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FSN FORUM Share specific examples of the Food Price Situation and

By Frank Ellis,2014-06-27 10:26
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FSN FORUM Share specific examples of the Food Price Situation and ...

    SUMMARY TABLES ON IMMEDIATE POLICY AND PROGRAMMATIC ACTIONS (FAO’S

    INITIATIVE ON SOARING FOOD PRICES)

    Comments from Robert Best, Trinidad & Tobago (in green)

    Comments from Charles Lagu, Uganda (in blue)

    Comments from Francois Leonardi, Zimbabwe (in purple)

    Policy or Expected Conditions for Caution Where is it being programmatic effects recommendation implemented measure

    Trade measures

    - lower the - Recommended, Must take into

    price of the provided budget is consideration situation - Reduce import Benin, Bolivia, Brazil, imported rearranged to avoid of free market economy taxes on food items, Burkina Faso, Ecuador, good excessive deficit agricultural inputs Egypt, El Salvador, - stimulates - Effect on prices and equipment (3.2) EU, Guatemala, Honduras, Risk of competition imports must be monitored India, Indonesia, Mauritania, with national Mexico, Moldova, Mongolia, production Morocco, Nicaragua, Niger, - negative -Set price rates for

    effect on state commodities Nigeria, Peru, Senegal,

    budget Turkey, Vietnam, Uganda,

    revenue CARICOM - Tax breaks for - same as - same as above importers (3.2) above

    - Financial support - same as - same as above - if many countries adopt or loans to private above this measure

    sector for funding could increase

    imports of food international prices commodities (3.2)

    - same as

    above - Reduce customs - care needed to avoid Must not compromise on procedures and other increasing health and substandard products formalities for food - speeds up safety risks from

    import (one stop imports imported food items

    shop) with or

    without relaxation of

    regulations (3.2)

    - Engage in forward - not - not recommended as a contracts for food effective in short term policy option imports to secure solving high

    food availability in price problem

    medium term (3.2)

    - reduces

    prices - Reduced, banned or Food - not recommended Argentina, Bolivia, Burkina - medium to taxed exports of commodities must be Faso, Cambodia, PR China, long term strategic food safe and less risky for Egypt, Ethiopia, Guinea implications commodities (3.2)human consumptionConakry, Honduras, on producers Indonesia, Kazakhstan,

    Malawi, Pakistan, Russia,

    Serbia, Ukraine, Vietnam - risk of

    smuggling

    and corrupt

    practices

    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented

     C:\convert\temp\61553826.doc 2010-6-27

measure

    Measure in

    favour of consumers

Tax policies

    - lower the price of the - more effective if

    food there is competition - Reduce or Afghanistan, Azerbaijan, on the domestic remove Value Bangladesh, Burkina Faso, market Added Tax (VAT) - negative effect on state Bolivia, Brazil, Burundi, - effect on prices and/or other taxes budget revenue Cameroon, PR China, must be monitored on food products Ethiopia, Honduras, India, (3.3.1) Indonesia, Kenya, Lesotho,

    Madagascar, Moldova, - Recommended,

    provided budget is Morocco, Niger, Nigeria,

    rearranged to avoid Pakistan, Peru, Russia,

    excessive deficit South Africa, Sri Lanka,

    Sudan, Uganda,

    Zimbabwe, Trinidad &

    Tobago

    - facilitates flow of - more effective if

    commodities there is competition - Removal of road - difficult to apply - reduces price on the domestic blocks and taxes selectively for food differential between market (3.3.1) items producers and consumers

    - effect on prices

    must be monitored - reduced income for

    local

    governments/authorities

    - reduces price - difficult to target

    differential between at food or - Tax reduction on - difficult to apply producers and consumers agricultural fuel for transport selectively for food - negative effect on state commodities: high (3.3.1) items budget revenue risks of leakages

