Trade Liberalization and Food Security: A Case Study of Taiwan using Global Food Security Index (GFSI)

Transcription

1 Trade Liberalization and Food Security: A Case Study of Taiwan using Global Food Security Index (GFSI) Chi-Chung Chen Department of Allied Economics, National Chung Hsing University mayjune@nchu.edu.tw Jou-Chen Shih Department of Agricultural Economics, National Taiwan University b @ntu.edu.tw Ching-Cheng Chang Institute of Economics, Academia Sinica, and Department of Agricultural Economics, National Taiwan University emily@econ.sinica.edu.tw Shih-Hsu Hsu Department of Agricultural Economics, National Taiwan University m577@ntu.edu.tw Selected Paper prepared for presentation at the 2015 Agricultural & Applied Economics Association and Western Agricultural Economics Association Annual Meeting, San Francisco, CA, July Copyright 2015 by Chi-Chung Chen, Jou-Chen Shih, Ching-Cheng Chang, and Shih-Hsu Hsu. All rights reserved. Readers may make verbatim copies of this document for noncommercial purposes by any means, provided that this copyright notice appears on all such copies. 1

2 1. Introduction Since Taiwan joined the World Trade Organization (WTO), Council of Agriculture, Executive Yuan (COA) constantly proposes agricultural industrial structure adjustment. However, facing the challenges of trade liberalization, climate change, and global food crisis, food security became an issue greatly concerned in Taiwan. In addition, as rapid developments of emerging countries, global food demand increases. But in the meantime, global food production decreases because of the global climatic anomaly. In these cases, the issue of food security is becoming extremely important. In 2011, a substantial reduction in the global cereal production caused by extreme weather made the global food safety stocks lower than the international standard, causing a panic. Therefore, in May 2011, Taiwan held the National Food Security Conference. Taiwan's government and the experts from many fields reached consensus that the issue of food security should be promoted to the level of national security, and stipulated a policy goal that Taiwan could attain 40 percent food selfsufficiency rate in Nevertheless, is food security equivalent to food self-sufficiency rate? Can the policy promote the food security of Taiwan efficiently? The effects of trade liberalization (e.g., WTO, FTA, or TPP) on agricultural sectors are always important issues in policy debates. Although Taiwan's government concludes free trade agreements actively hoping to enhance trade facilitation and overcome trade barriers between Taiwan and the other countries, some people believe that signing free trade agreement will loosen export and import restrictions on agricultural produce and lead to an over reliance on agricultural imports. And the over-reliance of Taiwan on other trading partners may hit Taiwan's peasant agriculture, reduce the food self-sufficiency ratio, and raise misgivings with regard to food security. With the liberalization of trade, food selfsufficiency ratio is declining indeed, but is food security also influenced by trade liberalization? Furthermore, although food self-sufficiency ratio is certainly one of the indicators for food security, it may greatly reduce the credibility if only one indicator is used as a criterion for food security. In this study, the Global Food Security Index (GFSI) created by the Economist Intelligence Unit (EIU) of the Economist was used to evaluate food security. The index analyses food security across three internationally designated dimensions: affordability, availability and utilization (or quality and safety). The EIU built the GFSI according to the following definition of food security adapted from a formulation established at the World Food Summit in 1996: 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. Experts on food security and agricultural policy all over the world were gathered by EIU to establish the methodology and weighting for all indicators. In addition to the quantized data, there are also some qualitative items, such as agricultural infrastructure, nutrition plan, and 2

3 strategy. In this study, we built time-series data of Taiwan s GFSI and explored the relationship between food self-sufficiency ratio and food security. In addition, we also investigated whether food security in Taiwan was influenced by trade liberalization. 2. Literature Review In recently years, climate abnormality and the continuous growth of world population have resulted in the inadequate supply of demand. Under this circumstance, how to maintain or even enhance global food security became a great issue, and the definition of food security has also been changed over time. 1. Availability at all times of adequate world supplies of basic food -stuffs, to sustain a steady expansion of food consumption and to offset fluctuations in production and prices. (United Nation, 1975) 2. A condition in which the probability of a country s citizens falling below a minimal level of food consumption is low. (Reutlinger and Knapp, 1980) 3. The ability to meet target levels of consumption on a yearly basis. (Siamwalla and Valdes, 1980) 4. Ensuring that all people at all times have both physical and economic access to the basic food they need. (Food and Agriculture Organization of the United Nations, 1983) 5. Access by all people at all times to enough food an active, healthy life. (World Bank, 1986) 6. Always having enough to eat. (Zipperer, 1987) 7. An assured supply and distribution of food for all social groups and individuals adequate in quality and quantity to meet their nutritional needs. (Barraclough and Utting, 1987) 8. A country and people are food secure when their food system operates efficiently in such a way as to remove the fear that there will not be enough to eat. (Maxwell, 1988) 9. Adequate food available to all people on a regular basis. (UN World Food Council, 1988) 10. Consumption of less than 80% of WHO average required daily caloric intake. (Reardon and Matlon, 1989) 11. Food insecurity exists when members of a household have an inadequate diet for part or all of the year or face the possibility of an inadequate diet in the future. (Phillips and Taylor, 1990) 12. Access to food, adequate in quantity and quality, to fulfill all nutritional requirements for all household members throughout the year (Jonsson and Toole, 1991) 13. Access to the food needed for a healthy life for all its members and not at undue risk of losing such access. (ACC/SCN, 1991) 14. Food security requires an available and reliable food supply at all times. At the global, regional and national levels, food supply can be affected by climate, disasters, war, civil unrest, population growth, lack of effective agricultural practices, and restrictions to trade. 3

