IFPRI Oxfam America Policy Roundtable -- Maximo Torero
1. From G20 France to G20 Mexico
Maximo Torero
m.torero@cgiar.org
Food Security and the G20, IFPRI
1st of May 2012, Washington DC
2. FAO Food Price Index
Averaged 216 points in March 2012, very similar to February (215) points and nearly
2 percent (5 points) up from December. The rebound represented the first upturn in
the FFPI since July 2011 but the index remained 7 percent below its corresponding
value last year.
4. Periods of Excessive Volatility
160
140
Number of days of excessive price volatility
120
100
80
60
40
20
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Year
Corn Soft Wheat Hard Wheat
Note: This figure shows the results of a model of the dynamic evolution of daily returns based on historical data going back to 1954 (known as the Nonparametric
Extreme Quantile (NEXQ) Model). This model is then combined with extreme value theory to estimate higher-order quantiles of the return series, allowing for classification
of any particular realized return (that is, effective return in the futures market) as extremely high or not. A period of time characterized by extreme price variation
(volatility) is a period of time in which we observe a large number of extreme positive returns. An extreme positive return is defined to be a return that exceeds a certain
preestablished threshold. This threshold is taken to be a high order (95%) conditional quantile, (i.e. a value of return that is exceeded with low probability: 5 %). One or
two such returns do not necessarily indicate a period of excessive volatility. Periods of excessive volatility are identified based a statistical test applied to the number of
times the extreme value occurs in a window of consecutive 60 days.
Source: Martins-Filho, Torero, and Yao 2010. See details at http://www.foodsecurityportal.org/soft-wheat-price-volatility-alert-mechanism .
5. Recommendations in the G20 of France
and reported in the G20-Mexico
Initiative Key objective Progress
Agricultural Market Has three objectives: 1) to improve the AMIS secretariat is
Information System information base and disseminate established, portal is
(AMIS): information in a transparent manner; 2) working and will be
to develop the capacity to produce officially launched in
detailed commodity market data; and June. G20 countries +
3) to facilitate policy dialogue and 7 key importers and
coordination in the event of a serious exporters have to
crisis in commodity markets deliver data.
Rapid Response Definition of indicators that could led to First meeting in April
Forum (RRF) an “abnormal international market 2012, in process of
condition” and the procedures that RRF defining indicators of
could adopt to cope with this condition “abnormal
international market
conditions”
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
6. Recommendations in the G20 of France
and reported in the G20-Mexico
Initiative Key objective Progress
International Aims to identify synergies and nurture Launched in
Research Initiative collaborations via facilitated open September 2011
for Wheat communications between research Global action plan is
Improvement programs for wheat improvement, developed by CGIAR
(IRIWI) research and technology development. and a business plan
The Global It aims to strengthen the international Launched and a is
Agriculture GEO- community’s capacity to produce and headed by the Group
Monitoring Initiative disseminate relevant, timely and on Earth Observation
accurate forecasts of agricultural which developed a
production at national, regional and detail work plan
global scales, by enhancing national and
agricultural reporting systems.
The Tropical focuses on enhancing capacity-building Consultation process
Agriculture Platform and knowledge sharing to improve with stakeholders to
(TAP) agricultural production and productivity define scope and
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nature of activity
7. Recommendations in the G20 of France
and reported in the G20-Mexico
Initiative Key objective Progress
Food Purchases for Removal of food export Still need to seek
Humanitarian Non- restrictions or extraordinary resolution from WTO
commercial Purposes by taxes for food purchased for
the World Food Program non-commercial humanitarian
(WFP). purposes by WFP
Regional Emergency ECOWAS pilot project in process ECOWAS task force to
Humanitarian Food of implementation develop operational plan.
Reserves Process is very slow.
Voluntary Guidelines on Guidelines approved by the CFS Pending country level
Governance of Tenure of implementation of
Land, Fisheries and guidelines
Forests in the Context of
National Food Security
Principles for Responsible Pilot Projects of the PRAI by Pilot project summary
Agricultural Investment CFS. Launched in Feb. 2012 report will be in
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(PRAI) September 2012
8. What was recommended in the G20 of
France and reported in the G20-Mexico
Initiative Key objective Progress
Risk management tools IFC has developed some APRM launched but still
tools to help developing needs validation, no clear
countries to cope with price progress in other tools.
volatility for agricultural
commodities, such as the
Agricultural Price Risk
Management (APRM) +
Platform on Agricultural Risk
Management (PARM)
Financial Regulations Principles for the Regulation Individual countries have
and Supervision of started some regulations.
Commodities Derivatives Progress report to be
Markets by the G20 presented by IOSCO in
Leader’s in Cannes, the November 2012
International Organization
of Securities Commission
(IOSCO) will assess their
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implementation
9. New Recommendations of IO’s to the G20-
Mexico
Core goal increase food
production and productivity in a
sustainable basis to promote
food security and foster economic
growth
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
11. Figure 1. Compound annual growth rates in world crop yields (%)
Compound Annual Growth Rates in
World Crop Yields
• The average global
rates of growth in
yield of most of the
Source: FAOSTAT.
major cereals are
declining.
• Since the 1980s,
growth in wheat
and rice yields fell
from 2.5- 3% to
around 1%. Maize
yields showed
growth of slightly Source: FAOSTAT
less than 2% over
the last decade
12. Figure 1. Compound annual growth rates in world crop yields (%)
Trends in food and agricultural public
expenditures
• Public R&D expenditures on
4,500
agriculture in low-and middle
4,000
income countries are
Million 2005 PPP dollars
3,500
generally lower as a % of Ag.
