FOOD AID NEEDS ASSESSMENT Approved by the World Agricultural Outlook Board December 6, 1996 ------------------------------------------------------------------------------- FOOD AID NEEDS AVAILABILITIES is published once a year by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20005-4788. GFA-8. Summary released November 21, 1996. Please note that this release contains only the text of FOOD AID NEEDS ASSESSMENT -- tables and graphics are not included. Subcriptions to the printed version of this report are available from the ERS-NASS order desk. Call, toll-free, 1-800-999-6779 and ask for stock #WRS, $20/year. ERS-NASS accepts MasterCard and Visa. ------------------------------------------------------------------------------- NOTICE: This report was modified on May 22, 1997, by the addition of Appendix 2. Appendices 1 and 3 are excluded from the original release as well as this release. ------------------------------------------------------------------------------ November 1996 Economics Editors Birgit Meade Michael Trueblood (202) 219-0652 Principal Contributors Birgit Meade Margaret Missiaen May Peters Stacey Rosen Shahla Shapouri Sharon Sheffield Editing/Production/Design Diane Decker Wynnice Napper Victor Phillips, Jr. Contents Summary World Grain Supplies and Food Aid Availabilities Food Aid Needs Overview North Africa Sub-Saharan Africa Asia Latin America and the Caribbean Former Soviet Union Food Security Introduction Food Security in Sub-Saharan Africa Food Security in Asia Food Security in Latin America and the Caribbean Country Grain Balance Tables Appendices List of Tables List of Figures Preface This report continues the series of food assessments begun in the late 1970's. Global Food Assessments were done from 1990 to 1992, hence the GFA series. In 1993, the title was changed to Food Aid Needs Assessment to more accurately reflect the contents of the report, which focuses on selected developing countries with past or continuing food deficits. The format of the 1996 report has been expanded to include data for 65 countries. This year's report introduces food aid needs models for five republics of the former Soviet Union. The food assessment part of this report is followed by three articles that analyze the food security situation in Africa, Asia, and Latin America. A special research report entitled Food Aid Needs and Availabilities: Projections to 2005 (GFA-6) was published in October 1995. This study focused on the world grain outlook and food aid availabilities and needs for the next decade. Acknowledgments The economics editors would like pay special tribute to Margaret Missiaen who retired this year. Margaret was a country and regional expert on Sub-Saharan Africa, and in recent years, an editor of this report. Her ongoing support and advice was invaluable. Appreciation is extended to Kitty Smith, Director of the Commercial Agriculture Division, for her support of the food aid needs work and to Cheryl Christensen and Kelley White for valuable comments on the food security articles. We would also like to thank the reviewers, especially David Kelch, Fred Surls, Richard Brown, Karen Ackerman, Dave Stallings, and Gerald Rector for their comments. Special thanks are extended to Mark Simone for his comments on the world grain situation and to Diane Decker, Wynnice Napper, and Victor Phillips for editorial and design assistance. The United States Department of Agriculture (USDA) prohibits discrimination in its programs on the basis of race, color, national origin, sex, religion, age, disability, political beliefs and marital or familial status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (braille, large print, audiotape, etc.) should contact the USDA Office of Communications at (202) 720-2791. Summary Sixty-five developing countries would need 9 million tons of grain food aid in 1996/97 to maintain per capita consumption at the average of the last 5 years (status quo target). These needs are 35 percent lower than estimated for 1995/96 due to good harvests in many regions and a forecast decline in world grain prices that is expected to boost commercial import capacity. Nutritional food aid needs, which are much higher than status quo needs, also are estimated to be lower than last year. Food aid needs are defined as the amount of grain needed to fill the gap between what a country can produce plus its capacity to import commercially, and two consumption targets--maintaining consumption at the level of the last 5 years and achieving a minimum nutritional standard. This season's grain harvest recovery by major grain producing countries will result in some modest replenishing of global stocks. However, food aid supplies among donor countries have continued to decline. An estimated 7.7 million tons of grain food aid were donated in 1995/96, down from 9.2 million in 1994/95. Food aid donations are expected to remain near the 1995/96 level in 1996/97, which would cover about 85 percent of projected status quo needs. With higher global grain production in 1996/97, world grain prices are forecast to decline from the record highs of 1995/96. However, grain prices are expected to remain volatile, which could hamper imports. Sub-Saharan Africa's status quo food aid needs of 3.4 million tons are down sharply from last year's 6.2 million tons, due to a record grain harvest. Grain production is up markedly in Southern Africa due to expanded plantings and favorable weather. Other Sub-Saharan regions increased their production as well. East Africa's food aid needs are down from last year's 3 million tons to 1.5 million and Southern Africa's are down from 1.5 to 0.4 million tons. Food aid needs remain high in West Africa at 1.3 million tons. Nutritional food aid needs are proportionately much higher in East Africa, where undernutrition remains a severe problem. While reduced warfare in Ethiopia and Mozambique has helped decrease Sub-Saharan Africa's status quo food aid needs, other countries that continue to suffer from war or civil strife show high food aid needs . North Africa has no food aid needs this year primarily due to a large recovery in grain production, which increased from 18.4 million tons to 31.2 million. The largest increases were in Morocco, Algeria, and Tunisia. For the nine Asian countries included in this report, 1996/97 grain production is expected to reach a record of 303 million tons. Status quo food aid needs are down from 4.6 million tons in 1995/96 to 3.5 million due to strong economic growth, favorable agricultural policies, and good weather. However, severe undernutrition in some parts of Asia place nutritional food aid needs much higher at 10.3 million tons. Bangladesh and Afghanistan have the region's highest food aid needs. However, food aid is not required in the foreseeable future in India, Indonesia, or Vietnam. For the 10 low-income Latin American countries in the assessment, status quo food aid needs are estimated at 0.8 million tons of grain for 1996/97, down from 1.4 million in 1995/96. Grain production increased slightly from 9.9 to 10.1 million tons. Strong economic growth, particularly in many of the countries' export sectors, also contributed to reduced food aid needs by allowing greater commercial purchases. Last year's report introduced discussions of food aid needs in the former Soviet Union (FSU). This year, food aid needs were estimated for five of the republics. Estimation was difficult due to rapid changes in income, agricultural supply, and food consumption patterns. Status quo food aid needs could be as high as 1.2 million tons for the the five republics. The food situation in North Korea and the former Yugoslav republics could not be assessed in the framework of ERS models due to inadequate data. However, according to the United Nations' Food and Agriculture Organization (FAO), North Korea faces a severe food shortage and needs 1.5 million tons of grain to avert a famine. FAO estimates that North Korea has obtained about 58 percent of these needs by barter agreements and food aid donations. The republics of former Yugoslavia have experienced declines in their wheat production, but are not expected to have food aid needs other than humanitarian assistance. The second part of Food Aid Needs Assessment consists of three papers on food security in selected countries of Sub-Saharan Africa, Asia, and Latin America and the Caribbean. A country's food security is defined as access to adequate amounts of food by the entire population. While the existence of food aid needs on a country level is an unmistakable indication of food insecurity, even countries without food aid needs can fail to guarantee food security for all. In Sub-Saharan Africa, per capita food consumption declined in the last decade despite increased food aid. Unless domestic grain production improves dramatically, food consumption is expected to decline further in the next decade. In the countries studied in Asia and Latin American, food security indicators have generally improved. However, a large part of the populations still live in hunger, and food insecurity remains a significant problem, mainly due to skewed income distributions. World Grain Supplies and Food Aid Availabilities Global grain output is record high in 1996/97 after 3 years of decreases due to harvest failures and policy changes in major producing countries. While grain prices are down from their peak, season average prices this year will remain strong compared to those in most of the 1990's. Food aid donations have declined in recent years. [Stacey Rosen] Global Grain Supplies The 1995/96 (July/June) grain market year was characterized by record-high U.S. and international prices for corn and wheat (in nominal terms), the lowest global ending stocks in 20 years, and growing import demand in many Asian countries despite the higher prices. 1/ U.S. corn prices averaged $168 per ton in 1995/96, more than 50 percent above those of the early 1990's. U.S. hard red wheat prices exceeded $200 per ton (f.o.b.) from October 1995 until August 1996, compared to an average of $156 per ton in 1994/95. Because of the strong prices, neither the United States nor the European Union (EU) used export subsidies from July 1995 until September 1996, when the EU began again awarding export restitutions on a limited basis. 1/ Grains are defined to include wheat, rice, and coarse grains. The price increases for wheat and coarse grains in 1995/96 were not caused by a 1-year event, but rather multiyear developments that caused global consumption to exceed production over the past 3 years, driving projected ending stocks to their lowest level since 1975/76. Some large grain producers experienced production decreases due to unfavorable growing conditions and/or changes in agricultural policies. The United States experienced below-normal yields in major wheat producing areas as crops were adversely affected by drought, disease, excessive rainfall, and frost. Argentina's crops were reduced by drought in 1995/96. The European Union (EU) had reformed its Common Agricultural Policy (CAP) for grains beginning in 1993 in order to reduce stocks, increase domestic consumption (primarily feed), and reduce budgetary expenditures. To achieve these goals, support prices were lowered and a land set-aside program was instituted. Because of these changes, supplies became so tight during 1995/96 that the EU imposed a tax on some exports of soft wheat and barley shipped outside the EU in order to limit price increases for internal consumers. Canada's wheat area declined during 1992-95, as the federal government discontinued its grain transportation subsidy and cut support levels for remaining programs in an effort to reduce a swelling fiscal deficit. The support programs began during the mid-1980's to allow Canadian farmers to remain competitive in international markets against subsidized competition. The reduction in grain support increasingly exposed Canadian farmers to market forces. Farmers responded by shifting area to canola, which provided relatively higher returns than wheat during 1992-1995. Poor harvests in the North African countries of Morocco and Tunisia led to a temporary surge in their import demand in 1995/96, further tightening world grain supplies. For 1996/97, world grain (wheat, rice, and coarse grains) output is projected to be record high due to higher yields and increased acreage, as farmers respond to last year's high world prices. Production is expected to exceed consumption for the first time in 4 years, thus allowing some replenishment of stocks. The 1996/97 world wheat harvest, forecast to increase 8 percent from 1995/96, is projected to be second only to the 1990/91 record. This will be driven by gains in the United States, Australia, Argentina, Canada, the EU, China, North Africa, and the former Soviet Union (FSU). The increase can be attributed to larger area planted and generally favorable crop conditions. U.S. farmers planted more wheat in 1996 than any time in the last 10 years, reflecting higher grain prices and increased planting flexibility under the new farm legislation. As a result, U.S. wheat output was up 5 percent from 1995/96 as a 25-percent rise in spring wheat production more than offset a 4-percent reduction in winter wheat. Global coarse grain production is projected to be a record--up 11 percent from 1995/96. U.S. feed grain acreage is estimated to have increased 15 percent in 1996/97, a result of robust U.S. grain prices and greater planting flexibility under the 1996 farm legislation. Global wheat and coarse grain ending stocks are expected to increase 16 percent in 1996/97, but they will remain at their second lowest level in 20 years. The stocks-to-use ratio will remain very low at around 16 percent--the second lowest since 1960/61. The lowest level in 20 years was in 1995/96. Given the tight stock situation and steady import demand from Asian markets, grain prices will remain highly sensitive to any changes in output and use. Prices will remain strong, but below 1995/96 levels. Given that 95 percent of grain trade is done on commercial terms, these prices will continue to have a large impact on importers--particularly those with weak economies. Recent Food Aid Trends At the same time that grain prices have risen steeply, food aid availabilities have fallen considerably. The United Nations' Food and Agriculture Organization (FAO) estimates that grain food aid availability for 1995/96 totaled 7.7 million tons, down from 9.2 million in 1994/95. This marks the smallest food aid shipments in 20 years and is almost entirely attributed to shrinking donor food aid budgets and lower global stocks (figures 1 and 2). Because of this trend, developing countries' food import bills are rising. Food aid shipments to the sub-group of low-income food deficit countries are estimated to have fallen more than 20 percent from 7.5 million tons to 6 million in 1994/95, or about 60 percent of the level provided in 1992/93. Food aid now accounts for only 8 percent of these countries' grain imports. In the previous 3 years, food aid accounted for 10-16 percent of the grain imports. More than 80 percent of total food aid is comprised of grains. Wheat and wheat flour make up about 60 percent of the grains, while more than 20 percent is coarse grains. Pulses, vegetable oils, and fats account for nearly 60 percent of the more than 1 million tons of non-grain food aid. The World Food Program (WFP)--which handles nearly all multilateral deliveries--delivered about 2.8 million tons of grain food aid in 1995/96. The WFP now accounts for about 33 percent of all grain aid deliveries, compared with closer to 20 percent in the early 1990's. Types of Food Aid Most countries divide food aid into three categories: program, relief, and project aid. Program food aid does not target specific groups. Rather it is provided on a bilateral basis to support recipient governments' budgets or reduce balance of payments deficits. Program food aid is provided on concessional terms, as opposed to relief and project aid, which is provided on a grant basis. Relief and project food aid, on the other hand, are targeted programs where food aid is provided to specific groups of nutritionally vulnerable people. Relief food aid is aimed at people suffering from natural or manmade disasters, such as drought or civil strife. Project food aid is provided to selected groups to support specific development objectives. Since the late 1980's, food aid donations have been moving away from the non-targeted type of assistance aimed at supporting recipients' budgets toward the targeted assistance programs. Program aid as a share of total food aid fell from more than 50 percent in the late 1980's and early 1990's to just 40 percent in 1995. During the same time, relief aid jumped from 26 to 34 percent and project aid rose from 23 to 26 percent. This means that the two targeted aid programs combine now for a 60-percent share of total food aid. In 1995, half of the program aid went to Eastern Europe and the former Soviet Union. While receiving just over 20 percent of program aid, Sub-Saharan Africa received more than half of the world's relief aid. South and East Asia received half of the total project food aid. Food Aid Donors The United States and the EU historically have supplied about 75-85 percent of the world's grain food aid. Japan has supplied nearly 10 percent, while Canada accounts for closer to 5 percent, and Australia ships around 2 percent (table 1). United States The United States shipped an estimated 3.1 million tons of food aid (grain and non-grain) in the 1995/96 marketing year. Due to reduced food aid budgets and higher commodity prices, the United States had to take special measures to ensure shipments, particularly for emergency and humanitarian programs. For example, the Secretary of Agriculture used his special authority under PL 480 and made 900,000 tons of corn available for humanitarian needs. In addition, President Clinton authorized the release of up to 1.5 million tons of wheat from the Food Security Reserve. At the time, only 300,000 tons of wheat were available from commercial supplies to meet total food assistance programming of 1.7 million tons. Nearly a third of U.S. shipments goes to Sub-Saharan Africa, while a slightly lower share goes to Eastern Europe and the former Soviet Union. U.S. food aid is almost evenly divided among program, relief, and project aid. Funding for the PL 480 program has declined in recent years. In fiscal 1996, funding is estimated at $1.19 billion, down 8 percent from 1995. Fiscal 1997 appropriations fell another 7 percent to $1.1 billion. The U.S. focus, given the declining food aid budget, is to provide more aid through non-governmental organizations and reduce the duration of long-term concessional loans. For fiscal 1996, Title I, which provides government-to-government sales of agricultural commodities to developing countries under long-term credit arrangements, was cut 4 percent to $316 million. Title II, the program under which the United States delivers emergency food and WFP shipments, was cut only 2 percent to $821 million. Title III, which provides for government-to-government grants to support long-term economic development of the least developed countries, was cut in half to $50 million. The fiscal 1997 appropriations bill funding levels are $241 million for Title I, $837 million for Title II, and $30 million for Title III. The 1996 Federal Agriculture Improvement and Reform Act contained some changes affecting food aid. The changes include: 1) amending the PL 480 Title I program so that for the first time concessional sales can be made to private entities as well as foreign governments; 2) broadening the scope of Title I beginning in fiscal 1997 so that all U.S. agricultural commodities are eligible for programming unless they are deemed in short supply by the Secretary of Agriculture; 3) broadening the Food Security Commodity Reserve beyond only wheat to allow rice, corn, and sorghum (potentially a significant change because now the reserve can be used for emergency assistance in some recipient countries that consume these other commodities); 4) raising the release authority for urgent humanitarian relief from 300,000 to 500,000 tons in a fiscal year; 5) allowing the Secretary of Agriculture, rather than the President, to authorize the release of these commodities from the Reserve; and 6) extending the authority of all PL 480 and related programs to the year 2002 to strengthen private sector involvement in agriculture in the recipient countries. Despite budgetary constraints and limited commodity availability, the United States continues to give high priority to its food aid program. Based on anticipated funding for fiscal 1997, the United States is expected to meet its Food Aid Convention (FAC) commitment of 2.5 million tons in 1996/97. European Union Total food aid shipments from the EU and its member states for 1995/96 are estimated at more than 2.4 million tons, up from 2.1 million in 1994/95. Eastern Europe and the FSU receive nearly half of the EU's food aid shipments, and Sub-Saharan Africa receives less than a third. About 60 percent of the EU's food aid is program aid. The EU increasingly has used local and triangular purchase programs to provide food aid. The benefits of these programs, where commodities are purchased locally, regionally, or in another developing country, include: 1) enhancing the development of agricultural markets within the countries, 2) promoting South-South trade, and 3) improving the cost-effectiveness of the donor programs by reducing transport costs. These programs accounted for nearly 45 percent of the commodities procured under EU's food aid efforts in 1995, compared with 10 percent in the early 1990's. Japan Japan allocated roughly $167 million for food aid in 1995, up 20 percent from 1994. For 1996, Japan's food aid budget is estimated to fall to $126 million, but it will fulfill Japan's FAC commitments of 300,000 tons. In 1995, more than 60 percent of Japan's food aid went to South and East Asia. Nearly 50 percent of Japan's food aid (in value terms) was purchased from developing countries in 1994. Rice was procured from Thailand and Pakistan, wheat from China, the United States, and other suppliers, and corn came mainly from South Africa. For 1995/96, Japan is expected to purchase grain from an even greater number of countries. Japan's food aid policy is aimed at promoting self-sufficiency in developing countries. To achieve this goal, Japan emphasizes providing countries with fertilizers, tools, and machinery in addition to food aid as part of its "Grant Aid for Increased Food Production" program. Canada Canada's food aid budget, as a share of Canada's total development assistance, has declined from nearly 17 percent in 1987/88 to around 11 percent in 1995/96. During the same time, food aid (in value terms) has declined more than 40 percent from $317 to $190 million. Canada's total food aid shipments in 1995/96 reached about 485,000 tons. Most goes to Sub-Saharan Africa and South and East Asia. Half of Canada's food aid is project aid, and the remainder is split evenly between relief and program aid. For 1996/97, the food aid budget is expected to drop below $183 million. To maximize quantities provided, Canada is investigating ways to reduce transport and other costs. Canada's current foreign policy, including a food aid policy, was announced in February 1995. The priority areas of the program are: 1) basic human needs such as health care, education, and nutrition; 2) women in development; 3) infrastructure maintenance; 4) human rights, democracy, and good government; 5) private sector development; and 6) the environment. The program aims to improve the cost-effectiveness of food aid. To achieve this goal, the program will target vulnerable populations, emphasize sustainable long-term development, and undertake a continuing review of program effectiveness. Australia Australia was expected to have fulfilled its FAC obligation of 300,000 tons in 1995/96. Nearly half of Australia's food aid budget is delivered through the WFP. Roughly 70 percent of Australia's food aid goes to South and East Asia, with Sub-Saharan Africa receiving nearly all of the remainder. Almost three-quarters of the aid is project aid. Future Donor Outlook The declining trend in world food aid availability has raised concerns about food supplies for the most vulnerable groups in developing countries. However, there are reasons to believe that the downward slide may not continue. Budgets are estimated to remain at their present levels and prices are projected to decline. Donors are addressing the issue of low supplies. Higher world grain output and lower prices bode well for food aid availability in the near term, despite small donor food aid budgets. In addition, donors are beginning to focus their efforts on improving the cost-effectiveness of food aid by targeting the aid to the neediest groups and looking for ways to reduce transport costs so that a larger share of the budget can go toward purchasing food. Food Aid Needs Overview Food aid needs worldwide are forecast to decline in 1996/97 despite continued high international grain prices. Favorable weather and expanded area have contributed to a good harvest outlook for 1996 in developing countries. [Margaret Missiaen and Michael Trueblood] In this report, grain food aid needs are estimated for 65 developing countries in Africa, Asia, Latin America and the former Soviet Union. 2/ Food aid needs are calculated using two criteria: 1) the amount of grain needed to support 1991/92-1995/96 average per capita consumption (status quo), and 2) the grain aid needed to meet a minimum per capita nutritional standard (nutrition-based). Grain food aid needs for the 65 countries, which have about half of the world's population, are estimated at 9 million tons in 1996/97. This amount is necessary to maintain per capita consumption at the recent 5-year average. High world grain prices have constrained commercial import capacity, but thanks to higher production due to good weather, needs are down about 30 percent from last year's forecast. More than 22 million tons of food aid would be needed to meet the minimum nutritional standard (figure 3). 3/ 2/ Some countries have been dropped from last year's report (Costa Rica and Panama) while others were added (Eritrea, Colombia, and five former Soviet republic countries, whose needs were considered in last year's assessment without applying the same methodology as used for the other 60 countries). See Appendix 1 for a list of countries studied. 3/ The method for estimating nutritional needs is described in Appendix 2. Comparison of the status quo and nutrition-based measures for individual countries indicates the possibility of adjusting food aid shipments depending on whether the food aid objectives are to provide consumption stability and/or to meet a nutritional standard. The estimates are aggregate measures that do not take into account uneven food distribution within a country. Care must be taken in considering food aid shipments that significantly exceed past receipts. In most low-income countries, weak market infrastructure, especially poor roads and inadequate port facilities, limits the capacity to absorb imports that are significantly larger than historical maximums. Weather continues to be an important factor in production performance of these countries. Good weather and high grain prices (which have stimulated production) have enabled low-income countries to reduce imports without forcing down consumption. Commercial imports in the 65 countries as a whole are forecast to drop slightly in 1996/97, although the decline is considerable in Sub-Saharan Africa (12 percent) and Asia (9 percent). As discussed previously, several food aid donors are making agricultural policy adjustments that reduce support for domestic producers, limit export subsidies, and lower government grain stocks. Food aid commitments also have been reduced. Low stocks are likely to contribute to greater grain price volatility. Tight world supplies caused grain prices to rise 25 percent, on average, in 1995/96. Prices are expected to decrease slightly from this high level in 1996/97, and, assuming normal weather, will fall further in 1997/98. Cuts in food aid supplies are expected to continue in 1996/97. In the mid-1990's, the 65 study countries received more than 80 percent of world food aid shipments (table 3). If this share is maintained, the 6 million tons of food aid available to these countries in 1996/97 will satisfy about two-thirds of their status quo needs and 25 percent of their nutrition-based needs. Of all regions, the greatest status quo needs are in Asia (3.54 million tons), followed closely by Sub-Saharan Africa (3.41 million tons). Although Asia has the largest total needs, its share is proportionately smaller than its population (figure 4). Sub-Saharan Africa, on the other hand, has only 22 percent of the population of the 65 countries but more than one-third of the 1996/97 status quo food aid needs. Needs in Latin America and the five FSU republics are also higher than their share of the population. Total needs of 9 million tons reflect lower needs in all regions. Per capita food aid needs present a different picture of the relative intensity of needs from one country to another. For the 65 countries, average 1996/97 status quo needs are 3.7 kg per capita, down from 6 kg last year. Per capita nutritional needs are much higher at 9.2 kg (table 4). Per capita food aid needs reflect the chronic nature of food shortages in many countries where agricultural production growth is slow and financial constraints limit commercial import capacity. In Sub-Saharan Africa, there is a wide variation in needs among regions and countries. East Africa has the highest per capita deficit--status quo needs of 7.8 kg and nutritional needs of 27.6 kg. Ethiopia and Somalia, both in East Africa, have seriously undernourished populations as measured by calorie intake. War-torn Liberia has one of the highest per capita needs of any country using either the status quo (76 kg) or nutritional (104 kg) measure. Liberia's civil war has spilled over to neighboring Sierra Leone, disrupting production and driving up per capita needs there as well. In Zaire, emergency needs are expected to increase dramatically after a refugee crisis developed due to war activities in eastern Zaire, where several refugee camps are located. The escalating crisis likely will require an additional 219,000 tons of humanitarian grain food aid (above the status quo food aid needs) to feed the refugee population of 1.2 million people in that region for 1 year. Per capita status quo food aid needs in Asia are low on average, but chronic undernutrition in Afghanistan and Bangladesh have put them among the 10 neediest countries. Afghanistan's per capita status quo needs are 65 kg, among the highest of the 65 countries examined. Some Latin America countries covered in this report are among those with the largest needs on a per capita status quo basis. However, per capita nutritional needs are much lower than in Sub-Saharan Africa, indicating less dire consequences of unmet needs. The per capita food gap in the Latin American region is estimated at 7 kg in 1996/97 but is forecast to drop to 4 kg in 1997/98 if grain prices fall and economic growth remains on track. Average per capita food aid needs in the five republics of the FSU included in the model are estimated to be high--especially on a per capita basis--and are likely to be overstated due to data problems. Status quo food aid needs are particulary elevated due to the relatively high consumption level that these countries enjoyed until recently. ERS methodology bases status quo needs on average consumption of the last 5 years. Nutritional needs may also be overstated if FAO's estimates of the share of grain in the republics' diets--between 45 percent in Armenia and 59 percent in Tajikistan--are inflated. The food situation in North Korea and the former Yugoslav republics could not be assessed in the framework of ERS models due to inadequate data availability. According to FAO, North Korea was hurt by a second year of heavy rains and floods that destroyed crops. Furthermore, financial constraints hinder commercial imports. As a consequence, food supplies have been scarce since 1995 and rations were reduced to prevent famine. North Korea has obtained an estimated 58 percent of the 1.5 million tons of grain import requirements from barter agreements and emergency food aid donations (delivered or pledged). The republics of former Yugoslavia have been able to increase their overall agricultural production, although wheat production was down in some republics. The republics are not expected to have food aid needs other than humanitarian assistance. Access to food, however, continues to be a problem as high unemployment and low salaries result in decreasing purchasing power. Projected status quo food aid needs for 1997/98, which assume a continuation of recent production and consumption trends, are only slightly lower than the 1996/97 estimate. Commercial imports are expected to rebound to a record 55 million tons in 1997/98 (table 2) due to an anticipated drop in grain prices and a downward turn in the production trend. The nutritional food aid needs for the 65 countries, which fall 9 percent in 1996/97 due to higher production, show little change in 1997/98 as population growth drives these needs. North Africa The countries of North Africa have no food aid needs in 1996/97 due to record grain harvests. The recovery from last year's drought is most dramatic in Morocco, where good weather led to a 4.5-times increase in grain output. The North African countries, which rely on imports for almost half of their grain use, curtailed imports in response to high prices in 1995/96. [Margaret Missiaen] North African countries harvested record grain crops in 1996/97 (table 5) as timely rainfall boosted grain production to 31 million tons, up almost 70 percent from the previous year's harvest. Most of this surge was due to a jump in area planted from 10 million to 13 million hectares (figure 4). Good growing conditions contributed to improved yields in the rainfed agricultural areas of Algeria, Morocco, and Tunisia. In Egypt, where most of the agricultural area is irrigated, the removal of production restrictions and use of high-yielding varieties have lead to a steady increase in output in the 1990's. Although poverty persists in rural areas, per capita caloric availability is above the minimum requirement, and nutrition-based food aid needs are zero for all countries. Increased import capacity in Algeria and Egypt will boost commercial grain imports in 1996/97. Egypt's economic recovery, which began in the second half of 1994, is gradually gathering momentum. Foreign exchange income from the tourism and petroleum industries has rebounded over the last 12 months. Large petroleum reserves and substantial debt rescheduling have sustained Algeria's import capacity despite political instability and declining per capita incomes. Wheat accounts for about 70 percent of the region's total grain imports, while corn, used mainly for poultry and livestock feed, comprises a 25-percent share. Availability of supplier export promotion programs supported growth in the region's commercial imports in the early 1990's but also left the economies vulnerable to changes in the grain trading environment. Tight world wheat supplies in 1996/97 will reduce favorable supplier financing. The United States and the European Union (EU), North Africa's major wheat suppliers, have exported wheat without subsidies during the last year. However, the EU reinstituted subsidies for some wheat exports in September 1996. Algeria has the capacity to commercially import all the grain needed to meet status quo and nutritional consumption targets. Good weather lifted Algeria's wheat output and boosted 1996/97 grain production to the highest level since 1992/93. The wheat harvest is estimated at 2.2 million tons and barley at 1.3 million tons. In 1995/96, Algeria's commercial grain imports fell below 4 million tons for the first time in a decade, reflecting better production and the high price of imported grain. Algeria's commercial import capacity is estimated at more than 5 million tons for 1996/97, but the good harvest and high prices will put downward pressure on imports. In the long term, population growth of 2.5 percent per year and constraints on crop yields, such as limited fertilizer use, lack of infrastructure, and poor seed quality, will continue to fuel import demand. Egypt's food aid receipts declined from 2 million tons to 200,000 tons during the last decade as the government took advantage of favorable supplier financing. A record 1996/97 wheat crop of 5.4 million tons and a recovery in the rice sector contributed to the latest in a string of record harvests since the mid-1980's. Corn output at 5.8 million tons is also a record, but the rapid growth of the early 1990's has slowed during the last 3 years. Fewer production and marketing controls for wheat and a steady rise in production and consumption of animal products are largely responsible for the grain sector's dynamic performance. Despite recent production gains, Egypt will remain dependent on grain imports due to changing consumer tastes, limited land and water availability, and the continued importance of bread in the diet. Morocco's 1996/97 grain harvest is estimated at 10.1 million tons, a record high. The severe drought that devastated the country's agricultural sector in 1995 cut grain stocks to less than 300,000 tons. The current harvest will support increased food and feed use and allow for stock rebuilding. Imports are expected to decline sharply with wheat purchases falling by more than half to 1 million tons. Corn used for feed is expected to continue its upward trend. The government has continued trade liberalization policies with the removal of import licensing requirements for grains. In recent years, robust growth in non-agricultural sectors has sustained Tunisia's import capacity despite high variability in rainfall and grain output. Record area and above average yields led to a record grain harvest in 1996, reducing the need to import high-priced grain. The wheat crop, which provides two-thirds of total output, was a record 2.0 million tons, while the barley harvest increased 10-fold to 850,000 tons. Tunisia's per capita grain food use of over 200 kilograms is the highest in North Africa. Feed use continues to expand rapidly as the livestock and poultry sector develops. Sub-Saharan Africa A record 1996/97 grain harvest is forecast for Sub-Saharan Africa. While high prices have limited the quantity of grain that can be imported commercially, food supplies from domestic resources have improved and food aid needs have fallen. [Margaret Missiaen] Sub-Saharan Africa's 1996/97 status quo food aid needs have declined more than 40 percent from last year's estimated needs to 3.4 million tons. Nutritional needs are down 30 percent, but are still 2.7 times the level needed to maintain status quo consumption (table 6). More than half of the nutritional needs are in East Africa. East and West Africa, the two most populous regions, have the highest status quo needs. East Africa's needs declined by almost half from last year, whereas there was only a slight decline in West Africa. Most of the improvement in East Africa can be attributed to a turn of events in Ethiopia, where an end to the civil war, major policy reforms, and favorable weather conditions contributed to a surge in agricultural output. In Southern Africa, high prices following last year's poor harvest and timely rainfall contributed to expansion of area planted and good yields in 1996/97.4/ Average or better grain crops are expected in the other Sub-Saharan African regions where most crops will be harvested near the end of 1996. 