4 (World Food Summit, 2002) 15. Food Security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life. (FAO, 2009) As we can see from the above definitions, earlier definitions of food security lay much more emphases on fulfilling physiological needs. And as global living standard advances, the definition of food security improved. New concepts, including affordability and nutrition, were added to ensure people around the world can obtain safe and nutritious food. In 2009, Food and Agriculture Organization of the United Nations (FAO) redefined food security and assessed it across four internationally designated dimensions: Physical Availability of Food, Economic and Physical Access to Food, Food Utilization, and Stability of the Other Three Dimensions over Time. Food security has a lot to do with many different dimensions. In terms of climate change, some experts regard enhancing food self-sufficiency ratio as the most crucial point. At present, Taiwan depends too much on importing agricultural products. That is, the rising of global food price caused by global warming or the increasing occurrence of extreme weather events may lead to food insecurity in Taiwan. Yet, food self-sufficient ratio cannot be the only indicator for food security. There are two main strategies to achieve food security: 1) Food Self-Sufficiency Strategy and 2) Food Self-Reliance Strategy. The concept of Food Self-Sufficiency Strategy is to enhance domestic food production; and the concept of Food Self-Reliance Strategy is to import food using dollars earned through exports when prices are cheaper than growing at home country, so as to release land to other uses which have comparative advantages. Recent decades have seen rapid growth of the world economy and the even faster rise in international trade. Many countries actively signed trade agreements, and so as Taiwan. The elimination of tariff barrier and trade restrictions on agricultural products brought about a significant increase on agricultural imports and exports, further reducing food selfsufficiency ratio. Therefore, advocates of Food Self-Sufficiency Strategy considered that food security in Taiwan would be threatened by trade liberalization. However, so many aspects of food security are discussed nowadays, Food Self-Sufficiency Strategy seems a little out of date. Based on 2010 APEC Ministerial Meeting, to achieve food security, APEC economies would collectively pursue the shared goals of 1) sustainable development of the agricultural sector, and 2) facilitation of investment, trade, and markets. According to the definition of food security made by FAO in 2009, EIU proposed GFSI benchmarked standards measuring across three internationally recognized dimensions: affordability, availability, and Quality & Safety. Although the GFSI is published and updated every year, Taiwan has never been considered in the EIU reports. In this study, we have two specific aims. The first one is to calculate the Global Food Security Index (GFSI) for Taiwan 4

5 and investigate the performance ranking of Taiwan in the world. And the second one is to build time-series data of Taiwan s GFSI and explore the relationship between food selfsufficiency ratio and food security. 3. Global Food Security Index (GFSI) 3.1 The introduction of the GFSI 1. Establishment of the GFSI The GFSI is based on the following definition of food security made at the World Food Summit in 1996: 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 source data of the GFSI are from several existing food security research conducted by international organizations, including the UN, the IMF, the FAO, the World Health Organization (WHO), and the World Bank. Each of the three categories - affordability, availability, and quality & safety - takes not only programs, policies but also practices in account, to evaluate food security. The EIU s newest annual report on global food security, the GFSI 2014, contains 28 subset indicators and provides ranking of food security for 109 countries. This reports indicates the overall situation improved in Introduction of Indicators (1) Affordability and financial access This category evaluates the capacity of individuals to pay for food and the relative costs they may meet under both food-related shocks and normal circumstances. The GFSI looks at affordability through two primary aspects: 1) whether an average individual has abilities to purchase food, and 2) the public structures that have been built to respond to personal or societal shocks. The affordability category contains six subset indicators: a. Food consumption as a share of household expenditure: a measure of the percentage of household expenditure that is spent on food at a national level. b. Proportion of population under global poverty line: a measure of the prevalence of poverty, calculated as the percentage of the population living on less than US$2/day in purchasing power parity. c. Gross domestic product per capita (at purchasing power parity, or PPP, exchange rates): a measure of individual income and affordability of food, calculated in US dollars at purchasing power parity. d. Agricultural import tariffs: measured as the average applied most-favoured nation (MFN) tariff on all agricultural imports. 5