    - implies that budget is rearranged to

    avoid excessive

    deficit

    - Targeted income - increase of disposable not tax reduction income for target groups recommended as it (3.3.1) will not benefit the

    poorer categories

    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented measure

    Market management policies

    - availability of food - potential difficulty to

    increases in the find sufficiently - Boosted food imports - must be implemented normal market rapidly on the world financed by balance of in consultation with channels market the amounts of payments, import private operators food needed at financing, and budget reasonable prices support (3.3.2) - can undermine

    speculation

    - will contribute to

    raise international

     2

    Policy or Expected effects Conditions for Caution Where is it being

    programmatic recommendation implemented

    measure

    prices by boosting

    demand

    - only when insufficient - will contribute to

    in-country availability raise international - Food aid in kind - availability of food Uganda by FAO, of food is confirmed prices by boosting (3.3.2) increases very rapidly WFP etc in and demand for implementing Karamoja and immediately various People’s displaced life-saving safety net camps including - only when “normal”

    modalities channels take too much refugee hosting It leads to dependence time for procuring areas. syndrome urgently needed food.

    - some increased - government needs

    immediate financial resources - Requisition of private - Only advised in availability of food stocks (forced extreme situations, - stock owners may procurement) (3.3.2) otherwise not hide stocks recommended. - Commitment to

    implement the idea by - private sector will be governments. reluctant to keep

    stock in future years

    - can temporarily - rebuilding of

    improve availability reserves/buffer stocks - Progressive release - stocks should have Burkina Faso, Niger on markets should be planned at of food kept in public sufficient size to have the same as releases food reserve (3.3.2) real impact are programmed - can help to put in

    place safety nets

    - close coordination

    needed with private

    sector

    - all consumers

    benefit from stable - Price control on key -If it is not free market Benin, Cameroon, This measure is not and moderate prices staple food products economy recommended as it is PR China, Ecuador, - likely to impact through regulation bound to amplify the Haiti, Mexico, negatively on (3.3.2) food crisis Russia, Senegal, producer prices which immediately and in the Zimbabwe may produce less in future (next year). the future

    -risk of black market

    Safety nets - beneficiaries have - where markets - if vouchers are only Brazil, PR China, additional resources functionaccepted by dedicated Egypt, Ethiopia, - Cash transfers or to purchase food - where food is public shops there is a Indonesia, Mexico, food vouchers or cards - can contribute to available risk of undermining the Mozambique, South (3.3.3) maintain diet quality - targeting effective private food marketing Africa, Sri Lanka, - could have through cash/vouchers and distribution system Tunisiainflationary effects for work - Hard to limit

    - vouchers could purchases to nutritious - Trinidad & become a parallel foods only vs alcohol, Tobago - plain unconditional currency tobacco, etc distribution when - subject to leakages, - use smart card to situations are extreme. embezzlement, monitor expenditure

    corrupt practices and patterns

    security risks - limit to temporary

    - cost to budget measure

    - Targeted

    to vulnerable groups - link to other social

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    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented measure

    programs to improve

    income earning - could be link to capability eg job public work training

    - beneficiaries have - where markets do not

    direct and free access function - Food distribution in Afghanistan, to a certain quantity - where food is not kind (3.3.3) Bangladesh, (ration) of food available Burkina Faso - if the food is Cambodia, PR purchased locally, it China, Honduras, - targeting effective can stimulate through food for work, India, Kenya, production. school feeding or plain Madagascar, - in case of short food distribution when Mozambique, Peru supply, local situations are extreme. purchases will have

    inflationary effect

    - if the food is

    brought in it could

    reduce local prices

    - could create new

    food habits

    - subject to leakages,

    corrupt practices and

    security risks

    - cost to budget

    - State Enterprise - Trinidad & make direct imports Tobago and sell to population

    at wholesale prices

    through a limited

    number of state outlets

    - everyone has access - if food is sold through - food transit through Bangladesh,

    to subsidised food normal marketing Ecuador, Egypt, public channels is not - Universal food - targeting possible by channels, agreements Indonesia?, recommended subsidy (3.3.3) focusing on selected have to be reached with - once-established, are Lebanon, Peru

    staple commodities main market operators difficult to remove (considering),

    - extremely costly Senegal, Yemen,

    with potentially - risk of cross-border serious smuggling Zimbabwe macroeconomic

    consequences

    - risk of black market

    in case of rationing

Other measures affecting disposable

    income

    - improved welfare of

    civil servants - Increasing salary in -where national - politically beneficial Burkina Faso, - risk of inflation civil service and other revenue increases (to stop urban riots), Cameroon benefits (3.3.4) but risky from the

