Food Security of Developing Countries Expected To Improve Through 2026 as Food Prices Fall and Incomes Rise
by Stacey Rosen, Karen Thome, and Birgit Meade USDA Economic Research Service staff
The international food price spikes over the last decade highlighted the impact of price shocks on the food security, or the ability to access enough food for healthy living, of vulnerable populations. This, coupled with the recent availability of consumer price data in food-insecure countries, has been a motivating factor for ERS to develop a new tool to assess international food security.
ERS has transitioned to a new International Food Security Assessment framework that includes information on consumer responsiveness to changes in food prices and incomes. The model projects food consumption as it responds to movements in domestic prices and income. When the projected demand exceeds projected food production, the difference is referred to as the implied additional supply required. Projections are based on given income and price change expectations as well as fixed policy regimes through 2026. The difference between projected food production and food demand should not be interpreted as ”projected imports” as the difference may be reduced or eliminated by imports and/or improvements in agricultural productivity.
The model estimates per capita food consumption and evaluates that against a nutritional target of 2,100 calories per person per day to determine whether population groups should be considered food secure. It also estimates the food distribution gap, which measures the amount of food needed to raise consumption to the nutritional target. In many countries, consumption in the lower income groups is projected to be below the national average-consumption level. The distribution gap provides a measure of the intensity of hunger—the extent to which estimated consumption levels fall below the nutritional target.
According to price projections from USDA Agricultural Projections to 2025 and income projections from ERS’s International Macroeconomic Data Set, food prices will drop and income levels will rise over the next decade. Under these assumptions, model results suggest improvements in food security through 2026 for 76 low- and middle-income countries examined by ERS in a new report. The share of the total population of these countries that is food insecure is projected to fall from 17 percent in 2016 to 6 percent in 2026. Over the same period, the number of food-insecure people is projected to fall by 59 percent, from 609 million to 251 million. This decline matches the projected decline in the distribution gap, indicating no change in the intensity of food insecurity, at the aggregate level.
These food security projections are made under the assumption of projections for income and prices changes as of late 2015/early 2016. Since that time, world economic conditions and price and income outlooks have changed: the outlook for income growth is not as optimistic in mid-2016 as it was then, and there are signs that food prices might see a slight increase rather than a decline over the next decade. The projections presented here are dependent on continued political stability, investment in infrastructure, and maintenance of flows in remittances. Economic conditions in China play an important role as the country is a major trader and/or investor in infrastructure in many of the study countries. Finally, in addition to changes in food prices, movements in prices of other commodities play an important role in the food security picture. For example, the direction of oil prices is important for revenue for the oil exporters and for the import bill of the oil importers. All of these factors above can work to change—for better or worse—the food-security situation of the countries included in this article.