6 e. Presence of food safety net programs: a measure of public initiatives to protect the poor from food-related shocks. Measured on a 0-4 scale. 0 means the worst, and 4 means the best. f. Access to financing for farmers: a measure of the availability of financing to farmers from the public sector. Measured on a 0-4 scale. 0 means the worst, and 4 means the best. (2) Availability This category assesses factors influencing the ease of access and the supply of food within a country. If access is difficult, volatile or uncertain, the availability score will be low. The availability category contains eight subset indicators to examine how structural elements determine a capacity to produce and distribute food within a country: a. Sufficiency of supply: an indicator that examines the 1) average food supply and the 2) dependency on chronic food aid. Average food supply is the estimate of the per-capita amount of food available for human consumption in kilocalories/capita/day. Dependency on chronic food aid is to measure whether a country is a recipient of chronic food aid, and it is measured on a 0-2 scale. 0 means that received chronic food aid on an increasing basis over the last five years. b. Public expenditure on agricultural R&D: a measure of government spending on agricultural research and development. c. Agricultural infrastructure: this composite indicator measures the ability to store and transport crops to market, and examines the 1) existence of adequate crop storage facilities, 2) road infrastructure and 3) port infrastructure. d. Volatility of agricultural production: a measure of the standard deviation of the growth of agricultural production over the most recent 20-year period for which data are available. e. Political stability risk: a measure of general political instability. f. Corruption: this indicator measures the pervasiveness of corruption in a country by assessing the risk of corruption. g. Urban absorption capacity: a measure of the capacity of a country to work under the stresses caused by urban growth and still ensure food security. h. Food loss: a measure of post-harvest and pre-consumer food loss as a ratio of the domestic supply (production, net imports and stock changes) of crops, livestock and fish commodities (in tons). (3) Quality and safety This category evaluates the variety and nutritional quality of average diets and the safety of food within a country. Based on the understanding that access to nutritious food is required for food safety, quality & safety category explores the overall quality of food supplies beyond the focus of traditional welfare metric. a. Diet diversification: a measure of the share of non-starchy foods (all but cereals, roots and tubers) in total dietary energy consumption. b. Nutritional standards: a composite indicator that measures government commitment to 6

7 increasing nutritional standards. It is comprised of the following binary sub-indicators: 1) National dietary guidelines, 2) National nutrition plan or strategy and, 3) Nutrition monitoring and surveillance. c. Micronutrient availability: a composite indicator that measures the availability of micronutrients in the food supply. Sub-indicators include: 1) Dietary availability of vitamin A, 2) Dietary availability of animal iron and 3) Dietary availability of vegetal iron. d. Protein quality: indicator measures the grams of quality protein using the methodology of the Protein Digestibility Corrected Amino Acid Score (PDCAAS). e. Food safety: a composite indicator that measures the enabling environment for food safety. Sub-indicators include: 1) Agency to ensure the safety and health of food, 2) Percentage of population with access to potable water and 3) Presence of formal grocery sector. 3.2 Overall GFSI rankings 1. Overall rankings in 2014 Table 1 is the overall ranking and score of each country in 2014, and it also shows the relative difference between 2013 and Among 109 countries, the United States took the first place (89.3 points). Singapore ranked 5 th (84.3 point), Japan ranked 21 st (77.8 points), South Korea ranked 25 th (73.2 points), and China ranked 42 nd (62.2 points). Compared to the 2013 GFSI score, overall global food security improved, and the average score of 109 countries increased of 1.1 points this year. Among 75 countries (70%) with the increasing GFSI scores, 15 countries increased more than 3 point. It might probably because of the decline of wheat price and rice price in 2013, which enhanced the ability of the poor countries to pay for food. In addition, it shows that the GSFI scores of lower-ranked countries increased greater than the scores of higher-ranked countries. This characteristic responds to a decline in the number of people estimated to be suffered from chronic hunger reported by the FAO (dropped from 868 million to 842 million over the past year). Table 1 Overall 2014 GFSI table 1 United States Uruguay =74 Uganda Austria Turkey Côte d Ivoire =3 Netherlands Russia Pakistan =3 Norway Venezuela Ghana Singapore China Syria Switzerland Serbia Kenya Ireland Romania Tajikistan

