Global Food Security Index 2014:

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1 Global Food Security Index 2014: Project results Sponsored by 12 June 2014

2 Overview Methodology Results Feeding Asia-Pacific: Australia s role in regional food security

3 Overview In 2012 the Economist Intelligence Unit was commissioned by DuPont to produce the innovative Global Food Security Index designed to develop a common framework for understanding the root causes of food insecurity. The third year of the index reveals food security developments from 2013 to 2014 and year-on-year trends since the 2012 launch of the index. Two new countries Kuwait and the United Arab Emirates and two new metrics food loss and prevalence of obesity were added to deepen the analysis. Defining food security Food security exists when people at all times have physical, social and economic access to sufficient and nutritious food that meets their dietary needs for a healthy and active life. The Global Food Security Index: ranks 109 countries according to their relative levels of food security using 28 indicators divided into three categories: Affordability; Availability; Quality & Safety.

4 Objectives To provide a rigorous, structured framework for understanding the drivers of food security. To enhance the understanding of food security in a global context. Specifically, the index seeks to identify: The factors affecting food security The relationship between these factors Leading and lagging countries Trends in food security across countries and regions How countries can improve food systems to reduce food insecurity Priority areas for each country (eg. trade policy, infrastructure, agricultural R&D)

5 What are we measuring? This index is the first to examine food security comprehensively across the three internationally established dimensions of food security: Availability, Affordability, and Quality & Safety It looks beyond hunger to the underlying factors that influence the ability of consumers to access sufficient amounts of safe, high-quality and affordable food. It employs a quarterly adjustment factor for food price fluctuations to examine the risks countries face throughout the year. It includes several unique qualitative indicators, developed and scored by Economist Intelligence Unit analysts, to capture drivers of food security not currently measured in any international dataset. This year s update includes one new indicator that aims to capture the effects on food security of food loss. It also includes a new output variable that looks at the relationship between obesity and food security.

6 Overview Methodology Results Feeding Asia-Pacific: Australia s role in regional food security

7 Geographic coverage: 109 countries in 2014 Canada, Mexico, United States of America Austria, Belarus, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Spain, Sweden, Switzerland, Ukraine, UK Australia, Azerbaijan, Bangladesh, Cambodia, China, India, Indonesia, Japan, Kazakhstan, Malaysia, Myanmar, Nepal, New Zealand, Pakistan, Philippines, Saudi Arabia, Singapore, South Korea, Sri Lanka, Tajikistan, Thailand, Uzbekistan, Vietnam Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Chad, Cote d Ivoire, Congo, Ethiopia, Ghana, Guinea, Kenya, Madagascar, Malawi, Mali, Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, South Africa, Sudan, Tanzania, Togo, Uganda, Zambia Algeria, Egypt, Israel, Jordan, Kuwait, Morocco, Saudi Arabia, Syria, Tunisia, Turkey, UAE, Yemen

8 Index framework Food consumption as a share of household expenditure Proportion of population under global poverty line GDP per capita, $US, PPP Agricultural import tariffs Presence of food safety nets Access to finance for farmers Affordability Index Sufficiency of supply Public expenditure on agricultural R&D Agricultural infrastructure Availability Volatility of agricultural production Political stability risk Corruption Urban absorption capacity Food loss Food Price Adjustment Factor Diet diversification Nutritional standards Micronutrient availability Protein quality Food safety Quality & Safety External Adjustment FAO global food price index adjusted for income growth, exchange rates and a passthrough coefficient of global to national food prices on a quarterly basis Applied to Affordability score Latest release: 22 April 2014 * Composite indicators are bolded.