    - budget deficit macroeconomic point

    of view - Credit facilities for - benefits better off Decentralised to local - Not recommended. consumers (3.3.4) groups units May contribute to fuel

     4

    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented

    measure

    inflation - Reinforce capacity - stimulating

    (training and economic growth Some minimum human The remedy may not equipment) in income - providing jobs and capacity and be immediate if generating activities income generating infrastructure is capacity is not built through value addition opportunities required on agricultural and

    food products (3.3.4) - meeting demand of

    urban consumers

Policy or Expected effects Conditions for Caution Where is it

    programmatic recommendation being

    measure implemented

    Measures in

    favour of producers

Market management

    measures

    - economic operators are - resources - could be contracted

    better informed on - good dissemination of out by government to - National market opportunities existing in the information private companies (if information system market - market must be left free private capacity exists) (prices - limits market segmentation for operators to respond to keep costs under observatory). - farmers and small traders to signals control (3.4.1) will be in a stronger position

    to negotiate prices - takes time to be established and to have

    - market problem areas can an effect

    be identified

    - Value chain - concerted decisions, Kazakhstan? analysis and/or actions and commitments by

    development various economic operators

    workshops (3.4.1) and the government to

    improve the functioning and

    governance of the value

    chain, and develop mutual

    trust.

    - Negotiation of - contributes to fair - requires consultations - Barbados commercial distribution of value added among stakeholders margins with along the chainusing value chain

    private sector workshops approach (3.4.1) above

    - provides a greater - most experience is for

    assurance of a market for cash crops, particularly - Make/facilitate - for food crops, with - Trinidad & farmers and thus removes for exportscontract farming the multiplicity of Tobago some of the risk from arrangements buyers, farmers are farming (3.4.1) tempted not to respect - need good and well - opens possibilities for enforced regulatory contract obtaining technical support framework and, on occasions, input

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    Policy or Expected effects Conditions for Caution Where is it programmatic recommendation being measure implemented

    supply on credit terms

    - can contribute to enhanced

    investment.

    - Government re-- seeks to undermine - only in remote areas Experience shows that engagement in speculation by private where the private sector this cannot be marketing (3.4.1) traders is not active, provided it generally

    is accepted to subsidise recommended

    this activity

    - black market

    - Forced Myanmar not recommended procurement (3.4.1) - disincentive for production

    - stability and increased

    supply of the food - Minimum - the minimum price Past experience shows PR China commodity producer price for should be the result of a that a government-key staple food negotiation among imposed minimum commodities. stakeholders price will be very - reduced risk for farmers

    (3.4.1) which encourages them to difficult to implement

    grow the commodity and

    invest

    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented measure

    Production support measures

    - rapid production of - where input markets - some risk of rent seeking

    short cycle crops are working - risk that this subsidised - Immediate including vegetables in reasonably well and programme becomes a support to peri-urban areas and on inputs are available, regular activity difficult to production in irrigated land the voucher system is interrupt in the future. Need family gardens - supply of certain food recommended to agree at start with key and irrigated items will be improved - where input markets stakeholders on an exit areas (3.4.2) on some markets are not working seek strategy