8 =8 Canada Panama =82 Benin =8 Germany South Africa =82 Senegal France Belarus Cameroon Denmark Botswana Nepal Sweden Thailand Myanmar New Zealand Bulgaria Nigeria Belgium Colombia Bangladesh Australia Ukraine =89 Ethiopia United Kingdo Peru =89 Sierra Leone Israel Tunisia Yemen Portugal Dominican Republic Angola Finland Ecuador Rwanda Spain Kazakhstan Malawi Japan Paraguay Mali Italy Jordan Cambodia Czech Republic Sri Lanka Sudan Greece Bolivia Zambia South Korea Azerbaijan Guinea Poland =63 Honduras Burkina Faso Chile =63 Morocco Mozambique Kuwait Philippines Niger Hungary Egypt Haiti United Emirates Arab Vietnam Tanzania Slovakia El Salvador Burundi Saudi Arabia India Togo Brazil Algeria Madagascar Malaysia Guatemala Chad Mexico Indonesia Congo (Dem. Rep.) Costa Rica Uzbekistan Average Argentina =74 Nicaragua 45.6 Source: EIU (2014), and the author. 2. Ranking of affordability category in 2014 Table 2 is each country s ranking and score in affordability category. As we can see in Table 2, the United States still took the first place (94.8 points) among 109 countries. Singapore ranked 2 nd (94.0 point), Japan ranked 19 th (89.0 points), South Korea ranked 28 th (78.0 points), and China ranked 48 th (58.9 points). Most countries showed meaningful improvement in GFSI affordability score, and 8

9 Benin had the greatest increase (11.2 points). Among the top 15 most improved countries, eight of which are in the Sub-Saharan African (SSA), four of which are in Europe, and three are in Asia & Pacific. Besides, only 14 countries showed a decline in GFSI affordability score. Affordability is highly correlated with the average per capita income. That is, lowincome countries accounted for the majority of the lowest-ranked. Table 2 Affordability 2014 GFSI table 9 1 United States Malaysia Syria Singapore Argentina Tajikistan Australia Uruguay Uzbekistan Switzerland Serbia Pakistan Norway Thailand =79 Benin Austria Turkey =79 Cameroon Ireland Costa Rica Egypt Canada Belarus Yemen =9 Denmark Peru Kenya =9 Sweden Colombia Ghana Germany =48 China Senegal Netherlands =48 Romania Angola United Kingdo Ukraine Myanmar Belgium Kazakhstan Bangladesh United Emirates South Africa Ethiopia Finland Panama Cambodia France Tunisia Sierra Leone New Zealand Paraguay Guinea Japan Ecuador Nepal Italy Botswana Sudan Spain Dominican Republic Malawi Israel Jordan Haiti Kuwait Bolivia Burkina Faso Czech Republic Azerbaijan Mozambique Portugal El Salvador Burundi Hungary =63 Honduras Togo Poland =63 Sri Lanka Zambia South Korea Morocco Nigeria Slovakia Guatemala Niger Greece Algeria Rwanda Saudi Arabia Uganda Mali Chile Nicaragua Tanzania

10 =33 Brazil Cote d Ivoire Chad =33 Russia India Congo (Dem. R Bulgaria Philippines Madagascar Venezuela Indonesia Average Mexico Vietnam Source: EIU (2014), and the author. 3. Ranking of availability category in 2014 Table 3 is each country s ranking and score in availability category. According to Table 3, the United States remained at top with 85.5 points among 109 countries. Singapore ranked 11 th (78.5 point), Japan ranked 22 nd (70.6 points), South Korea ranked 27 th (67.4 points), and China ranked 37 th (63.5 points). Compared to the 2013 GFSI availability score, the average score of 109 countries in 2014 (55.7 points) increased of 2.3 points this year As we can see in Table 3, areas that are fairly developed economies, including North America and Europe, stood out in availability category. While low-income countries, such as the countries in the SSA, have the lower scores. In addition, the lowest score in availability category was considerably higher than the lowest scores in both affordability and quality & safety categories. It indicates that most countries were more successful in dealing with the questions about food availability. Table 3 Availability 2014 GFSI table 1 United States Uruguay Nepal Austria Slovakia Pakistan Netherlands Hungary Uganda Germany Kuwait Nicaragua Switzerland =42 Argentina Kenya Norway =42 Egypt Myanmar New Zealand Romania El Salvador France Belarus Senegal Canada Thailand Zambia Ireland Colombia Bangladesh =11 Denmark =48 Serbia =85 Ethiopia =11 Singapore =48 Vietnam =85 Guatemala Portugal Venezuela Kazakhstan Sweden United Arab 55.2 Emirates +0.8 =88 Mozambique

11 15 Belgium Sri Lanka =88 Rwanda United Kingdo =53 India Sierra Leone Israel =53 Tunisia Tanzania Spain Jordan Benin Finland Cote d Ivoire Madagascar Australia Philippines =94 Syria Chile Peru =94 Tajikistan Japan Dominican Republic Malawi Costa Rica Uzbekistan Cameroon Italy Ecuador Angola Malaysia Russia =99 Burkina Faso Botswana Indonesia =99 Togo South Korea Azerbaijan Cambodia Czech Republ Ukraine Guinea Greece Morocco Yemen Poland Bulgaria Haiti Saudi Arabia Paraguay Sudan =32 Mexico Honduras Niger =32 South Africa Bolivia Congo (Dem. Rep.) =34 Brazil =71 Algeria Burundi =34 Panama =71 Ghana Chad Turkey Nigeria Average China Mali Source: EIU (2014), and the author. 4. Ranking of quality & safety category in 2014 Table 4 is each country s ranking and score in Quality & Safety category. It shows that Israel took the first place (88.5 points) among 109 countries. And the United States, which ranked 1 st in overall ranking and the other categories, only ranked 5 th (85.7 points) in quality & safety category. Singapore ranked 27 th (76 point), exhibiting that food quality and safety are relatively weak for Singapore. Japan ranked 22 nd (79.3 points), South Korea ranked 25 th (77.1 points), and China ranked 43 rd (66.6 points). In addition, there were declines rather than improvements in 2014 GFSI quality & safety score for most of the countries. The best-performing countries were highly developed economies and those countries experienced only minor adjustments in quality & safety score over the past year. Table 4 Quality & Safety 2014 GFSI table 11

12 1 Israel Slovakia Rwanda =2 France Belarus =76 Azerbaijan =2 Portugal Costa Rica =76 Cameroon Greece Turkey Niger United States Ukraine Syria Spain China India Italy Venezuela Nigeria Australia Serbia Nepal Ireland Uruguay Indonesia Netherlands Saudi Arabia Kenya Denmark Bulgaria Sudan Austria Panama Tajikistan Canada Tunisia Burundi Finland Dominican Republic Senegal Norway Colombia Sierra Leone Sweden Ecuador Malawi Belgium Paraguay Benin New Zealand El Salvador Myanmar Switzerland South Africa Cambodia United Kingdom Thailand Burkina Faso Germany Peru Guinea Japan =59 Honduras Chad Argentina =59 Pakistan Angola Czech Republic Botswana Mali South Korea Egypt Yemen Hungary Philippines Bangladesh Singapore =64 Guatemala Ethiopia Poland =64 Vietnam Zambia Kuwait Uzbekistan Haiti Russia Jordan Congo (Dem. Rep.) Romania Morocco Tanzania United Emirates Arab Bolivia Madagascar Mexico Ghana Cote d Ivoire Chile Nicaragua Togo Brazil =72 Algeria Mozambique Kazakhstan =72 Uganda Average Malaysia Sri Lanka Source: EIU (2014), and the author. 12

13 5. GFSI of Taiwan According to the methodology established by EIU, we added Taiwan to the GFSI. In addition, we took Singapore, who got the first place above Asian countries, as a model for Taiwan as well, trying to induce how Taiwan can improve food security. 4.1 Calculate GFSI of Taiwan 1. Methodology The data (or score) of every indicator is normalized and then aggregated across categories to compare food security across countries. The first step is to eliminate units and rebase the raw data to a pure number, called normalization. The second step is to assign weighting to each category. Weightings can reflect the relative importance of indicators assumed by the members of the EIU expert panel. (1) Normalization There are two kinds of indicators in the GFSI, which are the higher, the better and on the contrary, the lower the better. The former one means that a higher value indicates a more favourable environment for food security, such as GDP per capita, average food supply and do on. This kind of indicators have been normalized by the function: X= x min (x) max(x) min (x) The latter one means that a higher value indicates a more unfavourable environment for food security, such as volatility of agricultural production, corruption and so on, which have been normalized on the basis of: X= max(x) x max(x) min (x) In the both two functions, Min(x) and Max(x) are the lowest and highest values among 109 economies respectively in every single indicator. After being normalized, the value will be transferred to a number from 0 to 100 and become comparable. (2) Weighting The second step of calculating the GFSI is to assign the weightings to each indicators. As above, it can reflect the relative importance that experts determined. According to the 13

14 table 5, the three categories Affordability, Availability and Quality and Safety was assigned 40%, 44%, and 16% respectively. It reveals that in the assumption of the GFSI, Affordability and Availability are more important, or more influential to food security. In Affordability category, the weighting was mainly assigned to 1.1) Food consumption as a share of household expenditure, 1.2) Proportion of population under global poverty line, and 1.3) Gross domestic product per capita (PPP). In Availability, 2.1) Sufficiency of supply is the most important indicator, which got 23%. Other indicators have similar value which are ranged from 8~14%. Lastly, 3.3) Micronutrient availability and 3.4) Protein quality are the relatively important indicators in the Quality and Safety category. Table 5 Weighting in 2014 GFSI Indicators Weighting 1 AFFORDABILITY 40% 1.1 Food consumption as a share of household expenditure 22% 1.2 Proportion of population under global poverty line 20% 1.3 Gross domestic product per capita (PPP) 22% 1.4 Agricultural import tariffs 10% 1.5 Presence of food safety net programmes 14% 1.6 Access to financing for farmers 11% 2 AVAILABILITY 44% 2.1 Sufficiency of supply 23% Average food supply 73% Dependency on chronic food aid 27% 2.2 Public expenditure on agricultural R&D 8% 2.3 Agricultural infrastructure 13% Existence of adequate crop storage facilities 22% Road infrastructure 41% Port infrastructure 37% 2.4 Volatility of agricultural production 14% 2.5 Political stability risk 10% 2.6 Corruption 10% 2.7 Urban absorption capacity 10% 2.8 Food loss 13% 3 QUALITY AND SAFETY 16% 3.1 Diet diversification 20% 3.2 Nutritional standards 14% National dietary guidelines 35% National nutrition plan or strategy 31% Nutrition monitoring and surveillance 35% 3.3 Micronutrient availability 25% Dietary availability of vitamin A 33% Dietary availability of animal iron 33% Dietary availability of vegetal iron 33% 3.4 Protein quality 24% 3.5 Food safety 17% Agency to ensure the safety and health of food 32% Percentage of population with access to potable water 43% Presence of formal grocery sector 25% Source: EIU (2014), and the author. 14

15 2. The 2014 GFSI of Taiwan As it shows in Table 6, Taiwan ranks 24 th (74.4 points) in the 2014 overall GFSI ranking among 110 countries (top 20%). Each of the three categories ranks 26 th, 25 th and 27 th with 80 points, 68.6 points, and 76.3 points, respectively. Although the level of food security in Taiwan is worse than Japan based on the GFSI, it is better than South Korea. Table 6 Taiwan GFSI in 2014 Indicators Score Score Score 1 AFFORDABILITY Food consumption as a share of househ expenditure Proportion of population under glo poverty line Gross domestic product per capita (PPP Agricultural import tariffs Presence of food safety net programmes Access to financing for farmers AVAILABILITY Sufficiency of supply Average food supply Dependency on chronic food aid Public expenditure on agricultural R&D Agricultural infrastructure Existence of adequate crop stor facilities Road infrastructure Port infrastructure Volatility of agricultural production Political stability risk Corruption Urban absorption capacity Food loss 86 3 QUALITY AND SAFETY Diet diversification Nutritional standards National dietary guidelines National nutrition plan or strategy Nutrition monitoring and surveillance Micronutrient availability Dietary availability of vitamin A Dietary availability of animal iron Dietary availability of vegetal iron Protein quality Food safety Agency to ensure the safety and health food Percentage of population with access potable water Presence of formal grocery sector 100 Overall 74.4 Source: the author. 15

16 4.2 The comparison between Taiwan and Singapore In recent years, Taiwan's government is increasingly concerned about the issue of food security, but they only emphasize the importance of food self-sufficiency ratio. Nevertheless, the low agricultural production makes the food self-sufficiency approach to zero in Singapore, Singapore still took the 5 th place in the 2014 GFSI. What advantages do Singapore have? In this part, we compared the GFSI between Taiwan and Singapore. As the one ranking first among Asia countries, experiences about food safety in Singapore can provide ideas and solutions of improving food security in Taiwan. 1. Singapore GFSI Singapore was not included in the initial ranking until It took the 16 th place in 2013, and dramatically improved to the 5 th place in Compared to other top countries, Singapore shows a very different structure in those indicators. Singapore is a developed country with a relatively small agricultural sector and high agricultural imports. According to Table 7, Singapore scored exceedingly well in Affordability (2 nd ) and Availability (11 th ). Although Singapore performed well in these two categories, it only took twenty seventh place in Quality and Safety, which could attribute to its limited agricultural sector. Table 7 Singapore GFSI in 2014 Indicators Score Score Score v.s AFFORDABILITY Food consumption as a share of househ expenditure Proportion of population under glo poverty line Gross domestic product per capita (PPP) Agricultural import tariffs Presence of food safety net programmes Access to financing for farmers AVAILABILITY Sufficiency of supply Average food supply Dependency on chronic food aid Public expenditure on agricultural R&D Agricultural infrastructure Existence of adequate crop storage facili Road infrastructure Port infrastructure Volatility of agricultural production

