Price Effects and Substitutability of Food Assistance Commodities

Transcription

1 Price Effects and Substitutability of Food Assistance Commodities IATRC Annual Meeting San Diego December 10, 2012 Ryan Cardwell, University of Manitoba

2 1. Food prices 280 FAO Food Price Index ( =100) Food Meat Cereals /2000 1/2001 1/2002 1/2003 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 Source: OECD-FAO Agricultural Outlook Database 2

3 1. Food prices 1000 Grain Prices ($US/mt) Rice Wheat Maize Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Source: FAO GIEWS Database 3

4 1. Food prices 35 Six-month moving standard deviations of FAO price indices ($US/mt) Food (6mo.) Grain (6mo.) Source: OECD-FAO Agricultural Outlook Database, authors calculations 4

5 1. Food prices What happens to food assistance when prices rise? Food Assistance Flows and Commodity Prices ($US/mt; grain equivalent millions of mt) Weighted Price (L) Food Aid (R) Sources: WFP INTERFAIS, OECD-FAO Agricultural Outlook Database 0 volume decreases. Q.E.D. 5

6 1. Food prices Comparative static - change in cost of food assistance baskets, