production than can be consumed internally in the country
• These price supports are often coupled with import tariffs, which keeps the domestic price
high by discouraging or taxing imports on the difference between the world price and the
mandatory minimum.
• Instead of letting the commodity rot or destroying it, the government exports it
• Export subsidies can cause inflation: the government subsidies the industry based on costs,
but an increase in the subsidy is directly spent on wage hikes demanded by employees.
• Now the wages in the subsidized industry are higher than elsewhere, which causes the
other employees demand higher wages, which are then reflected in prices, resulting in
inflation everywhere in the economy.
Import subsidy
• Import subsidies are payments by governments on imported goods and the subsidies are paid to both
private importers and state import institutions.
• Import subsidies can help keep prices on domestic markets low.
• However, in the case of agricultural products, this is at the expense of domestic agriculture and the
state coffers.
• If the imported product is an input (e.g. sugar for processing agricultural products), processing
industries benefit from lower import prices.
• If the product is a final product, consumers benefit (increase in the consumer surplus).
• Import subsidies are therefore only recommended as a short-term measure in times of critically high
food prices. Alternatives such as lower import tariffs should be considered first.
Import subsidy
• Introducing subsidies on imports from regional partners could – depending on the
exporting countries’ production elasticity – cause a shortage in the products concerned
and increase prices in the partner country’s domestic market.
• This can cause problems if the products are also in high demand in the partner country
(e.g. staple foods).
• It is therefore appropriate to reach regional agreements on import subsidies.

Possible Negative Effects of Import subsidy
• Great burden on the state budget
• Businesses in the home country that cannot compete internationally are forced out of
the market (social risks)
• Increasing dependence on the world market for security of supply in the home country

Import tax(customs duty, tariff or import tariff)
• Import duty is a tax collected on imports and some exports by a country's customs
authorities.
• A good's value will usually dictate the import duty.
• Import duties have two distinct purposes: raise income for the local government and to
give a market advantage to locally grown or produced goods that are not subject to
import duties.
• A third related goal is sometimes to penalize a particular nation by charging high import
duties on its products.

Export tax
• An export duty or export tax is a tax imposed on commodities leaving a customs area
• Export taxes are levied on exports of certain products.
• They are mainly applied by developing countries and levied primarily on raw materials.
• A distinction is made between specific and variable export taxes;
Specific export tax: an export tax per unit (e.g. volume or weight) of a product
Ad valorem export tax: an export tax calculated as a percentage of the price
Differential export tax: the level of the export tax varies according to the degree to which the product has been
processed
Variable export tax: an export tax based on the world market price. These are often described as minimum
export prices
Export tax
• Export taxes can result in higher government revenues, fewer exports and therefore lower consumer prices
and can boost the processing industry by providing cheaper inputs.
• All these measures can strengthen food and nutrition security in the short term and promote economic
growth
Possible Negative Effects
• Market and trade distortion
• Loss of income for domestic farmers and exporters due to lower domestic prices and fewer exports
• Sales markets and trading partners may be lost and could be difficult to win back in the future
• Lower prices endanger food and nutrition security in the medium and long term
• Economic losses
End of the chapter

Chapter six
Impact of Agricultural Policies on food security

Chapter objective
At the end of this chapter you should able to;
Understand the concepts of
Exchange rate policy,
Marketing policy,
Input policy,
Credit policy,
Land use policy and
Research and Development policy and
 Their impact on food security

Exchange rate policy
• The exchange rate policy refers to the manner in which a country manages its currency in respect to
foreign currencies and the foreign exchange market
• The exchange rate is the rate at which the domestic currency can be converted into a foreign currency.
• This affects the costs of domestic production and finance relative to foreign products and capital.
• In formulating exchange rate policy, a balance must be found between several differing and
sometimes conflicting, objectives.
• In particular, the use of the exchange rate to promote the competitiveness of domestically-produced
goods must be considered alongside the implication for the international purchasing power of the
currency and in particular, the impact of changes in the exchange rate on domestic inflation.