17 Indicators Score Score Score v.s Political stability risk Corruption Urban absorption capacity Food loss QUALITY AND SAFETY Diet diversification Nutritional standards National dietary guidelines National nutrition plan or strategy Nutrition monitoring and surveillance Micronutrient availability Dietary availability of vitamin A Dietary availability of animal iron Dietary availability of vegetal iron Protein quality Food safety Agency to ensure the safety and health food Percentage of population with access potable water Presence of formal grocery sector 100 Overall Source: EIU (2014), and the author. 2. Comparison between Taiwan and Singapore According to the table 8, we can easily observed that, Taiwan got the lower scores than Singapore in Affordability and Availability categories. In Affordability, Taiwan and Singapore scored 81 points and 94 points. And in Availability, Taiwan and Singapore scored 68.6 points and 78.5 points respectively. Quality and Safety was the only category that Taiwan got a higher score than Singapore, which was 76.3 points and 76 points. Have a further observation to each category: (1) Affordability: Taiwan and Singapore both scored 100 point in 1.5) Presence of food safety net programs and 1.6) Access to financing for farmers. Except these two indicators, Taiwan performed worse than Singapore in every other indicators in Affordability. Among them, Taiwan only got 31 points in the 1.3) Gross domestic product per capita (PPP), which was a big gap that Singapore scored 73 points. This indicators was weighted 22%, which means that it is a relatively important indicator in Affordability. From this, Taiwan can improve food security in this direction. 17

18 (2) Availability Only three indicators in Availability did Taiwan score well than Singapore, which were 2.2) Public expenditure on agricultural R&D, 2.4) Volatility of agricultural production and, 2.7) Urban absorption capacity. On the contrary, the other six indicators showed the weakness of Taiwan, especially in 2.6) Corruption and 2.8) Food loss. In 2.6) Corruption, Taiwan and Singapore scored 50 points and 100 points respectively, which means that Taiwan is in the high-risk group of unstable food supply caused by corruption. In addition, 2.8) Food loss should also be one of the indicators that Taiwan need to improve. Taiwan should enhance the efficiency of food supply which can increase supply quantity and decrease unnecessary loss. (3) Quality and Safety In this category, Taiwan scored higher than Singapore. Because the Quality and Safety score of Singapore was diminished by 3.1) Diet diversification due to the limited agricultural sector. Table 8 Comparison between Taiwan and Singapore Indicator Taiwan Singapore 1 AFFORDABILITY Food consumption as a share of househ 87 expenditure Proportion of population under global poverty Gross domestic product per capita (PPP) Agricultural import tariffs Presence of food safety net programmes Access to financing for farmers AVAILABILITY Sufficiency of supply Public expenditure on agricultural R&D Agricultural infrastructure Volatility of agricultural production Political stability risk Corruption Urban absorption capacity Food loss QUALITY AND SAFETY Diet diversification Nutritional standards Micronutrient availability Protein quality Food safety Overall Source: EIU (2014), and the author. In Summary, although it seems that the food security performance of Taiwan is good 18

19 according to the GFSI, there are still many aspects that can be improved when we compare with the performance of Singapore, such as GDP per capita and the efficiency of distribution. 5. Agricultural Trade Liberalization and Taiwan s Food Security 5.1 Agricultural trade liberalization 1. Taiwan signed Free Trade Agreement (FTA) Taiwan has signed FTA with five Central American countries since we joined the World Trade Organization (WTO) in In addition, Taiwan signed Economic Cooperation Framework Agreement (ECFA) with China on June 29 th The Early Harvest Program of ECFA carried out on January 1 st 2011 makes great improvements on economy and trade between Taiwan and China because of the lower tariff on imported goods. So far, China is the top export destination and second source exporter for Taiwan as well as the biggest investment region of Taiwanese companies. On July 2013, Taiwan formally signed the Agreement between New Zealand and Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu on Economic Cooperation (ANZTEC). New Zealand became the first country without diplomatic relationship and first developed country signing an agreement with Taiwan. Due to the complementary relationship in produce and industrial structure, it is able to create more export markets for Taiwan. Singapore is the fifth largest trading partner of Taiwan, and Taiwan is the ninth largest trading partner of Singapore. Among the Association of Southeast Asian Nations, Singapore is the top largest trading partner of Taiwan. On November 2013, Taiwan, as a member of WTO, signed the Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP). ASTEP is a high quality comprehensive agreement, including provisions on intellectual property, government procurement, e-commerce, competition, and dispute settlement. In addition, it provides a zero-tariff preferential treatment on up to 8,882 products (99.48%) of Taiwan except for only 40 produce. 2. The trends in trade liberalization in Taiwan Chung-Hua Institution for Economic Research, the WTO and RTA Center of Taiwan, analyzed the trends in trade liberalization according to the database from the Department of Customs Administration, Ministry of Finance. As we can see in Figure 1, it shows downward tendencies in nominal tariffs, especially for agricultural products. In addition, the most significant changes of nominal tariffs for all products occurred from 2011 to 2012, the 19