9 Overview Methodology Results Feeding Asia-Pacific: Australia s role in regional food security

10 Overall results: 2014 GFSI

11 Global Food Security Index 2014: Overall results High-income countries in the US and Europe again take the top spots in the rankings. Key drivers are affordability measures, including improved incomes over the past year. Low-income countries constitute the lower tier, particularly Sub-Saharan African countries. Uganda is the highest ranked low income country, ranking 74th out of 109 countries in the 2014 GFSI. The most food-secure countries share these characteristics: Sufficient food supply Minimal political stability risk Low spending on food relative to other outlays The least food-secure countries share these characteristics: Low gross domestic product per head Underdeveloped agricultural infrastructure Corruption Low protein quality levels in the average diet TOP 10 1 United States Austria 85.5 =3 Netherlands 84.4 =3 Norway Singapore Switzerland Ireland 84.0 =8 Canada 83.7 =8 Germany France Australia 81.9 BOTTOM Burkina Faso Mozambique Niger Haiti Tanzania Burundi Togo Madagascar Chad Congo (Dem. Rep.) 24.8

12 Results: Year-on-year changes Overall food security improved from last year. Food security increased for 70% of the countries in the index. Higher scores in two Affordability measures account for much of this: Lower spending on food as a % of household budget More comprehensive food safety net programmes Food security improved more in Sub-Saharan Africa than any other region, with the regional average (score of 36.1 points) gaining 2 points overall. The top 25 ranked countries saw improved scores overall this year, as economic recovery spurred growth and improved national incomes. The top-performing developed countries recorded an average score increase of 1.1 points. Food security improved in every region in the index, but reduced Quality & Safety pulled down scores in Central & South America and Asia & Pacific, both of which were hurt by reduced diet diversification. LARGEST SCORE IMPROVEMENTS Country Score Δ Uganda Togo Serbia Malawi Benin Mali Sierra Leone Sudan Azerbaijan Australia LARGEST SCORE DECLINES Country Score Δ Myanmar Madagascar Romania Egypt Tunisia Niger Ukraine El Salvador Bangladesh Mozambique South Africa

13 Results: New metrics Food loss Food loss tends to be a problem for developing countries and decreases food security by reducing availability. Most developed countries experience high food waste rather than loss, which is may be a consequence of higher food supply. This indicator measures food loss as a ratio of the total domestic supply of crops, livestock and fish from post-harvest to pre-consumer stages of the supply chain. Loss ranges from 0.4% in Finland and Singapore to 18.9% in Ghana. BEST PERFORMERS Score =1 Finland =1 Singapore Norway United States United Kingdom Czech Republic Netherlands Switzerland Russia Uzbekistan Australia 89.7 WORST PERFORMERS Score 100 Malawi Nepal Nigeria Haiti Guinea Cameroon Benin Angola Togo Ghana 0.0 BEST PERFORMERS % 1 Bangladesh Ethiopia Nepal Vietnam Madagascar India Cambodia Burkina Faso Niger Chad 3.1 Prevalence of obesity WORST PERFORMERS % 91 Australia Venezuela Syria United States Mexico South Africa UAE Jordan Egypt Saudi Arabia Kuwait 42.8 Low income countries with low overall food security have the lowest prevalence of obesity, measured by body mass index (BMI). High income and upper middle income countries in the Middle East & North Africa suffer from the highest obesity rates. The correlation between food security and obesity is not always direct. More food secure populations in developing countries and less food secure populations in developed countries tend to have high rates of obesity.

14 Results: Asia & Pacific Asia & Pacific ranks fifth overall in the GFSI, ahead only of Sub-Saharan Africa. The region ranks fifth in both Affordability and Quality & Safety, but ranks third in the Availability category. If the top five countries in the region Singapore, New Zealand, Australia, Japan and South Korea were considered separately, that region would rank second overall. Low volatility of agricultural production and high urban absorption capacity, where Asia & Pacific scores highest globally, coupled with low food loss (the region has the third highest score behind Europe and North America) account for high food availability. Overall Score Changes: to OVERALL RESULTS 1 Singapore New Zealand Australia Japan South Korea Malaysia China Thailand Kazakhstan Sri Lanka Azerbaijan Philippines Vietnam India Indonesia Uzbekistan Pakistan Tajikistan Nepal Myanmar Bangladesh Cambodia 33.1 The region s comparatively high percentage of the population under the global poverty line and low diet diversification explain its lower scores in the Affordability and Quality & Safety categories.