4/ Southern Africa's 1996/97 marketing year (April-March) corresponds to the Northern Hemisphere's 1995/96 marketing year. Sub-Saharan Africa's 1996/97 commercial import capacity is estimated at 6.8 million tons, compared with commercial imports of 7.3 million tons in 1995/96. Commercial grain imports increased more than 750,000 tons from 1994/95 to 1995/96 despite a 25-percent surge in world grain prices. Most of the gain in commercial imports came in Southern Africa, where poor harvests caused food supply shortfalls. A 1-million-ton drop in grain production in Southern Africa was offset by an 800,000-ton stock drawdown and a 300,000-ton increase in commercial imports. Commercial imports also rose in West Africa, mainly in Cote d'Ivoire and Nigeria, where trade restrictions had held down imports in the previous year. Food aid as a share of total imports has declined since peaking in 1992 (figure 6). Southern Africa's 1996/97 food aid needs are 411,000 tons, compared with food aid receipts of about 800,000 tons in 1995/96. The two largest food aid recipients in 1995/96, Angola and Mozambique, have seen dramatic recoveries in grain production due to the end of civil wars that had plagued these countries for almost two decades. Their aid needs in 1996/97 are only a fraction of the 300,000 tons each received in 1995/96. The 1992 peace accord in Mozambique has enabled the country to make substantial progress toward economic recovery, helped by good weather in 1996. In Angola, on the other hand, the peace is still fragile and many farmers have not yet returned to their land. More than a million displaced people will need food aid in 1996/97. Most of Central Africa's 217,000 tons of food aid needs are in Zaire, the largest country in the region. The food supply situation remains tight in Zaire's cities due to a political crisis that has disrupted the economy. Despite high food production potential, a substantial share of grain needs are imported because of the lack of transport and marketing infrastructure between rural and urban areas. Food aid needs in East Africa are 1.5 million tons, compared with receipts of 1 million tons in 1995/96. East Africa's nutritional needs reflect the inadequacy of diets in the region. Nutritional needs regionally average almost 28 kg per person, with needs in Eritrea and Somalia exceeding 85 kg per person. Rainfall has been near normal during most of the 1996/97 growing season, but Ethiopia is not expected to repeat the record harvest of 1995/96. Some recovery is forecast in Eritrea, where drought sharply reduced the 1995/96 harvest. In Rwanda, area planted increased in 1996 to about 75 percent of the pre-crisis level, while good weather improved yields. These developments reflect increased stability in interior areas and the resumption of regular agricultural activities by a large number of returning refugees. In Burundi, widespread escalation of violence since April has caused the displacement of at least 100,000 people and has hampered distribution of humanitarian aid. Crop output was expected to be down significantly because of a severe dry spell in April and May and the insecurity that disrupted farming activities, including the provision of agricultural inputs and technical assistance. In West Africa, food aid needed to maintain consumption is 1.3 million tons, almost double last year's receipts. The 1996/97 harvest is expected to be near last year's record of 32 million tons. Widespread rains covered most of West Africa's agricultural zones through August, the end of the critical growing period in the drought-prone Sahel. Soil moisture reserves are sufficient for crop development except in Mauritania, eastern Niger, and northern Senegal, where dry spells in June and July forced farmers to replant. Food aid needs are highest in Liberia and Sierra Leone, where persistent civil strife has severely restricted agricultural activities. Asia Food aid needs in Asia will continue to decline due to favorable weather and generally high rates of economic growth. However, increased assistance will be needed in Afghanistan and Bangladesh. Chronic undernutrition will remain a significant problem in the region due to a skewed income distribution in many countries. [May Mercado Peters] To maintain recent average consumption levels, Asia will need an estimated 3.5 million tons of food aid in 1996/97, 23 percent lower than last year's estimated needs.5/ The region's food aid requirements will continue to decline in 1997/98 to 3.2 million tons (table 7). Despite the decline in status quo requirements, nutritional needs remain twice as high because undernutrition continues to be a problem in some countries. Factors contributing to the decline in status quo food aid needs include good weather, favorable agricultural policies, and generally high economic growth rates. However, the overall improvement in the region's food situation does not hold for all countries. Over the next 2 years, six countries will require food aid. Of these, Afghanistan and Bangladesh have the greatest needs, amounting to 92 percent of the nine-country region status quo requirements in 1996/97. 5/ Nine historically low-income food aid recipient countries are covered in this report: Indonesia, the Philippines and Vietnam from Southeast Asia; and Afghanistan, Bangladesh, India, Nepal, Pakistan, and Sri Lanka from South Asia. There is no sign of short-term recovery in Afghanistan's food situation. The on-going political turmoil continues to disrupt agricultural production and normal economic activities. Domestic food prices are increasing and purchasing power is decreasing. Grain output continues to be below normal and is constrained by short supplies of agricultural inputs. As a result, the country is estimated to need 1.5 million tons of grain in 1996/97 to maintain recent consumption levels. Bangladesh will require 1.4 million tons of food aid grain in 1996/97 to maintain current consumption levels, 14 percent lower than last year's estimated requirement. With one of the highest rates of malnutrition in the world (exacerbated by low income and dense population), Bangladesh shows dramatically higher nutritional food aid needs (7.2 million tons). Grain production increased from 19.0 million tons in 1995/96 to 19.3 million in 1996/97, despite a tornado and floods that destroyed more than 18,000 hectares of crops. However, these natural disasters could affect the growth in production in 1997/98, which was expected to reach a record 19.5 million tons before the natural disasters occurred. Nepal needs an equivalent of 120,000 tons of grains in 1996/97 to satisfy the minimum nutritional requirements of its population. Economic growth is highly influenced by the agricultural sector, which in turn is highly vulnerable to weather. Economic activity rebounded in 1995/96 as favorable weather conditions boosted grain production, which is expected to continue to increase in 1996/97. The food deficit situation of Nepal, however, should remain unchanged. In Sri Lanka, food aid needs have increased compared to last year as the decline in inter-monsoonal rainfall dampened rice production. Movement of food into areas affected by the drought is likely to be severely constrained by the deteriorating security situation. For 1996/97, Sri Lanka is estimated to require 200,000 and 240,000 tons of grains to meet its status quo and nutritional requirements. Overall food security indicators for the Philippines have continued to improve over the last few years. The Philippines will need about 400,000 and 900,000 tons of grain to meet its status quo and nutritional requirements for 1996/97, respectively. A shortage of rice in 1995/96 significantly raised domestic prices during the off-harvest season. Buffer stocks for 1996/97, however, should alleviate any supply difficulties. India, Indonesia, Pakistan, and Vietnam are the only countries of the nine Asian countries covered in this report that are estimated not to have any food aid needs. This is primarily due to growth in agricultural production and overall economic activity. Increasing rice production and competitive prices may enable Vietnam to replace India as the second largest rice exporter in the future. In Indonesia, intensive farming methods, expansion of cultivated area, and irrigation will contribute to an increase in grain production in 1997/98 to a record 40 million tons. Despite the production advances, domestic supply lags behind demand. However, high economic growth will continue to boost Indonesia's commercial import capacity (4.8 million tons in 1997/98) to satisfy food demands. Recent reports on Pakistan suggest that the country received normal monsoon rains, supporting expectations of record production in 1996/97. India's economic growth should moderate in 1996 after a strong performance in 1995, due to higher interest rates and slower export growth. Nevertheless, if a good monsoon season prevails as reported, the economy should continue to grow at about 5 percent per year. The planned expansion of grain production to 185 million tons by 1997/98 will improve the country's food situation. Despite the overall improvement in food availability, long run access to food remains severely constrained for some because of an inequitable income distribution. Latin America and the Caribbean Grain food aid needs for 10 low-income Latin American countries are estimated at 800,000 tons for 1996/97. Despite continued relatively high grain prices in 1996/97, commercial imports will increase slightly. Growing conditions are favorable and production is forecast to rise. [Birgit Meade] Status quo food aid needs for the 10 Latin American countries included in this report are 800,000 tons of grain for 1996/97, down 40 percent, as grain production and commercial imports have increased slightly.6/ Nutritional requirements are considerably higher at 1.7 million tons, indicating that undernutrition is still widespread despite economic progress in the region. 6/ The 10 countries are Bolivia, Colombia, El Salvador, the Dominican Republic, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, and Peru. Grain output is forecast to increase only 2 percent, barely keeping pace with population growth, despite favorable planting conditions across the region and high prices. Large parts of these countries' agricultural sectors have been neglected during the last two decades. Agricultural production growth has been slow due to a lack of resources devoted to the agricultural sector and a policy of importing inexpensive grains. Commercial grain imports are projected to increase 3 percent despite high international grain prices. In 1997/98, however, grain prices are expected to resume their long-term downward trend that will allow for further increases in commercial imports and even lower status quo needs. Commercial imports have nearly tripled since 1987/88, while food aid receipts reached historic lows (table 9). The steady increase in commercial imports was only interrupted by extraordinarily high grain prices in 1995/96. Commercial imports in 1996/97 may increase more than projected because several governments in the region have temporarily lowered taxes and import tariffs to prevent even higher food price increases. Export earnings, needed to pay for imports, benefited from a recovery in coffee, sugar, and metal prices that had plummeted in the early 1990's. Guatemala has the highest food aid needs in the region at 200,000 tons, which are 70,000 tons less than last year's estimated needs. Higher coffee prices and a more diversified export portfolio have contributed to improved export earnings and lower food aid needs. Grain products constitute 60 percent of the average Guatemalan diet. Despite domestic production of 1.4 million tons and 450,000 tons of commercial imports, an additional 220,000 tons still are needed to fulfill nutritional requirements. Haiti and Nicaragua, with status quo needs of 135,000 and 100,000 tons and nutritional needs of 144,000 and 53,000 tons, have only recently embarked on their long roads to recovery from the civil wars that disrupted their economies. Financial support from the international community and economic reforms have raised economic activity and prevented even higher food aid needs in the short term. However, both countries show declining per capita grain production in recent years. Bolivia has status quo needs of almost 100,000 tons, close to last years's food aid receipts. This forecast is based on an assessment of commercial import capacity that assumes an increase in foreign direct investment and continued inflows of grants and concessional loans. If these assumptions turn out to be overly optimistic, food aid needs may be underestimated. Honduras requires food aid of 100,000 tons to maintain status quo consumption levels. Even though its economy is recovering from a recession in 1994, growth has not been sufficient to make the country independent of food aid. Grain production is expected to be around 700,000 tons, slightly below the 1995/96 record, while commercial imports are projected at about 250,000 tons. Nutritional needs of 264,000 and 223,000 tons in Bolivia and Honduras are among the highest in the region, illustrating the gravity of malnutrition and food insecurity. Peru's status quo food aid needs--estimated at 85,000 tons-- have decreased dramatically in comparison to last year's estimated 285,000 tons. Strong economic growth in the last 3 years, 14 percent in 1994 and close to 7 percent in 1995, has helped improve the country's overall situation. Merchandise exports grew 30 and 20 percent in 1994 and 1995, but were not enough to keep pace with even faster growing imports. Grain production is expected to increase slightly. Continued strong economic growth and lower grain prices in 1997/98 may enable Peru to purchase all its grain needs commercially. Nutritional needs remain a concern, however, as Peru has one of the highest incidences of malnutrition and poverty in Latin America. Grain aid of 590,000 tons on top of close to 2.3 million tons of commercial imports is needed to allow all Peruvians to fulfill their minimum nutritional requirements. Colombia, the Dominican Republic, El Salvador, and Jamaica, all among the better-off countries in this group of ten, have combined status quo food aid needs of less than 100,000 tons. Despite improvements in domestic production, 40,000 tons are needed in Colombia, the largest country in this group with a population of 36 million. Jamaica has status quo needs of more than 50,000 tons. Needs in these countries are temporary and caused by high grain prices. Much lower needs are projected for 1997/98. Nutritional needs are high in the Dominican Republic at 140,000 tons. Former Soviet Union The 1996/97 status quo food aid needs for five republics of the former Soviet Union (FSU) region are projected at 1.25 million tons and will be targeted at the Caucasus nations (Armenia, Georgia, and Azerbaijan) and Tajikistan. A 20-percent projected increase in Kyrgyzstan's grain production should mitigate that country's food aid needs. [Sharon S. Sheffield] The five FSU republics' status quo food aid needs are forecast at 1.25 million tons for 1996/97, on par with last year's actual receipts. Nutritional food aid needs are projected at 1.16 million tons (table 9). However, these estimates may be overstated due to data problems as mentioned in the Food Aid Needs Overview. The FSU region's food aid needs are limited to the Caucasus nations of Armenia, Georgia, and Azerbaijan and the Central Asian country of Tajikistan. Commercial import capacity is expected to increase due to economic stabilization in the Caucasus nations and direct budget support by donor nations and international organizations (such as the IMF and World Bank). Kyrgyzstan, a traditional food aid recipient, is not projected to require assistance in 1996/97 as grain output is forecast to increase. Grain production in the five FSU countries included in this report is forecast to rise 10 percent to 3.3 million tons in 1996/97, with most of the increase taking place in Kyrgyzstan. Despite reduced area and drought in certain countries, area sown to wheat and other food crops is up and grain yields should improve from last year. High prices are driving the increase in food grain area (figure 9). Grain production in the Caucasus nations of Armenia, Azerbaijan, and Georgia is forecast at 1.9 million tons for 1996/97, a small increase from a year earlier. Estimated 1996/97 status quo and nutritional food aid needs for Armenia, Azerbaijan, and Georgia total around 900,000 and 700,000 tons respectively, slightly below last year's actual receipts. The region has traditionally received a large share of the aid provided to the FSU region as a whole, due to civil war in all three countries that disrupted distribution of domestic output. Although military hostilities within these countries have subsided over the last year, continuation of the nearby Russian-Chechen conflict has hampered grain flows, and Armenia continues to face a trade blockade by Turkey and Azerbaijan. Projected grain output in Tajikistan is little changed from 1995/96. However, status quo food aid needs are forecast 30 percent higher than last year's receipts. Nutritional needs are forecast slightly higher. Food aid needs in Tajikistan remain relatively high due to limited hard currency earnings and increased military conflict. The country's future food aid needs could be mitigated somewhat if domestic output increases due to a policy shift from maintaining cotton area to promoting grain self-sufficiency. Tajik farmers have already responded by increasing area sown to wheat at the expense of cotton. However, plans to liberalize the cotton market by abolishing state orders and procurement prices could spur a reversal of this trend in 1997/98. Moreover, the increase in grain output may be marginal if yields suffer due to expansion into less productive land and if resources are limited. Kyrgyzstan's grain production in 1996/97 is forecast to increase 20 percent from 1995/96 due to increased area and yields. Despite economic reforms, real GDP and incomes have fallen and the country has few natural resources to export for hard currency. These factors have necessitated import assistance in past years. However, higher output in 1996/97 will reduce Kyrgyzstan's status quo and nutrition-based needs to nearly zero. Food Security Introduction The existence of food aid needs on a country level is an unmistakable indication of food insecurity. But even countries without food aid needs can fail to guarantee food security for all. Poverty is mainly to blame for widespread hunger and malnutrition. Food security is access by all people at all times to enough food for an active and healthy life. Three conditions have to be fulfilled to ensure food security: food must be available, each person must have access to it, and the food utilized must fulfill nutritional requirements. The principal questions that arise upon examining food security issues include: Who are the food insecure? Where are they? Why are they food insecure? and What factors need to be addressed when dealing with the problems? Regional and country issues vary significantly. This report includes three regional studies (Sub-Saharan Africa, Asia, and Latin America), the results of which show that Sub-Saharan Africa is the most vulnerable region in terms of inadequate food supplies and in the share of the total population affected. Asia has the largest absolute number of vulnerable people, although many countries in the region have shown marked improvement in increasing food supplies. The major challenge for these countries is to overcome the skewed distribution of income and to reduce poverty. In Latin America, there are fewer people with food security problems than in the other regions, but the problem is still severe. The selected countries in this region are among those with the most skewed income distribution in the world, which creates substantial hardship on the poor. These countries rely on imports for a large part of their staple food consumption and their trade deficits continue to grow even after major policy adjustments. Such an imbalance is unsustainable, however, and can lead to deteriorating food security. In the long term, resource availability to support an adequate supply of food is of particular concern in resource-poor countries such as Rwanda, Burundi, Bangladesh, Nepal, and Haiti. Food Security: Availability, Access, and Utilization Global food security requires sufficient food production to provide the world's people with the amount of food they need to lead active and healthy lives. On a national level, food can be produced domestically or imported. Domestic production depends on the size of the production area and yields achieved, and is highly influenced by weather, especially where irrigation is nonexistent. Imports depend on a country's ability to pay for them and are affected by export earnings and international food prices. Domestic production and import activity are affected by domestic policies that are designed to influence producer and consumer behavior, to raise revenue, or pursue other economic or political goals that may benefit large or small segments of the population. Access to food is mainly determined by household income. Lack of access is therefore closely linked with poverty. Where incomes are insufficient, transfer or food assistance programs (such as feeding programs or food subsidies) are a means to ensure access to food. In most developing countries, a large share of the population lives in rural areas where most of the daily food consumption comes from farmers' own production. Adequate food utilization is also an important component of food security. Access to safe water, sanitation, and basic health care make a difference in nutritional well-being as they have an impact on the body's ability to utilize consumed foods. Certain eating habits or inadequate knowledge of basic nutritional facts may also prevent the best use of available food. Root Causes of Food Insecurity While most--but not all--countries have sufficient food to feed their populations, this food may be distributed unevenly, leaving large numbers of people undernourished. A wide disparity in income translates into large differences in food availablility among income groups. Food availablility is typically measured in calories per capita per day or in kilograms of grain consumed per capita per year. Grain contributes a large part of the diets of developing countries. For this reason, this measure--kilograms of grain per capita--is used in the present Food Aid Needs Assessment report. The income-consumption relationship is used to estimate the caloric or grain consumption by income quintile. The income-calorie elasticity is based on cross country (65) estimates. 7/ Obviously, assuming the same income-calorie elasticity for all countries and across income groups is a rough approximation. This assumption was only employed for lack of more specific estimates. This approach is still capable, however, of yielding some valuable insights into the effect that a skewed income distribution can have on the nutritional status of a population. 7/ The method of calculation is as follows: We assume a constant calorie income elasticity of b = 0.2. The functional form for daily calorie consumption is: ln C = a + b ln Y (1) solving for a = ln C - b ln Y. (2) For each quintile ln Ci = a + b ln Yi. (3) Plug (2) in (3), solve for Ci = exp(ln C - b ln Y + b ln Yi) (4). The following food security papers discuss food security issues relating to food availability and access to food--in particular food deficits by income quintile--for Sub-Saharan Africa, Asia, and Latin America. Food Security in Sub-Saharan Africa In Sub-Saharan Africa, per capita food consumption declined in the last decade despite an increase in food aid. Without a dramatic improvement in the performance of domestic production, food consumption is expected to decline further in the next decade. [Shahla Shapouri and Stacey Rosen] The amount of food aid (grain) needed to maintain consumption in Sub-Saharan Africa during the next decade is expected to nearly double even under the most optimistic assumptions about the region's ability to import food commercially. Of the region's 36 countries included in this study, 32 will need food aid during the entire projection period.8/ Only four countries in the region are projected to be able to purchase enough commercial imports to maintain their consumption. 8/ For a complete list of countries included see Appendix 1. Eritrea, while listed separately in the preceding food aid needs section of this report, is not included here. In Sub-Saharan Africa, per capita consumption is projected to decline 1.6 percent per year in the next decade. To maintain per capita consumption at recent levels, Sub-Saharan Africa's food aid needs are projected to double between 1996 and 2005. In 1996, 13 percent of total food use will have to come from food aid to maintain the recent per capita consumption levels. This share could increase to as much as 18 percent by 2005. Food needs to satisfy minimum nutritional standards are even higher. By 2005, only 2 of the 36 countries would have sufficient food available to satisfy the nutritional needs of their populations. Nutritional food aid needs are estimated to increase 40 percent by 2005--the equivalent of about 33 percent of total grain requirements. The Role of Food Aid Sub-Saharan Africa's per capita food consumption has declined in the last two decades as domestic food supplies continue to fall despite an increase in food aid (figure 10). During the last decade, the food aid share of the region's food grain consumption ranged from 8 to 11 percent. Food aid's contribution to consumption is strongly influenced by the level of domestic supplies, which depends on local production and, in turn, on weather and political conditions. For example, food aid shipments were, at times, critical during 1983-93 in response to emergency food shortages in Ethiopia, Sudan, and Somalia. During the drought years of 1983-85, food aid provided more than 20 percent of grain consumption in Ethiopia. In Somalia, food aid contributed more than 30 percent of food consumption during the 1983-85 drought years, and about 70 percent of consumption during the 1992-93 civil war. Sudan, which has been faced with prolonged economic and political difficulties, relied on food aid to supplement an average of 10 percent of its food consumption during 1985-95, and as much as 30 percent in some years. The 5.1 million tons of grain shipped to Sub-Saharan Africa during the 1992/93 crop year were in response to the disastrous drought in southern Africa. In Rwanda, food aid supplied 84 percent of total grain consumption during the 1994-95 civil war. Factors Affecting Food Security and Needs The problems of food security in Sub-Saharan Africa are deeply rooted in inadequate and highly variable food supplies and skewed distribution of purchasing power. Therefore, external support-- financial or food aid--alone cannot alleviate the problem. High population growth, slow growth in agricultural productivity, and slow overall economic growth that limits purchasing power have caused the region's food insecurity. Even in countries with adequate food supplies, food insecurity remains a major concern because of the wide disparity in purchasing power. Sub-Saharan Africa is the only region in the world with growing chronic nutritional problems. Average per capita calorie consumption has stagnated at a very low level. In 1990-92, the average daily calorie supply in the region was 2,027 or about 87 percent of the amount recommended by the U.N.'s Food and Agriculture Organization (FAO). (In comparison, calorie supplies in the United States average about 3,400 per person per day.) Extreme low weight is one of the first, and most visible signs of chronic undernutrition in young children. Young children who do not eat enough fail to grow at the proper rate and are much more likely to contract illnesses and die than are healthy children. According to the World Bank, in Sub-Saharan Africa, 31 percent of children are considered severely underweight compared to only 2 percent in North America. Population Growth High population growth rates--roughly 3 percent per year--are a major contributor to food insecurity in Sub-Saharan Africa. While a general decline in population growth is expected, the projected growth rate of 2.8 percent through 2005, down from the historical rate of 3.2 percent, is still extremely high. If population growth in this region were to decline 0.5 percentage points to 2.3 percent per year, total food aid needs of the region in 2005 would be 7.6 million, 30 percent lower than those projected by the base population growth scenario. Sub-Saharan Africa's population more than doubled to an estimated 527 million between 1960 and 1990, and by the year 2005 it will exceed 700 million. With the exception of successful family planning initiatives in Botswana, Kenya, and Zimbabwe, there is no indication of a sustained decline in Sub-Saharan Africa's population growth rate. The present age composition will also lead to continued high population growth. Between 35 and 50 percent of the region's population is 15 years old or younger. With such a large percentage of the region's inhabitants about to enter their reproductive years, population growth is likely to remain high even if average fertility rates decline. Agricultural Trends and Productivity During the 1980's, agricultural output in Sub-Saharan Africa increased roughly 1.8 percent per year and slowed to 0.7 percent per year between 1991 and 1995. Given the region's population growth rate, agricultural output declined in per capita terms. Performance of subsectors such as food crops and livestock followed similar growth paths. Constraints facing the agricultural sectors of Sub-Saharan Africa include: a low resource base and little use of modern inputs, government policies that discourage production, poor infrastructure, environmental problems, civil strife, and an unfavorable climate. Resource Constraints and Limited Use of New Technology--Poor production performance is rooted in low yields. Limited resources, low input use, and little new technology adoption are the principal factors constraining yield potential. Yield growth exceeding projected levels would dramatically reduce food aid needs. In fact, if annual yields grew 1 percentage point more than projected, food aid needs could be cut in half by 2005. This also means an additional 84 million people would be able to maintain their food consumption. Currently, yields for all major crops in the region are lower than the world average of about 2.8 tons per hectare during 1992-94. For example, corn is a staple crop for many African countries, particularly in East and Southern Africa, and yet the region's corn yields are only about 25 percent of the world average. Adoption of high-yielding corn varieties in a few countries such as Kenya and Zimbabwe was a milestone in increasing yields, but regional adoption rates remain low. Improved production practices such as mixed cropping can also increase yields. While these gains are very important, they are not expected to substantially increase total production. Fertilizer use in Sub-Saharan Africa is lower than in any other region in the world. The region accounts for only 1 percent of the world's fertilizer use. The use of capital inputs is also very low. On average, there are nearly 20 tractors per 1,000 hectares of arable land in use in the world. In Sub-Saharan Africa, the number is 1.2, low even compared with the developing countries of Latin America and Asia, where there are 12.5 and 8.6 tractors for every 1,000 hectares of arable land. Because Africa has not seen improvements in technology, most increases in agricultural output have stemmed from area expansion. However, the long term prospects for acreage expansion are not bright. Sub-Saharan Africa has a vast and diverse land area, but the region faces a number of resource constraints to sustainable agricultural growth. In many countries population pressures and poor farming practices that have caused soil erosion and nutrient-deficient soils have already pushed farmers to marginal lands. The average per capita area under major crops declined from 0.4 hectare in 1980 to 0.26 hectare in 1994. Some countries, such as Sudan and Zaire, have vast areas of rainfed land with crop potential, while others, such as Kenya and Madagascar, have already exhausted theirs. Also, a large part of land with crop production potential is unfit for cultivation without major investments. According to FAO estimates, about half of Sub-Saharan Africa's land with crop production potential has poor soils. In addition, relative to land now in production, much of the potential cropland is distant from domestic and foreign markets. The transportation and communications infrastructure necessary for trade between the areas of crop potential and elsewhere is poorly developed. More than 20 percent of all vegetative land is degraded due to human causes, with water and wind erosion accounting for the majority of the affected hectares. Much of this degraded area is in the Sahel, Sudan, Ethiopia, Somalia, Kenya, and southern Africa. Historically, farmers adjusted to resource constraints by using alternative and fallow cultivation. However, population pressures have encouraged continuous cropping at the expense of these sustainable agricultural techniques, leading to sharp declines in land productivity. Policies--Given the importance of agriculture in employment, income, and export earnings, policy intervention in the sector has been widespread. Governments have intervened in all stages of production, consumption, and trade of output as well as inputs. Government policies that favor urban consumers have often stifled agricultural development in Africa. This led to rapid urbanization such that Sub-Saharan Africa now is faced with the highest rate of urban growth in the world, 4.6 percent during 1990-94 compared to 3.3 percent in South Asia. Sub-Saharan Africa also has a larger share of its population living in cities (32 percent) than South Asia (29 percent). To satisfy politically influential urban consumers, food prices were held below market levels, providing disincentives to domestic production. To control prices, governments relied on marketing boards to buy, store, and sell crops at government-set prices. The boards were characterized by overstaffing, inadequate budgets, and poor management. Exchange rate policies supported overvalued currencies, indirectly taxed farmers, and acted as a disincentive to produce export crops and other exports, thereby diminishing potential foreign currency earnings. Also, overvalued currencies made imported foods less expensive than domestically produced foods, further discouraging farmers from producing. Inaccessibility to extension services, inputs and credit, and government emphasis on industry also stymied agricultural production. Many countries have been implementing reform programs begun in the mid-1980's aimed at improving producers' access to inputs, raising producer prices, reducing the government's role in marketing, improving rural roads, and providing research and extension services. The process and success of implementing these reforms has varied widely--in part depending on the initial structure of economies. For example, implementing a policy calling for the elimination of marketing boards was easier to do when there were some private sector activity and/or parallel markets that were able to replace the functions performed by the state. Along the same lines, the reforms that have called for reductions in fiscal expenditures have led to tighter domestic credit situations. Because the government was the principal source of credit for agriculture, the cutback has had an adverse impact because the private sector has not compensated for the reduction. Lack of access to markets has been a significant constraint for small-scale Sub-Saharan African farmers. Rural infrastructure development is needed to facilitate transportation, distribute seeds, tools, and inputs, and market output. To stimulate agricultural growth, private agents are needed to assume functions formerly performed by the state, and redefine the role of the state and improve efficiency in the delivery of public goods. Improvements in market infrastructure, however, require investment, and the likelihood of a significant increase in investment in these countries is slim. According to the World Bank, domestic savings in the countries successfully implementing adjustment policies did not increase markedly and prospects for further increases are not encouraging because of low incomes. In summary, public institutions previously played a large role in the functioning of African agriculture in terms of providing credit, delivering inputs, and supporting research and extension services. Therefore, the withdrawal of the state from the agricultural sector without defining its new role and the lack of any other institutions to take its place, failed to stimulate growth in the sector. In some cases--usually where distortions were huge--structural adjustment programs were successful; in others they failed. Weather Variability--Drought is a chronic problem for consumers and producers. Food consumption in most countries is highly correlated with domestic production, which is directly influenced by rainfall. Large areas of the continent outside the forest zone have short growing seasons and highly variable rainfall. Soils are low in organic matter, which limits their moisture retention capabilities and further reduces the supply of water to growing plants. The instability in production is measured by coefficients of variation. The data for 36 countries were adjusted for trends. The region's average coefficient of variation in grain production for 1980-95 was 16 percent. The results, however, show considerable variability among countries, ranging from 3 percent in Madagascar to 89 percent in Cape Verde (which has a very low level of grain production). In 30 of 36 countries, the coefficients of variation were more than 10 percent. A large part of this variation in production is often transmitted to consumers. The average correlation coefficient between production and consumption was about 80 percent, and the average coefficient of consumption variability was 13 percent. This means that in a given year, average per capita consumption can decline more than 10 percent. This is particularly troublesome when there is a declining trend in food consumption. The problem is more severe in rural areas where most of the poor reside and who often have no access to commercial markets to purchase food during shortfalls. Given that rainfall in these countries can be highly variable, irrigation could reduce production shortfalls when rainfall is inadequate. However, limited water resources and capital mean that only 4.3 percent of arable land is irrigated. This is low even when compared to other developing regions. In Latin America, 13 percent of arable land is irrigated and in Asia, 38 percent is irrigated. The world average is 19 percent. Investment in irrigation is costly and in most cases the returns are low. Most of the larger scale irrigation schemes were developed to increase production of cash crops. However, yields in the irrigated areas are not significantly above those in rainfed areas because of the lack of inputs, poor water control, and lack of maintenance. Import Capacity and Income Growth If a country cannot grow enough food, imports are expected to make up the shortfalls. Although food imports have expanded in the region, their contribution to total consumption remains low. Inadequate foreign exchange availability limits imports. During the last decade, export earnings growth was minimal, measuring close to zero during 1985-89, followed by a decline of 0.4 percent per year during 1990-94. Although the performance varied by country, export earnings declined since 1990 in 20 out of 36 countries. Countries that had been major participants in world trade lost market shares. Additional pressure came from the decline in terms of trade 9/ (figure 11). Since 1980, the region's terms of trade declined 4 percent per year, leading to a 0.8-percent annual loss of income (import share of GDP averages 20 percent) 9/ The terms of trade are a measure that captures the relative level of export prices compared with import prices. To prevent a sharp decline in imports, countries either borrowed or received financial support from donors. Total external debt increased more than threefold during 1980-1994. In 1994, the debt service to export earnings ratio averaged 43 percent, and average per capita debt was 30 percent higher than the average per capita GDP. Official Development Assistance (concessional financial flows that aim to promote economic development) more than doubled during 1980-94, reducing import constraints and contributing to the bulk of domestic investment. Domestic consumer purchasing power also declined in the past decade. The average per capita income for the region in 1994 was $259, or about 70 cents per day, the lowest in the world (table 10). In addition to low income, a skewed distribution of income intensifies food insecurity and malnutrition in the region. In 1994, the average per capita income of the people in the highest income quintile was more than 10 times higher than that of those in the lowest income quintile. According to the World Bank, about 45 percent of the 532 million people in the region live below the national poverty line (two-thirds of average per capita national income). Without targeting the pattern of growth, the food security problem can escalate in the future. For example, looking only at population growth, the number of people in the lowest income quintile will increase from 100 million in 1994 to 141 million by 2005. The average annual per capita income in the region during 1985-94 declined by 1.2 percent. Continuation of this trend means further cuts in earnings of the poor. Assuming an income-grain consumption elasticity of 0.2 (a cross-country estimate based on 65 low income countries), almost 80 percent of the region's population would not be able to maintain its current grain consumption in 2005. (A higher income elasticity will yield an even more desperate situation.) The potential to increase consumption of other foods is limited because grains contribute almost 70 percent of the region's diet and are the cheapest source of energy. For selected countries, an estimate was made to calculate the income growth required (over 10 years) for consumption of the lowest income quintile to reach the base-period country average (table 10). The annual per capita growth required ranged from 8.6 to 19.3 percent, while per capita income growth during 1985-94 ranged from -4.6 to 2.3 percent. According to a World Bank study, growth rates of at least 6.5 percent per year are required for typical African countries to reduce the poverty to an acceptable level. Because of the severity of poverty, the study argues that income growth alone is not sufficient, but the pattern of growth leading to increased productivity and employment of the poor is crucial. Therefore, the first step is to promote the productive use of the poor's main asset, labor. In Sub-Saharan Africa, about 70 percent of the population depends on agriculture for employment. If the goal is to reduce poverty and improve food security, policies and programs to improve incentives and technology of the agricultural sector must undergo radical change. According to the World Bank, this cannot be achieved without governments' commitment to policy reform and increased assistance from donors. Political Conflicts Poverty and income inequality are behind the social and political instability of the region. Civil war and/or disturbances in many countries have disrupted agricultural activities. In addition, the conflicts pose challenges of rehabilitating agricultural sectors disrupted by the dispersal of farming populations from their land, loss of crops and livestock, exhaustion of seed supplies, cutting of trees, and laying of mines on roads and in fields. According to a United Nations' report, about 12 million people or about 2.5 percent of the population are either refugees or internally displaced. There is, however, no estimate of the costs associated with the loss of health, nutrition, production capacity, and destruction of market infrastructure. In recent years, some progress has also been made in political liberalization. Since 1990, many countries have held presidential or parliamentary elections, some for the first time. With the resolution of long-standing conflicts in Angola, Ethiopia, and Mozambique, agricultural output has responded positively and is expected to continue along this newly established growth path. Conversely, conflicts that persist in Burundi, Liberia, Rwanda, and Sudan continue to stifle output. Food Security Prospects A growing food gap between needs and availabilities--projected to nearly double in 10 years--is based on extrapolation of trends in production, financial capacity to import, population growth, and income distribution. The gap is much larger than the entire projected supply of food aid. Even with an assumption of no restrictions on food aid supplies, countries cannot conceivably import and distribute such large quantities of food aid because of limited import facilities and transportation infrastructure. Accepting a decline in per capita consumption from already low levels could have severe nutritional consequences. Currently, per capita consumption of about 78 percent of the population in the region is less than the minimum recommended nutritional level. Given the high income inequality, it is projected that almost 83 percent of the population may not be able to maintain their current consumption levels in the next decade, meaning further nutritional deterioration. The only solution, therefore, is to improve production performance and expand exports to finance imports. The region has potential to expand food production. The crop yields are the lowest in the world and any increase in the use of modern inputs such as fertilizer could substantially improve production. Several countries have significantly changed their policies. Although it is difficult to measure the impact of the reforms because of the short duration of adjustment, data show an increase in real farm prices in those countries. When market distortions are removed and prices are set according to supply and demand, there is a desperate need for a sound blend of improvements in nonprice factors such as infrastructure, technology, delivery systems, and services. Evaluation of the performance of selected countries that have made significant policy adjustments and have at least a modest input distribution network or extension service shows positive growth in grain production on a per capita basis (table 11). The impact of weather variability remains large and in most cases could mask the impact of other factors. A recent study by the World Bank, however, indicates that to expand agricultural production, increases in fertilizer use and capital inputs are essential, particularly since the contribution of land and labor are expected to slow down in the future. To achieve a 4-percent annual production growth rate in the next decade, the study estimates that fertilizer use must grow by 10 percent per year and capital inputs by 6 percent (according to a study by Cleaver and Donovan, the elasticity for land and labor is 1.0, fertilizer 0.1, and capital inputs 0.2). In Sub-Saharan Africa most of the modern inputs are imported. Therefore, improvements in the financial condition of the countries will support increases in imports of essential inputs as well as expand the opportunity for food imports. The IMF projects annual export growth for Sub-Saharan Africa to be 4-5 percent through 2000. Slower export growth is expected for the mismanaged economies of Liberia, Zaire, Central African Republic, Sudan, Somalia, Rwanda, Burundi, and Angola. This projection, however, depends on policy adjustment efforts, the future of commodity prices, and the region's terms of trade. Exports of primary commodities contribute about 75 percent of foreign exchange earnings in the region. Internal market conditions of Sub-Saharan countries generally have no significant influence on world market prices for their export and import commodities. Therefore, their export earnings are influenced by fluctuations in world commodity prices and by changes in the domestic output of export commodities. According to the World Bank, nonoil commodity prices are projected to decline on average 2 percent per year in 1996-2004 in real terms, minerals by 1 percent, agricultural commodities by 2.5 percent, and beverages by 5 to 6 percent. Many of these products are being exported by developing countries. Sharp declines in terms of trade, if continued, will have severe implications for the financial situation of these countries. Domestic policies aimed at diversifying exports will help stimulate earnings growth. Commodity diversification would improve export performance because a decline in the price or the volume of one commodity would have a less disruptive impact on the country's overall receipts. Policy adjustments, particularly exchange rate policies, have shown significant improvement in the financial situation of CFA 10/ countries in West and Central Africa. Continued peace in the Horn of Africa and Southern Africa should have residual benefits through increased flows of investment and trade. 10/ CFA stands for Communaute Financiere Africaine and it describes the union of African countries that have pegged their currencies to the French franc at a fixed rate. References 1. Kapoor, Kapil (editor). Africa's Experience with Structural Adjustment, Proceedings of the Harare Seminar, 1994, The World Bank, Washington, D.C.,1995. 2. Cleaver, Kevin and W. Graeme Donovan. Agriculture, Poverty, and Policy Reform in Sub-Saharan Africa, The World Bank, Washington, D.C.,1995. 3. International Monetary Fund. World Economic Outlook, IMF, Washington, D.C.,1996. 4. Missiaen, Margaret, Shahla Shapouri, and Ron Trostle. Food Aid Needs and Availabilities: Projections for 2005, USDA, ERS, Washington, D.C., 1995. 5. United Nations, Food and Agriculture Organization (FAO), Agrostat database. 6. The World Bank. Adjustment in Africa: Lessons from Country Case Studies, Washington, D.C., 1994. 7. The World Bank. African Development Indicators, Washington, D.C., 1996. 8. The World Bank. Commodity Markets and the Developing Countries, The World Bank, Washington, D.C. (1996). 9. The World Bank. Financial Flows and the Developing Countries, Washington, D.C., August 1996. 10. The World Bank. Global Economic Prospects and the Developing Countries, Washington, D.C., 1996. 11. The World Bank. The World Development Report, Washington, D.C., 1996. Food Security in Asia While Asia as a region is not experiencing an overall food shortage, the bulk of the world's hungry can still be found there. Food insecurity remains a significant problem, mainly due to skewed income distribution. [May Mercado Peters] Asia, as a region, has made impressive gains in achieving food security over the past three decades. During this time many countries in the region sustained average annual growth rates in per capita food consumption of over 1 percent. As a result, per capita food consumption throughout the region has increased considerably. The region's impressive performance, however, masks serious food security problems. The region still has some of the most densely populated and poorest countries in the world. These countries have not shared equally in the region's economic performance. Income in South Asia, averaging $320 per capita per year, remains one of the lowest among all developing regions. So while Asia is not experiencing an overall food shortage, the bulk of the world's hungry can still be found there. In nine selected Asian countries, 11/ the poorest 20 percent of the population, 319 million people, is equivalent to about 60 percent of Sub-Saharan Africa's total population. In India alone, a net grain exporter, 20 percent of the population (about 180 million people, slightly less than Indonesia's entire population) remains chronically undernourished. In the long term, sustainability of resources remains a major food security issue in low-income and densely populated countries such as Bangladesh. 11/ The countries are Afghanistan, Bangladesh, India, Nepal, Pakistan, Sri Lanka, Indonesia, Philippines, and Vietnam. The dramatic improvement in Asia's food security has been due in large part to rapid economic growth (particularly in China and East Asia), sustained growth in agricultural production, and a slowing of population growth. Economic growth has increased incomes as well as the commercial import capacity of the region's countries. Since 1990, agricultural production in the two most populous countries, China and India, has grown well over 3 percent per year. Population growth in Asia has slowed significantly, from over 2 percent per year during the 1960's to 1.6 percent during 1990-95. The slower growth has lowered the growth in projected food requirements. Role of Food Aid in Asia The role of food aid in Asia has diminished over time. Food aid currently accounts for less than 1 percent of food consumption in the region. As a result, the bulk of food aid has shifted towards Sub-Saharan Africa where emergency food shortages often occur. Although food aid is declining, it is still important in the region, especially during emergencies and transitional food shortages. Several Asian countries are now receiving project-oriented food aid aimed at transferring income to the poor. For instance, India is the largest recipient of the United States' PL 480 Title II food aid that specifically targets vulnerable segments of the population through programs such as the "Food for Work Program." Nonetheless, food aid is not a long term answer to chronic undernutrition problems, but is an effective tool for supplementing temporary shortfalls in food supplies. This article examines recent trends in population, consumption, production, import capacity, and income distribution to estimate food grain needs for maintaining recent levels of consumption over the next decade. The estimates indicate that in the year 2005, Bangladesh and Afghanistan will still have grain gaps of about 2.7 and 4.1 million tons, respectively, to maintain recent levels of consumption. Current Food Security Situation Among the Selected Countries The nature of the food situation in Asia varies dramatically from one of very high consumption in high-income countries, such as South Korea, which in 1994 consumed an average of 3,224 calories per capita per day, to one of undernutrition in low-income countries such as Bangladesh, which in 1994 consumed an average of 1,951 calories per capita per day. With this in mind, the following discussion of Asian food security issues and food aid needs will focus on nine low-income countries: Afghanistan, Bangladesh, India, Nepal, Pakistan, Sri Lanka, Indonesia, the Philippines, and Vietnam. Since the early 1970's, these nine countries, hereafter referred to as Asia, have been the largest food aid recipients in the region. As such they are more likely than the other countries of the region to have significant problems with food availability and undernutrition. The discussion will also focus on consumption of grains, the region's primary source of calories. Grain accounts for about 65 percent of average calories consumed per person in the developing countries of Asia. Grains play an even more crucial role in the region's poorest countries, such as Afghanistan, Bangladesh, and Nepal, where they account for about 80 percent of average calories consumed. Food Availability The grain availability situation in Asia is better than that found in other developing regions of the world such as Sub-Saharan Africa and Latin America. Consumption of grains has grown over the past 30 years, exceeding the rate of population growth in all selected Asian countries except Afghanistan. Grain consumption increased the fastest in Indonesia, exceeding its rate of population growth rate by 2 percentage points. Grain production grew more than 3 percent per year between 1961 and 1995 in most countries, while per capita economic growth averaged 2 percent or more during 1985-94 in all but a few countries (table 12), thereby raising income and increasing the region's ability to import food. The main exception is Afghanistan, where grain production and economic growth have declined due to on-going civil strife. Population Growth Population growth will continue to be a significant force in the growth of food demand. While population growth rates have been declining, they remain high, especially given the degree of population density and age distribution of the population (table 12). The annual population growth rate during 1961-95 for seven of the nine selected Asian countries was greater than 2 percent. The other two countries, Sri Lanka and Indonesia, exhibited low annual rates of 1.5 percent and 1.7 percent, respectively. The decline in growth rates in these two countries has been attributed to the success of family planning programs that have lowered fertility rates to replacement levels. About 29 million people are added to the population of the nine countries annually, or about 290 million additional people in the next decade. The continuing increase in population means that grain availability will have to increase by over 2 percent per year to maintain current levels of grain consumption. Yet, grain production since 1990 has lagged behind the rate of population growth in six of the nine selected countries. As such, increasing both agricultural output and grain import capacity are important for meeting future demand for food. Agricultural Production Domestic grain production is important to Asia, accounting for more than 80 percent of the countries' available grain supply. The importance of domestic production to consumption can be seen from the relation between the variation in production and the variation in consumption. Variability in production, as measured by the coefficient of variation, is strongly related to variability in consumption in most countries (table 12). Correlation analysis of data from 1961 to 1995 indicates that variation in grain consumption is highly correlated to variation in grain production, ranging from 0.89 in Sri Lanka to 0.99 in India. The increase in grain production during the past three and a half decades and slower growth in domestic demand have caused some countries to shift from being net grain importers to being net grain exporters. India, Vietnam, and Pakistan have become major rice exporting countries, consistently ranking among the top five in the world together with the United States and Thailand. Recent record levels of wheat production have caused India to become a net exporter of wheat as well. Even though these countries are exporting grains, a large number of their populations go hungry. Since 1990, grain production growth has slowed below that of population growth in many countries. In Bangladesh and Sri Lanka, the growth rate of grain production has not only dropped below the rate of population growth, but actually turned negative. The reasons for the decline in production growth rates are not clear. The decline could be due to a lack of needed inputs such as fertilizer as occurred in Bangladesh, or adverse weather conditions as in Nepal and Sri Lanka, or to a slowdown in the growth of agricultural productivity. If the region's production rates do not recover, other sources of supplies such as imports will be needed to maintain consumption levels. Land Area Impedes Production Growth Land area is one of the region's most limiting factors of production. Long-term prospects for expansion of cultivable area are limited as most of the selected Asian countries have already put most of their potential fertile cropland under cultivation. Since 1980, expansion of cultivable area has stagnated, increasing by less than 1 percent per year in most countries and actually declining in Bangladesh, India, and Sri Lanka. These three countries are among the more densely populated countries and have been losing cropland to urbanization caused by population pressures and increased industrialization. As a result, most Asian countries will have to rely on yield increases and more intense cropping to increase or maintain growth in grain output. Potentials Exist for Increasing Yields The strong growth in grain production since the early 1960's stems primarily from increased yields. The rate of growth in yields between 1980 and 1994 exceeded the rate of area expansion (table 13). Growth in grain yields since 1980 have been strongest in Bangladesh, India, the Philippines, and Vietnam, increasing by over 2 percent a year. Increased irrigation contributed to yield increases in Asia, allowing multiple cropping. Irrigation accounts for between 20 and 30 percent of total arable land for most of the selected countries, significantly higher than the world average. In Pakistan, nearly 65 percent of cropland is irrigated. The expansion in irrigation was also accompanied by the spread of high yielding varieties of rice and wheat and increased fertilizer use. Asia benefited the most from the development and the adoption of the Green Revolution technologies and as a result, yields have increased more in Asia than in other developing regions. Yield growth, however, is slowing down, raising some concerns given the limited ability to expand area. The challenge is to increase yields in a sustainable manner with minimum environmental degradation (deforestation, loss of biodiversity, increase in soil salinity, waterlogging, and loss of soil and soil fertility). Despite their growth, grain yields in the region fall below the world average except for Indonesia. Wheat yields are generally higher than the world average, while rice yields of the major exporters are below the world average. However, considerable potential exists for increasing yields in Asia. Continued yield increases in Asia are attainable with improved production technologies, improvement and expansion of irrigation systems, improvement of cropping practices, development of higher yielding varieties, and proper timing and input application. Agricultural Policies Domestic grain production in the nine countries is also important because of its contribution to the economy's growth and the dependence of a large proportion of the population on the agricultural sector. The percentage of the population living in rural areas exceeds 65 percent in most countries. Agriculture accounts for over 20 percent of gross domestic product (GDP) while employing over 50 percent of the population. As a result, government intervention in agricultural markets has been pervasive with the goal of protecting the sector. The main goal of agricultural policies in the selected countries has been self-sufficiency in grain production. The policies vary by country, but usually include price supports for producers, price subsidies for consumers, and quantity restrictions or tariffs on grain imports. Imports of grains are used primarily to compensate for shortfalls in domestic production. In South Asia, government intervention in agriculture has involved the direct marketing of agricultural inputs and commodities through public parastatals 12/ and government pricing of major grain products. Recent liberalization of economic policies has not extended to the agricultural sector --particularly in Pakistan and India, where agriculture remains highly controlled by the government. The most extensive liberalization of the agricultural sector has occurred in Bangladesh where the government has drastically reduced subsidies on food and fertilizers and allowed for private sector participation in grain trade. 12/ Parastatals are governmental and nongovernmental enterprises, including marketing boards, that have been granted exclusive or special rights or privileges. The extensive intervention of government in agricultural markets is generally believed to stifle agricultural production. Governments have a tendency to maintain low food prices to benefit consumers, which reduces the incentive for grain producers to increase production. The effect of this bias on production is difficult to determine. A 1988 study by the International Food Policy Research Institute indicated that food pricing policies in Bangladesh and Pakistan were biased against agricultural production, but that little or no bias existed in food pricing policies in Sri Lanka and India. Other studies indicated that there is a significant bias in favor of urban consumers in these countries. Economic Growth and the Ability To Import The food import capacity of the region has been growing due to trade liberalization accompanied by relatively strong economic growth and a consequent increase in export earnings. Because primary commodity exports account for less than 18 percent of export earnings in all selected countries, the region has not experienced a decline in its terms of trade similar to that of Sub-Saharan Africa and Latin America. The debt service ratio varies by country, but is typically below 20 percent, except in India, Pakistan, and Indonesia where it exceeds 25 percent (table 14). Economic growth in the selected countries, which has exceeded 4 percent a year since 1990, ranges from 1.6 to 7.6 percent per year. Economic growth increases the demand for food, but when it is accompanied by sufficient export earnings and positive capital inflows, it permits financing of food imports when there are shortfalls in domestic production. This is particularly relevant in Indonesia, where grain imports have grown 30 percent per year since 1990 in response to slower growth in domestic grain production. The ability of Indonesia to finance increased grain imports has permitted grain consumption to grow 5 percent per year during this period of production shortfalls. Meanwhile, although the situation is not uniform, Bangladesh and Afghanistan, and to a lesser extent Nepal, are countries where average national food supply remains below recommended quantities. Economic Access to Food Despite the favorable trends in food availability, undernutrition remains a serious problem in all of the selected Asian countries. The extent of undernutrition in the region is primarily the result of unequal purchasing power, which prevents the poor from taking advantage of available supplies. Economic access to food and insufficient rates of economic growth remain the major food security issues for the region. Income Distribution The disparity in purchasing power is largely due to a skewed income distribution. The distribution of income indicates that the poorest 20 percent of the population accounts for only 8-10 percent of total income, and the richest 20 percent accounts for around 40 percent of total income (table 15). To better understand the relationship between income distribution and undernutrition, the gap between per capita consumption of grains and recommended nutritional standards was estimated by income group. The analysis is also useful for identifying the depth of undernutrition in each country. The results of the analysis indicate that per capita grain intake in the poorest 20 percent of the population falls below the recommended nutritional levels for all selected countries except Indonesia. Individuals in the next quintile are generally not much better off, with grain consumption still below the recommended minimum requirement in most countries. At the highest income quintile, all the countries are able to meet the recommended grain requirements except Afghanistan. Furthermore, it is not until the fourth income quintile that average grain consumption levels exceed minimum nutritional requirements in a majority of countries. This indicates that even in countries where food availability is not a problem, 20 to 40 percent of the population lacks economic access to nutritionally adequate diets. The results from the above grain distribution analysis were used to calculate statistics that identify the dimensions of the undernutrition problem in a country. The undernourishment problem in terms of number of people affected is greatest in India and Bangladesh. On the other hand the breadth of the undernutrition problem is greatest in Afghanistan, Nepal, and Bangladesh. The breadth of the undernutrition problem in India is relatively low, despite the large number of affected people, compared to many other countries in the region. In Afghanistan, Bangladesh, and Nepal, the undernutrition problem is a function of both food availability and disparity in purchasing power. Improving Food Security The most important food security problem facing the selected Asian countries is chronic undernutrition caused by a disparity in purchasing power within the population and inadequate rates of economic growth. In most countries in the region, if food were distributed equally, everyone would have enough to eat to meet minimum nutritional standards. However, the incomes of the poorest segment of the population are not sufficient to allow them access to available food. It is estimated that, given current trends and rates of economic growth, it will take 7 years for average grain consumption of the poorest 20 percent of the population in Indonesia to reach the minimum nutritional standard. By way of contrast, if the Bangladesh economy were to grow 14 percent per year, it is estimated that the country could eliminate hunger among the poorest segment of the population in 10 years. While it is unlikely that Bangladesh could reach and sustain this rate of growth, it does highlight the importance of economic growth in reducing hunger and undernutrition. Estimates based on recent trends in population, consumption, production, and income distribution indicate that undernutrition could be eliminated in all Asian countries except Bangladesh and Afghanistan in 10 years if economic growth exceeded 9 percent per year. This rate is high given current rates in most of these countries, but only slightly higher than Indonesia's economic growth rate from 1985 to 1994. Also, undernourishment in all but the lowest quintile could be eliminated in Afghanistan, Nepal, the Philippines, Sri Lanka, and Vietnam by increasing the average rate of economic growth over the next 10 years to 4 percent. The analysis indicates that undernutrition will be significantly reduced if economic growth rates are increased. Many countries have already taken major steps to target programs to reduce food security problems of their vulnerable population groups. Most of the programs rely on public food distribution systems and rural public works projects. The major concern with public distribution of food is that it often creates an urban bias that increases food consumption of the urban poor, but provide disincentives for agricultural production and rural incomes. Government distribution systems typically set food prices and ration supplies. Given the high percentages of their populations living in rural areas, the effectiveness of these programs is lower than expected. On the other hand, the rural public works projects instituted in Bangladesh and India that are targeted programs and provide employment to the poorest segments of the population are generally viewed as being very effective in reducing hunger, especially in times of famine. Sri Lanka has made extensive efforts to reduce poverty and hunger through public spending on social services such as education and health. As a result, life expectancy and literacy rates exceed rates in the rest of South Asia. High rates of illiteracy in South Asia highlight the importance of human capital development and investment in education. Reduced illiteracy could also support the efforts to increase rural incomes as literacy is positively correlated with the adoption of Green Revolution technologies and, consequently, higher output and income.. Indonesia has followed a similar path of investing in agriculture to increase economic growth and reduce poverty which translates into higher food consumption. Higher rural incomes were achieved in Indonesia by liberalizing domestic agricultural markets and increasing public expenditures on agricultural production items such as irrigation. Efforts to reduce poverty and food insecurity are not uniform in all countries. The changes in government in India, Bangladesh, and Sri Lanka have slowed the pace of economic reforms and liberalization in these countries, especially with respect to the agricultural sector. In Bangladesh, changes in government policies regarding the distribution of fertilizer caused by a succession of changes in governments led to a significant disruption in fertilizer distribution and a reduction in agricultural output in 1994/95. On the other hand, the period of stability provided by its latest government has been credited for brightening the economic outlook and the implementation of needed economic liberalization policies. Political instability in the region has also played a major role in increasing poverty and undernutrition. Civil disorder in Afghanistan and Sri Lanka has led to declines in agricultural production and disruption of economic activity. References 1. Ahmed, Raisuddin. "Agricultural Market Reforms in South Asia," American Journal of Agricultural Economics, vol.78, no.3, August, 1996. 2. Asian Development Bank. Asian Development Outlook 1996 and 1997. Oxford University Press, 1996. 3..Bigman, David. Food Policies and Food Security Under Instability, Lexington Books, Lexington, Massachussets, 1985. 4. Bouis, Howarth E. "The Effect of Income on Demand for Food in Poor Countries: Are our Database Giving Us Reliable Estimates?" Paper prepared for the conference on Database for Development Analysis held at the Yale University. May 15-16, 1992. 5. Bouis, Howarth E. And L. Haddad. "Are Estimates of Calorie Income Elasticities too High: A Recalibration of the Plausible Range," Journal of Development Economics, vol.39, no.2, 1992. 6. Braun, Denny. "Multiple Measurement of U.S. Income Inequality," The Review of Economics and Statistics, August, 1988. 7. Crosson, Pierre and J.R. Anderson. "Resources and Global Food Prospects, Supply and Demand for Cereals to 2030." World Bank Technical Paper, no.124, Washington D.C., 1992. 8. Economic Research Service. "Asia Situation and Outlook Series," International Agricultural and Trade Reports, ERS, U.S. Department of Agriculture, Washington D.C., 1993. 9. The Food and Agricultural Organization of the United Nations. Agriculture Towards 2010. UN/FAO, Rome, Italy, 1994. 10. The Food and Agricultural Organization of the United Nations. Agrostat Database. 11. The International Monetary Fund. Article IV Staff Reports and Reports on Recent Developments. Selected Asian countries, 1996. 12. Kocher, James, J. Brady, L. Krieger, and Z. Rionda. Integration Issues in Maturing Population Program. Report from the Research Triangle Institute for the Asia Near East Bureau of USAID, 1994. 13. Lerman, Robert and S. Yitzhaki. "Income Inequality Effects by Income Source: A new Approach and Application to the United States," Review of Economics and Statistics, vol.67, no.1, 1985 14. Pinstrup-Andersen, editor. Food Subsidies in Developing Countries. The Johns Hopkins University Press. Baltimore, 1988. 15. Scott, Linda and Shahla Shapouri. "World Food Consumption UP, But Not Everywhere," Food Review, vol.18 no. 2, ERS, USDA, Washington, D.C., 1995. 16. Shaw, John and Edward Clay (eds.). World Food Aid, World Food Programme, Rome, 1993. 16. Smil, Vaclav. "How many people can the earth feed," Population and Development Review, vol.20, no.2, 1994. 17. Stark, Oded, J.E. Taylor, and Shlomo Yitzhaki. "Migration Remittances and Inequality: a Sensitivity Analysis Using Gini Extended Index," Journal of Development Economics, vol.28, 1988. 18. Sundrum, R.M. Income Distribution in Less Developed Countries. Routledge Press, London and New York, 1990. 19. Timmer, C. Peter. "Liberalized Agricultural Markets in Low-Income Economies," American Journal of Agricultural Economics, vol.78, no.3, August, 1996. 20. Von Braun, Joachim, T.Teklu, and P. Webb. " Labor-intensive public works for Food Security in Africa: Past Experiences and Future Potential," International Labor Review, vol.131, no.1, 1992. 21. The World Bank. World Development Report, World Bank, Washington, D.C., 1996. 22. The World Bank. Trends in Developing Economies, World Bank, Washington, D.C., 1995. Food Aid Needs Security in Latin American and the Caribbean Food security indicators have improved in several Latin American countries, but hunger remains a problem in selected countries despite general improvements in economic and social indicators. Food insecurity stems from a lack of purchasing power for a large part of the population due to skewed income distribution. [Birgit Meade] The 11 countries covered in this study have been traditional food aid recipients: six Central American countries, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama; three Caribbean countries, the Dominican Republic, Haiti, and Jamaica; and two South American countries, Bolivia and Peru. Malnutrition and hunger are prevalent in a number of these countries and, if historical trends in food supply continue, per capita food consumption is projected to decline 1.1 percent per year in the absence of food aid. The food gap to maintain per capita consumption is projected to decline for the 11 countries as a whole by 2005 (by about 20 percent). Only in Haiti, Nicaragua, and Guatemala, are food aid needs expected to grow in the next decade. The nutritional gap is in general larger but projected to follow a similar trend, declining about 10 percent by 2005. These estimates are based on an analysis of aggregate grain availability in the study countries. Grain contributes 43 percent of the diet in these countries (from a low of 30 percent in Jamaica to a high of 60 percent in Guatemala), while animal products contribute 13 percent (from a low of 6 percent in Haiti to a high of 20 percent in Panama), and starchy roots contribute 4 percent. Since 1990, the share of grain in the diet has increased in Bolivia, El Salvador, Nicaragua, and Panama, and remained unchanged or declined slightly in all other countries studied. Grain consumption is used as the indicator of food consumption because it is the cheapest source of food and therefore of special importance in low-income countries as indicated by the high share of grain in people's diets. The food situation has begun to improve in a number of the study countries. Most of the gain resulted from an improved financial capacity that led to an increase in food imports. The growth in food production remains low, barely keeping up with population growth. In most countries, however, food shortages are not the cause for food insecurity. The cause is the skewed distribution of income that limits purchasing power and access to food for low-income households. Only in Haiti, Nicaragua, and Guatemala, where production is projected to decline, are constraints in food supply, in addition to a skewed income distribution, expected to intensify food security problems. The Nature and Extent of Food Insecurity Per capita food consumption stagnated throughout the 1980's. Annual per capita consumption growth between 1980 and 1994 for the group as a whole was close to zero percent, with the highest growth of 0.8 percent in Honduras and the most drastic decline of -1.7 percent in Haiti. In 1994, the group's average per capita calorie consumption was 2,330 calories per day, 11 percent above the FAO recommended level of 2,100. Haiti had the lowest consumption with 1,714 calories, 20 percent below the nutritional minimum. Costa Rica and Jamaica led with 2,790 and 2,700 calories per day (table 16). The average national data on food availability does not capture the true extent of food insecurity because of the unequal distribution of food. The percentage of malnourished children is a revealing indicator of food insecurity. Children are among the most vulnerable to insufficient food because of their special requirements while growing and because of their weak position within the family hierarchy. While malnutrition in children under 5 is still particularly high in Guatemala and Haiti at 29 and 27 percent, it has decreased in almost all the study countries. The exceptions are Nicaragua and Haiti, where this indicator has worsened slightly. Costa Rica has the lowest share of malnourished children under 5, 2 percent, followed by Panama at 7 percent. This positive trend over time is also reflected in other nutritional indicators such as the percentage of low-birth-weight babies and the rate of infant mortality. In the countries studied here, infant mortality decreased by roughly 40 percent between 1980 and 1994. It is still high, however, in Haiti and Bolivia, where 86 and 71 out of 1,000 live born infants die. Nicaragua and Peru follow with a rate of 51 and 48. Costa Rica and Jamaica were able to reduce infant mortality from 20 to 13. Factors Affecting Food Security Sufficient food availability is a necessary condition for food security. During 1980-94, food production in the 11 countries grew 2 percent per year, but varied significantly among individual countries. For example, food production increased nearly 4 percent per year in Bolivia and Costa Rica, while it declined in Haiti at an annual rate of 1.2 percent. Nicaragua experienced the second slowest growth of 0.6 percent, far below its population growth of close to 3 percent. Per capita growth in food production was positive in Bolivia, Costa Rica, the Dominican Republic, El Salvador, and Jamaica, and negative in Haiti, Honduras, Nicaragua, Panama, and Peru. The countries' food import dependency has grown over time. In general, the countries import almost half of their grain consumption. More than one-quarter of total imports are food aid. If food aid declines, the food security of the countries becomes more dependent on their external financial condition. Imports' share of total grain supply was the highest in Jamaica, 99 percent, and the lowest in Guatemala, 28 percent, during 1992-94. (In Jamaica, agriculture's share of GDP is small, only 8 percent in 1994.) The increasing food import dependency, particularly in Haiti, Nicaragua, and Peru, is of concern. In 1994, food imports reached about 20 percent of total merchandise imports in these countries. This trend is likely to continue. Population growth, in particular continued urbanization, is putting pressure on food import demand. The growth of a politically influential urban population is one reason sighted for the neglect of the agricultural sector in these countries. Food Production Performance Growth in agricultural production of the countries depends almost entirely on yield increases because there are limitations to area expansion. Peru and Bolivia, for example, are land-rich countries, but good-quality arable area is nevertheless threatened by high urbanization and environmental hazards such as soil erosion, salinity, and drainage, usually caused by poor cropping practices and intensive use. Yield increases have been low in the last 15 years mainly due to neglect of the agricultural sector. During 1980-94, annual growth in grain yields ranged from -0.2 in Haiti to 3 percent in Costa Rica. The average was about 1 percent. Because of the slow growth, grain yields are significantly lower than the world average. World grain yields during 1992-94 were about 2.8 tons per hectare while in the study countries, average grain yields were 1.6 tons per hectare, ranging from 1 ton in Haiti to 3 tons in Costa Rica. The poor performance of the agricultural sectors must be blamed on a history of domestic policies favoring the manufacturing and service sectors and on political unrest in some countries. During much of the 1980's, the agricultural sector lost in importance while the manufacturing and the service sectors increased their contributions to GDP. The manufacturing sector, especially import-substituting industries, was heavily supported. The protection of these industries led to import restrictions and high tariffs, which made essential agricultural inputs such as fertilizers and technological equipment unavailable or excessively expensive. Because of the lack of investment in the agricultural sector, rural infrastructure is now in bad need of repair and modernization, even though the distorting domestic policies have been abandoned during the process of economic reforms. Population Growth and Increasing Urbanization Population in the 11 countries has grown about 2.3 percent per year since 1980. While this is not nearly as fast as in some other developing countries, it is well above the world average of 1.7 percent and almost 5 times the rate in the industrial countries. Some of the poorest countries have the fastest population growth: Honduras and Nicaragua are leading with 2.7 percent between 1994 and 1995, closely followed by Guatemala with 2.6 percent. Population growth for all countries is projected to slow down, dropping to around 1.7 percent by 2005. Besides relatively fast population growth, the countries as a whole have been experiencing even faster urbanization. Thirty years ago, most of the countries studied here were predominantly rural. Peru was the only country with more than 50 percent of the population living in urban areas. By 1994, six countries were predominantly urban, with close to three-quarters of the people living in cities in Peru. The mostly rural countries are Haiti, where 70 percent of the population lives in rural areas, and Costa Rica, El Salvador, Guatemala, and Honduras with 50-60 percent rural population (table 17). An increase in urbanization has implications for the composition of food demand as urban diets tend to consist of more livestock and wheat products. The increase in livestock drives feed demand and that, in turn, competes with food grains that are consumed by the poor. Because domestic grain production is insufficient, large quantities of feed grains and wheat have to be imported, thereby increasing the countries' dependency on trade. This shift in average diets, together with population growth, put significant pressure on food import demand and may be difficult to sustain given the financial condition of the countries. Import Capacity and Income Growth The structural changes introduced by economic stabilization and liberalization programs have so far not revitalized agricultural production. But trade liberalization, widely implemented in the countries since the late 1980's and early 1990's, has caused quantity restrictions to virtually disappear and import tariffs fall to historic lows. The response was a sharp increase in imports. Food imports followed the same path and increased almost 10 percent a year between 1989 and 1994. Most Latin American countries except Jamaica have traditionally produced most of their food requirements and imported a relatively small share of total consumption. However, the changes have been drastic in some countries such as Costa Rica, the Dominican Republic, and Peru, where imports have surpassed domestic production. This sharp increase raises the question of how these countries can pay for these imports as their export earnings, while growing rapidly in a number of countries, can not keep pace (figure 12). Trade deficits have grown through time. According to the World Bank, in Haiti the value of merchandise exports was one-fifth, in Nicaragua two-fifths, of the value of imports in 1994. In the Domincan Republic, El Salvador, and Panama the share was less than 50 percent. Large shares of foreign exchange earnings are furthermore earmarked to pay off huge debt accumulated during the 1980's. In 1994, total external debt as a share of GNP ranged from a low of 23 percent in Guatemala to a high of 800 percent in Nicaragua. External debt as a share of exports is by far the highest in Haiti and Nicaragua at more than 1,000 and 2,000 percent and debt service as a percentage of exports was, on average, close to 25 percent in 1993 for these countries. The percentage of official financial assistance of GNP remains strong in Haiti at 38 percent and in Nicaragua at 42 percent. Development assistance, however, can no longer be counted on as a major source of financial support as all donors have cut their aid budgets in view of domestic financial pressure and are not expected to increase them any time soon. Most study countries have experienced a recovery in terms of per capita GNP growth since the early 1990's, when the first success of reforms was felt. The extent of economic growth differs considerably, in part because the countries studied here did not all embark on their path towards economic reforms at the same time.13/ Per capita GNP of these countries ranges from a low of $230 in Haiti, the poorest country in the Western Hemisphere, to $2,580 in Panama (table 16). 13/ Bolivia was among the first, when it started its reform process in 1985, followed by Jamaica and Costa Rica in 1987 and 1988. Guatemala, Honduras, Nicaragua, Panama, and Peru began their reforms between 1990 and 1992, and Haiti in 1995. The Dominican Republic has so far been labeled as a non-reformer. It will be interesting to see if economic reforms will be introduced by its newly elected president. More studies will be necessary to determine whether the internal distribution of growth has increased or decreased income inequality. Increased income inequality leads to increased poverty, and social and health indicators indicate the consequences of poverty. For example, Haiti's life expectancy is 57 years, well below the group's average of 67 years. Illiteracy was 55 percent in Haiti and 44 percent in Guatemala in 1995. A high incidence of poverty and unfavorable social and health indicators are proof that the countries still have a long way to go until hunger and food insecurity are eliminated. Skewed Income Distribution is the Root of Food Insecurity Food insecurity is closely linked with poverty. During 1980-90, per capita GDP stagnated or declined in most countries. Falling per capita incomes were reflected in increasing numbers of poor people and falling levels of food consumption (in Bolivia, Haiti, Jamaica, Nicaragua, Panama, and Peru). With the successful macroeconomic stabilization, economic activity has picked up in most countries, even though no major improvements have been felt yet in countries such as Haiti and Nicaragua where civil conflicts resulted in several years of declining economic activity. During the crisis of the 1980's, income distribution worsened in some countries such as Bolivia and Guatemala. According to World Bank data, Guatemala, Panama, and Honduras are among the countries with the most unequal income distribution in the world (table 17). The poorest 40 percent of the population accounts for only 7.9, 8.3, and 11.2 percent of the national income in these countries, while the upper 10 percent accounts for 46.6, 42.2, and 41.9 percent of income. The 11 Latin American countries have much higher per capita incomes than in South Asia and Sub-Saharan Africa, almost four times as much in 1994. Nevertheless, extreme skewed income distribution is the main contributing factor to their severe poverty and food insecurity problems. Based on income distribution data, the average calorie availability per income quintile was estimated.14/ If 2,100 calories per capita per day are used as the minimum requirement, the estimated average calorie consumption in the poorest income quintile falls below this threshold in all countries except Jamaica (figure 13). There is, however, significant variation among countries. For example, the average daily calories accessable to a person in the lowest income quintile in Jamaica is estimated to be more than 2,100 calories, while the estimate is less than 1,250 in Haiti and below 1,600 in Guatemala and Honduras.15/ 14/ The methodology is explained in the Food Security Introduction. 15/ These calorie levels may appear extremely low, but household data on Brazil, published by FAO, show that the lowest income decile there lived on 1,250 calories a day. These poor households usually have a large number of children, whose consumption is on average lower than that of an adult. In Haiti, the estimated calorie deficit exceeds 40 percent, and in Guatemala, it is 35 percent. In 8 of the 11 countries, more than 20 percent of requirements are estimated to remain unmet in the poorest quintile of the population. An estimated 47 million people fall short of the target calorie consumption, more than half of the total population of 82 million. Peru has the largest number of people, 14.5 million, or 60 percent of the entire population, whose estimated consumption falls below the target. In Haiti, almost the entire population fails to reach the minimum target level. In Bolivia, the Dominican Republic, Honduras, Guatemala, Nicaragua, and Peru, more than half of the population fall below the threshold. There is also a wide gap in poverty and food insecurity of rural and urban areas (table 17).16/ In most countries, more than half of the people living in rural areas are poor. In Bolivia, 86 percent of the rural population is poor, while 80 percent in Haiti and Jamaica are poor. Similarly, three-quarters of the rural populations live in poverty in El Salvador, Guatemala, and Peru. Urban poverty also has increased since the early 1980's, particularly in Guatemala and Haiti where more than 50 percent and 75 percent of the urban populations are poor. 16/ There exist considerably different statistics on poverty incidence. The difference is due to different underlying poverty lines used in various studies. Poverty also hits indigenous people harder than non-indigenous people (table 18). In Bolivia, Guatemala, and Peru about half of the non-indigenous population live in poverty, but less than one-quarter are considered extremely poor.17/ In Guatemala, 87 percent of all indigenous people live in poverty, and more than 60 percent are considered extremely poor. In Peru, almost 80 percent of the indigenous population is poor, with 55 extremely poor, and in Bolivia the percentages are 64 and 30 percent. 17/ Poverty is defined as living on less than U.S.$60 per month, measured in 1985 PPP (purchasing power parity) dollars. This amount should allow for other essential expenditures than food. Extreme poverty is defined as living on less than U.S.$30 per month, an amount which would only cover minimum food requirements. This approach was first employed by World Development Report 1990, World Bank, and then adopted by Psacharopoulos and Patrinos, 1994. Food Security Outlook In most of these study countries, it is not the lack of food, but inadequate access to it by a large share of the population that causes food insecurity. Even though slow production growth, an uncertain future of import capacity, population growth, and urbanization pose a challenge to future food availability, it is widespread poverty--resulting from a skewed income distribution --that causes food insecurity. The economic outlook for the countries as a whole is fairly bright. Positive growth in per capita income is expected through the end of this century. Empirical evidence indicates that economic growth should to be based on a strong export sector, which is crucial for earning foreign exchange needed to pay for essential imports such as food, capital goods, and inputs. Merchandise exports, which to a large extent consist of primary goods, have been growing rapidly and are expected to continue to do so. The rapid growth of imports, however, might become a problem for the countries concerned. Continued high import growth--without a corresponding growth in exports--will widen trade deficits and could dampen economic growth in the long term. Another troubling factor is the decline in terms of trade (table 19). Since 1987, the group's terms of trade deteriorated 11 percent. The only countries that experienced an improvement were the Dominican Republic, where terms of trade increased 44 percent, and Jamaica (5 percent increase). The decline was most drastic in Haiti at 48 percent, followed by Bolivia, 31 percent, and Honduras, 27 percent. The decline in terms of trade led to a loss of about 0.5 percent in annual income (import share of GDP averages about 30 percent). Income loss in Honduras was the highest, 1.3 percent per year, because imports contribute about 37 percent of GDP. The annual decline in terms of trade since 1987 was about 3.5 percent. Even with an optimistic projection of import capacity and income growth, food security of the poor may not improve much if the poor do not share in the success. If the goal is the elimination of hunger within 10 years without a change in income distribution, average annual economic growth would have to exceed 8 percent for the 11 countries--16 percent in Haiti, 13 percent in Guatemala, 11 percent in Honduras, and 8 percent in Bolivia and Peru. Even considering the improvements in economic growth in recent years, such high growth sustained over 10 years appears difficult to achieve. Hunger and poverty among large segments of the countries' populations are expected to continue unless special attention is given to the low-income households. As growth in the agricultural sector remains low and a large number of poor people live in rural areas, policies that increase incentives to farmers are very effective. More than half of the populations in Haiti, Honduras, and El Salvador live in rural areas. Programs targeting rural development can reduce poverty, reduce urbanization growth, and improve food security. For the resource-poor countries, such as Haiti, where poverty and agricultural resource degradation are growing, the situation is expected to get worse unless external assistance is provided. Not all people will benefit equally from growth. So far, only a few countries have targeted policies and programs to improve food security of the poor. These programs are mainly concentrated in the capital or other urban areas, and very few programs reach the rural poor. In Lima, Peru, for example, food assistance and other transfers from non-profit organizations represented almost 10 percent of expenditures for poor households in 1991. There, 74 percent of the extremely poor are estimated to receive some food assistance. On the other hand, there are no programs in areas such as Peru's Sierra region, where the incidence of malnutrition is five times higher than in Lima. In Jamaica, food stamp programs have proven successful and far superior to broader food subsidy programs. The groups eligible to receive food stamps are: pregnant and lactating women, children under 5, the elderly, and handicapped persons. A recent analysis of the food stamp programs in Jamaica indicated that 57 percent of the benefits accrued to the poorest 40 percent of the population. With pressure building to cut fiscal deficits, budgets will remain tight for years to come, thereby heightening the need to make food programs effective and efficient. Educating people has been recognized as the most successful poverty alleviation strategy. In the Dominican Republic, nutritional education programs for the poor have significantly improved nutrition at a low cost and without any food subsidy programs. References 1. Edwards, Sebastian. Crisis and Reform in Latin America, The World Bank, Washington, D.C., 1995. 2. Grosh, Margaret E.. "The Jamaican food stamps programme," Food Policy, vol.17, no.1, February 1992, pp.23-40. 3. Interamerican Development Bank, Basic Socio-Economic Data, 1995. 4. v.Haeften, Roberta. "Food Security: A Review of the Concepts and an Update on the Realities in the AID-assisted LAC countries." Agriculture and Rural Development Technical Services Project, 1991. 5. Psacharopoulos, G. and H.A.Patrinos (eds.). Indigenous People and Poverty in Latin America, The World Bank, Washington, D.C., 1994. 6. The World Bank. The World Development Report 1996, Washington, D.C., 1996. 7. The World Bank. Global Economic Prospects and the Developing Countries, Washington, D.C., 1996. 8. The World Bank. "Poverty and Income Distribution in Latin America. The Story of the 1980s," Washington, D.C., 1993. 9. United Nations, Food and Agriculture Organization (FAO). The State of Food and Agriculture, Rome, Italy, 1995. 10. United Nations, Food and Agriculture Organization (FAO), Agrostat Database. 11. United Nations, Food and Agriculture Organization (FAO). Potentials for agricultural and rural development in Latin America and the Caribbean, Main Report, Rome, Italy, 1988. 12. United Nations. Human Development Report, 1995. 13. United Nations, Food and Agriculture Organization (FAO). Compendium of food consumption statistics from household surveys in developing countries, vol.2, 1994. 14. U.S. Agency for International Development. Latin America and the Caribbean, Selected Economic and Social Data, 1995. 15. U.S. Department of Agriculture, Foreign Agricultural Service, attache reports, various years. Appendix 1--Not included in electronic version. Appendix 2--Guide to the Assessment Tables and Methodology For estimation purposes, the 65 countries included in this report have been summarized in five regions: former Soviet Union, North Africa, Sub-Saharan Africa, Asia, and Latin America. Food aid needs are estimated on an aggregate basis for each region from individual country data. Detailed assessments of food aid needs are provided for selected countries listed in appendix 1. The selection was based on several criteria, including emergency aid needs, extraordinary refugee situations, and the importance of the country in the region. Historical Data Historical supply and use data for 1986/87 to 1995/96 for most variables are from USDA. Food aid and commercial import data are from the Food and Agriculture Organization (FAO). Historical nonfood-use data, including seed, waste, processing use, and other use, are estimated from the FAO Food Balance series. Commodity Coverage This report assesses the food aid needed to meet grain consumption requirements. Because of data limitations, accurate estimates of the supplies of nongrain foods such as pulses, roots and tubers, vegetable oils, and milk frequently are not available. The omission of nongrains from this analysis may misrepresent food aid needs in those countries where grains are a small share of the diet. However, in many low-income countries, grains account for at least 50 percent of all calories consumed (see appendix 1). In addition, the bulk of all international food aid is provided in the form of grains. Food Aid Needs Definition Food aid needs are defined as the gap between target consumption and the availability of grains for food use. The first step in assessing food aid needs is to project the availability of grains for human consumption. This is decomposed into two parts--supply of grains and allowance for nonfood use. Supply is defined as production, plus stocks, plus commercial imports: Supply = production + beginning stocks + commercial imports (1) Nonfood use includes exports, feed use, other nonfood uses (such as waste, seed use, and processing), and stock accumulation: Nonfood use = exports + feed use + other nonfood use + ending stocks (2) The quantity of grains available for food use is equal to supply less nonfood use: Food availability = supply - nonfood use (3) Finally, food aid needs are computed as the gap between target food use and food availability: Food aid need = target food use - food availability (4) Food Aid Needs Projection Methodology Food aid needs are determined by calculating the gap between target consumption and the availability of grains for food use. Target consumption is derived from two alternative objective measures of per capita food use. Target Food Use Projections The procedures to estimate (project) target consumptions are: 1) Status quo food use target. The objective of the first consumption target is to support average per capita consumption of the recent past. The most recent 5-year average is used to estimate per capita consumption and eliminate short-term fluctuations. 2) Nutrition-based food use target. Nutrition-based grain needs are derived from the minimum daily caloric intake standards recommended by the United Nations. These country-specific caloric requirements are based on several variables, including the age and sex distribution of the population and the physical size of the people. Caloric requirements also vary with assumed physical activity levels. The caloric requirements used in this assessment are those necessary to sustain life with minimum food-gathering activity. They are comparable to the activity level for a refugee--they do not allow for play, work, or any activity other than food gathering. In addition, the caloric requirements are regional averages rather than country specific. The status quo measure embodies a "safety-net" criteria by supporting food use at recently achieved levels. The nutrition-based target assists comparisons of relative well-being. When status quo needs exceed nutrition-based needs, it is an indication of a relatively high standard of well-being and a less urgent need to support consumption with food aid. When status quo needs are below nutrition-based needs, it is an indication of a more urgent need to support consumption with food aid, if it can be effectively absorbed by the local economy. It should be noted that all assessments are based on national aggregate data and may mask acute needs resulting from uneven food distribution within individual countries. Food Availability Projections The calculation of grain availability for human consumption is based on estimates of production, nonfood use (including exports, feed, seed, and waste), beginning and ending stocks, and commercial imports. Production. Production for 1996/97 is based on USDA estimates as of October 1996. For most countries production in 1997/98 is projected assuming normal weather and no external world macroeconomic shocks that could affect production. However, expected trends in domestic producer incentives and policies are factored into the production projections. Exceptions to this method are cited by the authors. Nonfood use. Historical nonfood use for seed and waste are estimated using the FAO Food Balance series. Export and feed use figures are USDA data. Except in the case of a country where an internal structural change called for the use of a different base period, exports, seed, feed, and other nonfood use are projected using a 5-year average (exceptions are cited by the authors). This method assumes that nonfood use of grains will continue at historic rates and increase in aggregate terms at the same rate as population growth. Stocks. For 1996/97, ending stocks are based on USDA forecasts. For 1997/98, ending stocks are determined based on projected production levels relative to those of 1996/97, and on the level of 1996/97 ending stocks relative to historical maximum and minimum levels in the past 10 years. If 1997/98 beginning stocks are below the historical minimum, stocks are raised to the minimum. If beginning stocks are above the historical maximum, stocks are lowered to the maximum. If beginning stocks are within the range of the minimum and maximum, stock adjustments depend on projected production. If production is at, or above, that of the previous year, stocks are allowed to build towards the maximum. If production is forecast to decline, stocks are reduced towards the minimum to augment domestic supplies. The allowance for stock use or buildup is made under the assumption that stockpiling of grains in normal production years can help reduce fluctuations in grains available for food use in poor production years and, therefore, help stabilize food aid needs. Exceptions to this method are cited by the authors. Commercial Import Projections. The procedure for calculating commercial import capacity relies on historical economic relationships. For most countries the current method of forecasting commercial grain imports for 1996/97 and 1997/98 uses the total value of merchandise imports and the total value of grain imports. Total merchandise imports are first estimated for 1996/97 and 1997/98 using time-trend regression. The projections of the value of total merchandise imports are based on 10 years of data and a log-log form regression is used: ln(impval) = alpha[subscript i] + beta[subscript 1] * ln(yr)[subscript I] + e[subscript I] Commercial grain import values for 1996/97 and 1997/98 are found by applying a 5-year constant share of grain imports to the value of total merchandise imports. Using a 5-year constant share of commercial grain imports ensures that year-to-year fluctuations in grain imports, due to weather or other factors, will not skew the projections. The quantity of total grain imports is estimated using the projections of total grain import values explained above, and grain prices. From 1984/85 to 1993/94, the unit values (prices) were found by dividing the value of total grain imports by their quantity. For the projected years, a unit value for grain was calculated using the USDA reference price for specific crops, weighted by the importance of that crop in the value of total grain imports (a 5-year share). Using the unit values, the quantity of total grain imports for 1996/97 and 1997/98 was then found by dividing the total grain import value by unit value. The exceptions to this method are cited by the authors. Tables Entitled "Summary of Grain Balances for Region/Country" Production: Historical data to 1995/96. Forecasts for 1996/97-1997/98. Beginning stocks: Historical data to 1995/96. Forecasts for 1996/97-1997/98. Commercial imports: Historical data to 1995/96. Forecasts for 1996/97-1997/98. Food aid receipts: Historical data to 1995/96. Food aid needs: Forecasts for 1996/97-1997/98. Exports, feed and other nonfood use: Historical data to 1995/96. Targets for 1996/97-1997/98. Ending stocks: Historical data to 1995/96. USDA estimates for 1996/97 and 1997/98 forecasts. Availability net of food aid Grains available for human consumption before food aid. This is the sum of production, beginning stocks, and commercial imports, less the sum of exports, feed, other use, and ending stocks. Historical data to 1995/96, and forecasts for 1996/97 and 1997/98. Food use, per capita food use: Historical data to 1995/96, with status quo and nutrition-based targets for 1996/97-1997/98. Population: Historical data to 1995/96. Forecasts for 1996/97-1997/98. Appendix 3--Not included in electronic version. List of Tables 1. Grain Food Aid Contributions by Donor 2. Summary of Forecast Grain Food Aid Needs 3. Historical Grain Food Aid Receipts and Projected Needs for 1995/96 and 1996/97 4. Food Aid Needs by Region and Selected Countries, 1996/97 and 1997/98 5. Summary of Grain Supply and Demand for North Africa (4 countries) 6. Summary of Grain Supply and Demand for Sub-Saharan Africa (37 countries) 7. Summary of Grain Supply and Demand for Asia (9 countries) 8. Summary of Grain Supply and Demand for Latin America (10 countries) 9. Summary of Grain Supply and Demand for FSU (5 countries) 10. Sub-Saharan Africa: Income and Poverty Indicators for Selected Countries 11. Sub-Saharan Africa: Agricultural Growth in Countries With Some Agricultural Investment 12. Asia: Growth and Variability in Population, Grain Consumption, and Grain Production 13. Asia: Agricultural Production Variables 14. Asia: Macroeconomic Indicators 15. Asia: Income Distribution 16. Economic and Health Indicators for 11 Selected Latin American and Caribbean Countries 17. Latin America: Income Distribution and Poverty Measures 18. Poverty Incidence in Latin America: Indigenous Versus Non-Indigenous Population 19. Imports in Selected Latin American Countries Summary of Grain Balances for: 20. Total (65 countries) 21. Total Africa (41 countries) 22. North Africa (4 countries) 23. Algeria 24. Egypt 25. Morocco 26. Tunisia 27. Total Sub-Saharan Africa (37 countries) 28. Central Africa (3 countries) 29. East Africa (9 countries) 30. Southern Africa (8 countries) 31. West Africa (17 countries) 32. Angola 33. Benin 34. Burkina 35. Burundi 36. Cameroon 37. Cape Verde 38. Central African Republic 39. Chad 40. Cote d'Ivoire 41. Eritrea 42. Ethiopia 43. Gambia 44. Ghana 45. Guinea 46. Guinea-Bissau 47. Kenya 48. Lesotho 49. Liberia 50. Madagascar 51. Malawi 52. Mali 53. Mauritania 54. Mozambique 55. Niger 56. Nigeria 57. Rwanda 58. Senegal 59. Sierra Leone 60. Somalia 61. Sudan 62. Swaziland 63. Tanzania 64. Togo 65. Uganda 66. Zaire 67. Zambia 68. Zimbabwe 69. Asia (9 countries) 70. Afghanistan 71. Bangladesh 72. India 73. Indonesia 74. Nepal 75. Pakistan 76. Philippines 77. Sri Lanka 78. Vietnam 79. Latin America (10 countries) 80. Bolivia 81. Colombia 82. Dominican Republic 83. El Salvador 84. Guatemala 85. Haiti 86. Honduras 87. Jamaica 88. Nicaragua 89. Peru 90. FSU (5 countries) 91. Armenia 92. Azerbaijan 93. Georgia 94. Kyrgyzstan 95. Tajikistan List of Figures 1. Food Aid Donations: Cereals 2. World Grain Stocks 3. Food Aid Needs in 1996/97 4. Population and Food Aid Needs 5. North Africa - Grain Area and Yields 6. Grain Imports in Sub-Saharan Africa 7. Asia--Food Aid Needs in 1996/97 8. Latin America--Grain Supply Sources 9. FSU (5 republics) - Wheat and Coarse Grain Acreage 10. Grain Supply in Sub-Saharan Africa 11. Development of Trade in Sub-Saharan Africa 12. Merchandise Trade in 11 Latin American and Caribbean Countries 13. Latin America: Estimated Calorie Consumption per Income Quintile END_OF_FILE