    - prices of certain food to make contracts - marketing arrangements

    items could be reduced with existing private should be planned in

    on some markets dealers for advance

    distributing input

    packs or make - if targeting is effective, - too much attention to arrangements with this can contribute to targeting can increase the NGOs, projects and improve welfare of poor time needed to put government services small farmers programme in place. - inputs must be

    available

    - vulnerable farmers can - requires that a - risk that vouchers become

    decide which inputs they reliable and well like a parallel currency - Input vouchers want to get functioning network - marketing arrangements for vulnerable - it is cheaper to of input dealers should be planned in farmers (3.4.2) distribute input vouchers - need for an advance

    than to distribute food to appropriate system to

    the vulnerable verify input quality, - not recommended in particularly seeds areas where there is high

    likeliness of drought or - can improve the

    welfare of the poor flood, as risks are too high

     6

    Policy or Expected effects Conditions for Caution Where is it being programmatic recommendation implemented measure

    which reduces the advantage

    of this approach

    - benefits to small - benefits well shared - prices of certain food items Burundi, Ecuador,

    farmers are potentially among stakeholders are likely to be reduced D.R. of Congo, - Pilot fertilizer large - initial Revolving particularly in less Kenya, Nigeria, and seed input - availability of certain Fund must maintain accessible areas Philippines, credit schemes food items will be 100 percent of its Indonesia, Peru, for small-scale improved in households initial purchasing Botswana, farmers for the - marketing arrangements of the pilot areas and in power for the scheme Lesotho, Turkey, next cropping should be planned in close by markets to be sustainable Algeria, Brazil, season (3.4.2) advance Cameroon,

    Ecuador, Kenya, - with good targeting, - this integrated Morocco, Nigeria, this can contribute to approach requires a Philippines, improve welfare of small safe and well Tunisia, Brazil, farmers. enforced regulatory Ecuador, Morocco, framework for Ecuador, Ethiopia, contracts and Syria.

    - vulnerable farmer are - requires good

    able to chose the inputs organization capacity - Input trade fairs - it may be difficult to reach that they need - offers the (3.4.2) large numbers of farmers opportunity for seed

    quality control - can strengthen the local

    seed system

    - ITFs should be

    organized just prior

    to planting season

    - procurement should - this approach often does Burundi, Ethiopia,

    be done well in not build the local seed Ivory Coast, DRC, - Direct Seed - Beneficiary farmers advance of the system Nigeria, Tanzania, Distribution have access to inputs production season (3.4.2) that allow them to - good source of produce food - marketing arrangements quality seed should be planned in - ability to deliver it advance to the vulnerable

    farmers

    - quality verification

    system for the seed

    - seed supply of - source of quality

    appropriate crop seed - Community - well planned marketing of Burkina Faso, varieties will be - technical seed production the seed produced Cameroon, improved supervision, (3.4.2) and Ethiopia, Lesotho, storage seed Swaziland, bank - progressive farmers Sudan, etc - in the case of seed or farmers groups to bank quantities multiply the seed instead of prices may

    determine loans,

    - allocation of

    government budget - Measures to Technical guidance on China? - platform for resources for a credit ensure fertiliser application to constructive dialogue line for private sector availability of prevent water eutrophication among public and - organisation of national fertilizer (3.4.2) private sector or subregional bulk fertilizer stakeholdersprocurement

    - creation of a risk-

    sharing fund to facilitate

    the issuance of letters of

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    Policy or Expected effects Conditions for Caution Where is it being

    programmatic recommendation implemented

    measure

    credit

    - fertilizer available on

    time in appropriate

    quantities and quality

    - if input markets - success is more - amount of subsidy has to function, subsidies will likely in areas where be carefully determined to - Universal Mexico (intention), distort production rain is sufficient or avoid over-utilisation of (untargeted) Nigeria decisions and encourage reliable or in irrigated fertilizer subsidised over-utilisation areas - universal fertilizer subsidy fertilizers (3.4.2) - if input markets are - existence of reliable benefits more large farmers imperfect subsidies can delivery systems who use large quantities of increase economic fertilizer and few politically efficiency powerful individuals - a large share of the

    fertilizer subsidy goes to the - small farmers have industry (if there is one in easier access to fertilizer the country) and can increase yields - smuggling of fertilizer

    from border areas to

    neighbouring countries

    - not recommended if

    markets function well or in

    drought/flood prone areas

    - marketing arrangements

    are indispensable to ensure

    that any surplus production

    will find its way to the

    market at remunerative

    prices - Farmers, particularly - it should be clear Risk of low loan repayments small farmers, will have for the farmers that that the guarantee fund is - A lift of some access to credit for they are getting some rapidly exhausted. collateral and the purchasing inputs and money on credit and establishment of small equipment, and for that they will have to a government Weather changes be taken engaging in repay it guarantee fund into consideration i.e. rehabilitation of - Loans provided will (3.4.2) drought, floods, hailstorm. productive assets. need to be well

    - Increased production monitored. - some cost sharing

    between government and banks for

    monitoring the loans

    could be envisaged

    - Loan period should

    not be short

    otherwise repayment

    is compromised

    - Area cropped, - Mechanical means - possibility of intensifying production and food for increasing existing cropping systems - Provide support Liberia? availability in the next cropped area are beyond sustainability, by (mechanic) and season will increase available and encroaching on fallowfinancial support currently - increased cropped area for increasing underutilised. could be at the cost of cropped area - Farmers will have forests, pastures or other (3.4.2) the capacity to land categories, with

    properly manage the associated risks and

    additional area consequences

    cropped to ensure

    successful crops and - marketing arrangements

     8

Policy or Expected effects Conditions for Caution Where is it being

    programmatic recommendation implemented

    measure

    avoid wastage of should be planned in

    resources. advance

    - vulnerable farmers - requires a reliable - vouchers, they could

    have access to farm and well functioning become a parallel currency - Pilot scale farm power and equipment for network of farm power vouchers preparing land, power and equipment (3.4.2) - marketing arrangements cultivation and transport providers with which should be planned in of produce the government (or advance - in case of limited NGOs or projects)

    availability of power can make contractual

    services and equipment, arrangements

    vouchers system can contribute to make them more expensive - improve the welfare of the poor

    - Stop any - reduction in - will take some time to subsidy or economically have a sizeable impact on Alternative sources of encouragement unsustainable animal food availability: the time animal source foods for animal production with the for animal feed producers to be got otherwise it production consequence of reduced switch back to grain will compromise on (3.4.2) supply of animal production for humans balanced diet. products and higher

    prices for these food this apply for Is this advisable and products biofuel as well not - increased availability counterproductive?of certain grains for human consumption but

    less meat.

- Increase - more efficient use of - research needed Technical guidance on China? Uganda?

    extension and fertiliser, taking into fertiliser use…. advisory services account it higher price

    on food

    production

    (3.4.2)

    - improve soil structure - works best were - requires some technical

    and reduce the hard competition for training and initial attention - Conservation Zimbabwe, work of residues with to weed management. agriculture Zambia, Lesotho digging/ploughing the livestock is not a - specific equipment (3.4.2) and Swaziland, fields serious problem required South Africa and - marketing arrangements others should be planned in - tabilize efficiency - needs to be used for advance increased some time for full

    benefit to be felt

    - better extraction rates - needs to be

    and therefore greater discussed and agreed - Encourage the availability (less loss of with processors.production of by products). lesser processed

    cereals by - campaign to inform

    processors (3.4.2) the population of - higher nutrition quality

     9

Policy or Expected effects Conditions for Caution Where is it being

    programmatic recommendation implemented

    measure

    of the product. higher nutrition

    quality of the product

    obtained - Inform private - in the immediate, sector on impact identify accompanying

    of increased measures that can

    prices on increase investment in

    profitability of agriculture and food

    investments in chains. in the medium

    agriculture and term, increased

    food chains investment flows into

    (3.4.2) the sector that will boost

    production, tabilize

    markets, increase the

    diversity of food

    products available on the

    market and create jobs.

    - limits expansion of

    constructions on - Moratorium on Philippines agricultural land construction - will create tension in licence in urban areas as supply of cultivable lands housing will be reduced (3.4.2) and may become more

    expensive.

    - could create

    opportunities for rent

    seeking and corrupt

    practices.

Facilitate access to land for

    farmers and

    commercial…

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