Source: FAOSTAT. 3,000
GDP than in OECD 2,500
countries. 2,000
• In East Asia and the Pacific, 1,500
China accounted for about 1,000
500
two-thirds of total public
0
agricultural R&D 1981 1986 1991 1996 2001 2006
• In Sub-Saharan Africa, after Sub-Saharan Africa East Asia & Pacific, minus China
a decade of stagnation in the China South Asia, minus India
1990s, investment in
Latin America & Caribbean India
agricultural research rose
more than 20% between
Source: ASTI
2001 and 2008 but mainly in
few countries
13. New Recommendations of IO’s to the G20-
Mexico
Initiative Key objective
Increase agricultural productivity - Invest in sustainable approached to
productivity growth
- Supporting improving agricultural and
rural statistics in public and private
investment in agricultural productivity
Improving trade policies - Sstrengthen international disciplines on
all forms of import and export
restrictions, as well as on domestic
support schemes that distort production
incentives
- Promote greater adherence to the
science-based sanitary and
phytosanitary measures developed by
the FAO/WHO Codex Alimentarius
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Commission and capacity building
15. Secondary responses: An illustration with the wheat market:
Effects on world prices of trade policy reactions for
selected countries
Exogenous demand increase [initial
Policy Effects perturbation]
Effects of increases in export taxes
to mitigate the shock on domestic
“Natural”
prices
Shock
Effects of decrease in import duties
to mitigate the shock on domestic
prices
Interaction effects between import
and export restrictions
0% 10% 20%
Source: Bouet and Laborde, 2009. MIRAGE simulations
16. New Recommendations of IO’s to the G20-
Mexico
Initiative Key objective
Promote Public Private partnership - Work with B20 to assess the potential of
for investment in agriculture various public-private partnership
models to increase foreign direct
investment in developing country
agriculture and,
- promote and scale-up appropriate
partnership models in developing
countries’ agriculture
Improve investments in agricultural - Continue to support G20-Paris initiatives
innovation systems - Increase policy dialogue on AIS at a
high level
- Support the Agricultural Science and
Technology Indicators (ASTI) initiative
to a) collect and maintain a
comprehensive database on
expenditures on agricultural innovation;
b) develop tools and methods to assess
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the performance and impact of
17. New Recommendations of IO’s to the G20-
Mexico
Initiative Key objective
Improving information, access and - Support developing countries to
IPR systems on plant and animal establish and enforce IPR systems
genetic resources consistent with international obligations
- Support development and promotion of
a global information system on plant
and animal genetic resources and
making information available through a
common portal such as “Genesys”
Improve investments in agricultural - Continue to support G20-Paris initiatives
innovation systems - Increase policy dialogue on AIS at a
high level
- Support the Agricultural Science and
Technology Indicators (ASTI) initiative
to a) collect and maintain a
comprehensive database on
expenditures on agricultural innovation;
b) develop tools and methods to assess
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
the performance and impact of
18. New Recommendations of IO’s to the G20-
Mexico
Initiative Key objective
On Water - Recognizing the importance to improve
the efficiency of water use in agriculture
and to safeguard the quality of water
- Continue dialogue based on the
recommendations concerning food
security and water made by Ministers in
their Declaration at the World Water
Forum
Sustainable use of natural resources - Review policies that could have perverse
within the short-term imperatives of incentives for sustainability
ensuring food security - Support design of policies that do a
comprehensive analysis of the
relationship between food security, food
production and natural resources
- Increase monitoring and evaluation of
systems of “market-smart” smallholder
targeted subsidies
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- Analyze mechanisms to increase
19. Distribution of World Fertilizer
Production capacity by country
Note: Based on capacity of operative plants in 2008/09.
Data: IFDC Worldwide Fertilizer Capacity Listing by Plant.
Source: Hernandez, M and Torero, M (2012)
20. Impact on fertilizer intake, crop production and
rural income of a 10% decrease in concentration
18.8
20
18
13.3
16
14
12
10
%
8 4.7
6 3.3
1.0 1.9
4
2
0
Increase in fertilizer Increase in crop Increase in rural
use production income
Conservative scenario Optimistic scenario
Source: Hernandez, M and Torero, M (2012), ), Gruhn et al. (1995) and Bumb et al. (2011).
21. New Recommendations of IO’s to the G20-
Mexico
Initiative Key objective
On Risk management - Platform for Agricultural risk
management
- Global Index Insurance Facility
- Weather info for All initiative
- Improve historical and current
meteorological information to facilitate
development of weather insurance
On Human Capital Development - Support the continued provision of
targeted, well-designed and gender-
sensitive social protection programs
- Explicit integration of agricultural
education and of the sustainable
agriculture intensification agenda
- Bridge gender productivity gaps in
agriculture (both access to resources
and technology)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE - Promote the Women Empowerment
22. Final comments
Invest in agricultural research and development to
improve world portfolio of exporting countries
Improve information to better prioritize needed
investment to increase agriculture productivity in a
sustainable basis
Enable environment to the increase of private and public
& private investment
We need to increase food production and productivity in
a sustainable basis Competition in the input markets is
needed
Better information to improve risk coping mechanisms is
needed