Marketing policy
• Marketing Policy means the set of principles described in a certain Brand and Product
Marketing Manual, which has been provided to Licensee prior to or contemporaneously
with the execution of the Agreement.
• The 5 P's of marketing – Product, Price, Promotion, Place, and People – are a framework
that helps guide marketing strategies and keep marketers focused on the right things

Input policy
⚫ Input policy concerns the ways government tries to influence the quantities and combinations of
purchased variable inputs used by small farmers in developing countries.
⚫ Purchased variable inputs include chemical fertilizers, pesticides, high yielding seed verities, fuel,
animal feeds, water
Variable input policies have three dimensions:
I. Price level of variable inputs, concerns state actions to influence the prices paid by farmers for inputs
II. Delivery system for variable input, concerns state actions to improve the physical flow of inputs to
farmers
III. Information provision to farmers concerning the type, quantity and combination of inputs

Credit policy
⚫ It concerns with the provision of credit to farm families in developing countries; and credit
provision has been one of the most popular type of state intervention in the agricultural sector;
⚫ Credit may be informal, or formal, private or state in origin.;
 Informal credit channels refer to the financial services provided by money lenders (as an
example the rich farmers, traders and others);
 formal credit channels are those bound by the legal regulations of a country, and they include
private banks, state banks, registered cooperatives, and a host of others.

 The entire system of institutions and the way they work is called rural financial system

Credit policy
⚫ Farmers need funds for three major reasons:
1. Working capital. In most of agricultural that the production is obtained only by the end of season, while costs are
sustained throughout all of the season, farmers need to anticipate money.
2. Consumption smoothing. Agricultural production is highly variable from year to year, whereas consumption needs to be
kept constant. Farmers may need to borrow money during bad years and save money during good years.
3. Investments. When an investment is realized, its cost is paid at the beginning,

while the benefits are only obtained later on during many years.
⚫ New objectives and instruments of credit policy;-
 The first objective should be that of local saving mobilization.
 The second objective should be that of reducing the margin of the financial intermediary, especially by reducing
transaction costs.

Land use policy
The importance of land tenure
⚫ Without clearly defined rights of access to land, or land tenure, production is more difficult to
carry out and incentives are weakened for long-term investments in land to raise its productivity
⚫ Land tenure also is one of the organizing pillars of rural economies and societies that helps
define economic and contractual relationships, forms of cooperation, and social relationships
⚫ Land reform policy which covers a wide range of social changes involving the access of people
to land and the size structure of land holdings, and legal or contractual forms of land tenure

Land use policy
⚫ Article 40.3 of the Ethiopian Constitution decreed the following in relation
to land tenure:
⚫ "The right to ownership of rural and urban land, as well as of all natural resources, is exclusively
vested in the state and in the peoples of Ethiopia. Land is a common property of the Nations,
Nationalities and Peoples of Ethiopia and shall not be subject to sale or to other means of
exchange."
⚫ Article 40.4 of the Constitution puts the right to use land as follows: "Ethiopian peasants
have [the] right to obtain land without payment and the protection against eviction from their
possession."

Land use policy
⚫ However, in addition to the right to use, government policy allows for: renting of land; transferring
the right to use land to legal heirs; and compensation for land improvements in case of expropriation
by government or other bodies.
⚫ Therefore, while in terms of ownership, land remains under government
ownership.
⚫ However, there are substantial changes in the exercise of the right to use land, as shown above,
and in promoting security of tenure.

Research and Development policy
⚫ During the 1950's and 60's national and international concerns over food shortages, particularly in
Asia, led to large investments in public agricultural research organizations.
⚫ The unambiguous agenda was to raise agricultural productivity as a means of increasing the
aggregate food supply as a way of reducing hunger and the poverty associated with it.
⚫ With this agenda in mind, centralized public sector scientific research institutes were created to
solve the generic problem of increasing the biological potential of important food crops.
⚫ The institutional set up contained international agricultural research centers and, at the national
level, sets of commodity and or disciplinary based research institutes.

⚫ The task of transferring technology packages to farmers was given to the
institutionally separate extension system.
⚫ This approach resulted in the development and spread of input responsive, high yielding cereal
varieties and the consequent "green revolution" phenomenon.
The new agendas:
⚫ Poverty: The green revolution, despite its success in increasing food production, demonstrated the
difficulty of using advances in agricultural productivity to address complex social phenomena such as
poverty.
⚫ It brought to attention the fact that the poor did not always have the resources to benefit
directly from new productivity enhancing technology.

⚫ Moreover when the poor had land-based resources, research often had difficulty responding to
their specific technological needs, usually in the less favorable production environments.
⚫ For the landless and urban poor the need for better entitlements to food (through employment for
example) restrained the benefits that would have otherwise arisen through cheaper and more
abundant food.
⚫ Environment: Concerns were also emerging as to the environmental consequences of an

intensive agricultural development strategy reliant on chemical inputs and heavy consumption of
water.
⚫ As a consequence the environment is now a mainstream agenda for agriculture and development
policy generally.
⚫ Stakeholder participation: There was also a growing realization that the hierarchical
institutional arrangements typical of most centralized, public agricultural research organizations
make it difficult to achieve a client focus in research.
⚫ Farmer participatory research arose as a way of addressing this issue.
⚫ Sustained advocacy during the 1990's placed the participatory "paradigm"
in the mainstream.
⚫ However the institutional context of many public research organizations has restricted the
development of truly participatory and client focused working practices.