20 year Taiwan formally joined the WTO. Before joining the WTO, the nominal tariff rate of agricultural products is percent, and there was a 30 percent decrease of nominal tariff after joining the WTO. Figure 1 Average nominal tariff of import products Source: Chung-Hua Institution for Economic Research (2011). Since Taiwan joined the WTO in 2002, we have lowered import tariffs on several type of products. As we can see in Figure 2, although Taiwan kept recording negative balances in trade, it shows upward trend in the value of imports and exports on agricultural products. That is, the agricultural sector of Taiwan is moving toward trade liberalization. 20

21 Figure 2 Import and export value of produce in Taiwan Source: International Trade Centre (ITC), and by the author. 5.2 Food self-sufficiency ratio in Taiwan As we can see in Figure 3, it shows downward tendency in food self-sufficiency ratio after joining the WTO in It can be inferred that trade liberalization has negative impacts on food self-sufficiency Figure 3 Food self-sufficiency ratio of Taiwan in the past 15 years Source: COA(2014), and by the author. 5.3 The GFSI, food self-sufficiency ratio and agricultural trade liberalization in Taiwan The Taiwan GFSI for the past 15 years was calculated to investigate the correlation between agricultural trade liberalization, food self-sufficiency ratio, and food security. As 21

22 we can see in Figure 4, the Taiwan GFSIs show upward tendencies. It indicates that food security in Taiwan moved in the right direction in the past 15 years. However, the Taiwan GFSI plummeted sharply in 2001 and 2008, and joining the WTO and the financial crisis might be the reasons that caused these sudden sharp decreases. Joining the WTO had direct impacts on the performance of availability category. That is, we can attribute the declines in food self-sufficiency ratio and the Taiwan GFSI to the expansion of agricultural trade led by loosening trade restrictions. According to Figure 2 and Figure 3, on the other hand, the import value dropped dramatically which indirectly led to a slight increase in food self-sufficiency ratio and a significant decline in the GFSI in Figure 4 Annual GFSI of Taiwan in the past 15 years Source: By the author. 6. Conclusion In this study, we calculated the Global Food Security Index (GFSI) for Taiwan and investigated the performance raking of Taiwan in the world. Besides, we also build the timeseries data of Taiwan s GFSI and explore the relationship between Taiwan s trade liberalization since her WTO accession in 2002 and food security status. Except for the unique situations in 2001 and 2008, which was joining WTO and finial crisis respectively, Taiwan GFSI increased gradually. Corresponding to the tariff concession on agricultural import and the trend of food self-sufficiency ratio, the following conclusions can be summarizes: 1. The results of this study indicate that the GFSI of Taiwan (74.4 points) took the 24 th place 22

23 (the top 20%) in the overall ranking among 110 countries in Each of the three categories ranked 26 th, 25 th and 27 th with 80 points, 68.6 points, and 76.3 points, respectively. Depending on the relatively better ranking, it is not necessary to concern about food security. 2. Food security performance of Singapore (5 th ) is much better than Taiwan (24 th ) in Aiming at Singapore s level of the GFSI, Taiwan needs to strengthen the Affordability and Availability categories. Compared to Singapore, the most weak indicator in the Affordability is 1.3) Gross domestic product per capita (PPP). In the other hand, 2.6) Corruption and 2.8) Food loss in Availability category should be reinforced as well. In short, Taiwan should improve the overall economic level to keep up with Singapore s path. 3. In order to have effective trade facilitation and reduce the trade barriers between countries, the government of Taiwan actively concludes the Free Trade Agreements (FTA) with our major trading partners. According to the figure 1, we can easily observe that the average import tariff had a substantial reduction. Using import tariff and import and export value as indicators for trade liberalization, Taiwan is obviously in progress. Trade liberalization certainly led to the decline of food self-sufficiency ratio. However, the GFSI of Taiwan was in an upward trend instead. 4. According to the third point, trade liberalization does not affect food security directly. That is, the situation of food security cannot be deduced only from the food self-sufficiency ratio. Furthermore, trade liberalization in the agricultural sectors does not have negative impact on food security of Taiwan. In summary, the Taiwan GFSI enhances stably. However, there are still some spaces for improvement of food security in Taiwan. With the trade liberalization, food self-sufficiency ratio is decreasing indeed, but the GFSI of Taiwan is rising annually instead. References Asia-Pacific Economic Cooperation, Niigata Declaration, 2010 APEC Ministerial Meeting on Food Security. ( Statements/Food-Security/2010_food.aspx) (2014/11/15). Barraclough, S.L., and P. Utting, Food security trends and prospects in Latin America, Working Paper No. 99, USA: Helen Kellog Institute for International Studies, University of Notre Dame. Clay, E Food security: Concepts and measurement. In Trade reforms and food security: Conceptualising the linkages, Rome: Food and Agriculture Organization of the United Nations. 23

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