15 Country results: Australia Australia performs strongly, with an overall score of 81.9 points in the 2014 index. Its best performance is in the Affordability category (score of 91.8), where it scores third best out of the 109 countries in the index. Australia s Overall Performance: 2014 Australia s score rose 0.8 points from 2013 to 2014 owing primarily to increased food affordability. A score increase of 14.5 points in food consumption as a share of household expenditure, a 2.8 point improvement in GDP per head and a 1.8 point increase in agricultural import tariffs, where Australia scores highest globally, drove the country s performance in the Affordability category. The country s low score of 12.5 points in the public expenditure on agricultural R&D indicator hampers Australia s overall performance. Additionally, although Australia scores moderately in volatility of agricultural production, it performs poorly compared with other countries in the region and globally (ranks 21st and 89th respectively).

16 Country results: Australia (cont.) Australia s increased corruption levels and lower public expenditure on agricultural R&D drove its 1.6 point decline in food availability; however, corruption in the country remains low. Low political stability risk, coupled with developed agricultural infrastructure and sufficient food supply, offsets the country s score decreases in the Availability category. Perfect scores in nutritional standards and food safety, in addition to a very diverse diet and relatively high protein quality, balanced out a moderate score in micronutrient availability. However, a 1.8 point decrease in diet diversification and 0.9 point decline in protein quality resulted in Australia s 0.6 point deterioration in the Quality & Safety category Index: Summary for Australia

17 Overview Methodology Results Feeding Asia-Pacific: Australia s role in regional food security

18 Australia has long history of a vibrant agricultural sector Historical shares of Australia s exports and GDP, by sector Exports GDP Australian mining exports have historically influenced the value of the Australian dollar and, consequently, the competitive success and the volume of Australian agricultural exports. The demand for Australian mineral exports will continue to play an important role for the agricultural sector. Sources: Economist Intelligence Unit; Anderson; Freebairn; updated from ABARES and BREE.

19 Australia s exports largely go to East Asia Countries in East Asia accounted for 61.1% of all Australian merchandise exports in However, Australia only exported 23.0% of unprocessed food and 36.0% of processed food to East Asia. The Asia & Pacific region imported 81.3% of Australian merchandise goods, 40.9% of unprocessed food and 53.4% of processed food. Destinations of Australia s merchandise exports, (%)

20 Developing countries will become a greater share of the global economy In 2007, Asian developing countries comprised just over half of the GDP of all developing countries. In 2030, their GDP is forecast to account for just under 75% of developing country GDP. In developing Asian countries, GDP and population are growing faster than agricultural sectors. These countries food demand is expected to outstrip their global agricultural output. Share of world GDP (2007 US$) Source: Economist Intelligence Unit; DFAT.

21 Australia is forecast to export a larger share of agricultural products to China in 2030 than in 2007 It is forecast that by 2030 the share of Australian exports to high-income Asian countries and other countries globally will fall by approximately 30-45% since Increased Australian exports to the resource-poor countries of developing Asia, most notably China, will replace the share of exports to high-income Asian countries and other countries globally. Source: Economist Intelligence Unit; Derived from GTAP model results in Anderson and Strutt.

22 Assistance to agriculture has risen in Asia Price-distorting measures, including trade barriers and input subsidies, reduce national income and, thus, the aggregate capacity to access food. The nominal rates of government assistance to farmers have risen from approximately zero in the late 1990s to more than the average in high-income countries now. By expanding their public investment in key areas, these countries may be able to better address food security concerns while raising national income levels in the shortrun and rates of economic growth in the long-term. Source: Economist Intelligence Unit; Anderson and Nelgen.

23 Policies in China will impact household consumption of farm products If China implements food import bans it would impose a burden on households that are net buyers of grain, meat and milk products by increasing both producer and domestic consumer prices for these products. The consequent reductions in the volume of various foods consumed by households would include declines of up to 6% for livestock products and 0-3% for grains. Such a protectionist policy response to declining food self-sufficiency in China would undermine national food security by reducing the vast majority of households economic access to food. Source: Economist Intelligence Unit; Anderson and Strutt. Alternatively, investment in rural public goods can raise net farm incomes, boost economic growth and, in some cases, lower domestic consumer prices thus enhancing food security for both farm and non-farm households.

24 Contact information John Ferguson Senior Economist, Custom Research Economist Intelligence Unit The 2014 GFSI can be found at: