Policies that subsidize
Food Consumption
Text extracted from
The World Food Problem
Leathers and Foster, 2004
http://www.lastfirst.net/images/product/R004548.jpg
Food Subsidies
• Popularity of subsidies:
– Donor countries
• with burdensome surpluses
– Donors
• directly feed famine victims
– Exporters
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Farmers
Food distributors
Input suppliers
Shippers
– Developing countries
• Military
• Industry
• Politicians
http://www.uni-mainz.de/Organisationen/SORC/images/arbore/1foodaid2.jpg
• Removal of food subsidies
– Can result in riots
Marketwide food subsidies
• Egypt
– lowered the cost of food for everyone
– Bread, flour, pulses, sugar, tea,
cooking oil
– kept undernutrition to minimum
– Inefficiency
• Waste
– Bread used for livestock feed
• Lower industry investment
– Government money used to import
food
http://www.ardia.net/dan/photos/egypt-al-bread%20II.jpg
• Overconsumption of wheat
– Government paid higher price than
consumers would have
• Up to 17% of Government budget
used for subsidies
Subsidies for the needy
• Income targeting
– Sri Lanka restricted rice
subsidies to low income
households
• Half of households qualified
• Self-targeting
http://biology.queensu.ca/~arnoldh/sri%20market.jpg
Sri Lanka market
– Subsidies on food with low
demand
• Cassava, yams, maize,
sorghum, millet
Subsidies for the needy
• Supplemental Feeding
– Direct distribution to
pregnant women, infants
• Positive results
– Severely malnourished
benefit most
– Must be combined with
health care
• Problems
http://gbgm-umc.org/umcor/photos/malawi/richardlord/balamanjasffeedingchildren.jpg
– Food shared with nontarget family members
– Nutritional timing
important for pregnancy,
preschoolers
Subsidies for the Needy
• Ration Cards
– Allow purchase of food at
below market price
• Food Stamps
– Pay market price for food
– Must buy food stamps
• price varies with income
• Food for Work
http://www.humanitarianinfo.org/DPRK/mediacentre/photo%20galler
y/Activities/Food/FoodAgriculture.asp
Food for work project,
North Korea
– Often work to improve
agricultural infrastructure
Food Aid
• Important in famine relief
– Best if purchased in country
•
Problems with giving food:
– Shipping costs high
• 89% value of the food
– Medical care more critical
– Not self-sustaining
– Food sometimes used as cash
Food aid for Indonesia
Earthquake victims, 2005
http://www.iabc.or.id/photos_aceh.htm
• Children don’t benefit
– Depresses farm prices in country
• Disincentive to agriculture