⚫ Public vs. Private: In the last decade economic liberalization along with shifts in globally held
perceptions concerning the role of the State in society have emerged as a major new policy agenda.
⚫ This has made institutional concerns of fundamental importance, focusing attention on the
efficiency and proper role of the public sector in areas such as agricultural research.
⚫ Private sector agricultural research has also grown as a result of the opportunities that economic and
trade liberalization are now presenting for private investments in agro-industries such as seed
production, horticultural exports and so forth.
⚫ Private research has also been encouraged by improved intellectual property protection regimes and
technical advances associated with biotechnology.

End of the chapter
End of the course
Thank you for your time!!!


Agricultural Policy and Food Security

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Food and Agricultural policy

Department of Agricultural Economics

Chapter 1: Introduction to food security and Agricultural Policy

Chapter 2: Overview of Agricultural and food policy in Ethiopia

Chapter 3:Food and nutrition security and measurement

Chapter 4:Driving forces of food security

Chapter 5: Relationship between stabilizing Agricultural markets Policy and

Chapter 6:Impact of Agricultural Policies on food security

At the end of this chapter the students will able to understand;

• Foundation, Definition and dimensions food security

• Principles and objectives of agricultural policy

• Agricultural and food problems in developing country

• Role of agriculture in poverty and food insecurity reduction

• Role of agriculture in economic development of developing countries

The 5th Annual Agricultural Policy Conference (AAPC)

• What mean by food security or agricultural policy mean for you?

The 5th Annual Agricultural Policy Conference (AAPC)

Food security is a flexible concept as reflected in the many attempts at definition in

The 5th Annual Agricultural Policy Conference (AAPC)

basic food that they need

times to enough food for an active, healthy life”

The 5th Annual Agricultural Policy Conference (AAPC)

The 5th Annual Agricultural Policy Conference (AAPC)

The definition is again refined in the State of Food Insecurity 2001:

The 5th Annual Agricultural Policy Conference (AAPC)

• Food insecurity exists when people do not have adequate physical, social or

The 5th Annual Agricultural Policy Conference (AAPC)

The four dimensions of food security

The 5th Annual Agricultural Policy Conference (AAPC)

• Households with enough resources can overcome unstable harvests and local

The 5th Annual Agricultural Policy Conference (AAPC)

The 5th Annual Agricultural Policy Conference (AAPC)

• Food safety impacts food utilization, and can by impacted by the preparation, processing,

• Nutritional values of the household determine food choice

The 5th Annual Agricultural Policy Conference (AAPC)

• The same is true if the composition of the consumed food is unbalanced

The 5th Annual Agricultural Policy Conference (AAPC)

The 5th Annual Agricultural Policy Conference (AAPC)

A healthy physical environment, including safe drinking water and adequate

The 5th Annual Agricultural Policy Conference (AAPC)

• Food security can be transitory, seasonal, or chronic

• Civil conflicts can also decrease access to food.

The 5th Annual Agricultural Policy Conference (AAPC)

Policy is the course of action chosen by government towards an aspect of the

Agricultural policy describes a set of laws relating to domestic agriculture and

The 5th Annual Agricultural Policy Conference (AAPC)

• Agricultural policy is a complex and evolving web of governmental interventions in output

1. National and 2.Sectoral Objectives

Agriculture is not an island in the economy.

Its ultimate objective should be to support national development.

The 5th Annual Agricultural Policy Conference (AAPC)

•Fundamentally, they should be related to the promotion of human development.

(b) Contributing indirectly to the satisfaction of those needs in urban areas.

The 5th Annual Agricultural Policy Conference (AAPC)

The 5th Annual Agricultural Policy Conference (AAPC)

• To safeguard the environmental friendliness of production methods and animal welfare

• To contribute to economic cohesion within the Union

Fiscal sustainability: Policies, programs and projects whose complete sources of

The 5th Annual Agricultural Policy Conference (AAPC)

In an era of increasing budgetary stringency in all governments, application of

The 5th Annual Agricultural Policy Conference (AAPC)

 Institutional sustainability: Institutions created or supported by policy should be

Environmental sustainability. Policies should be developed to bring about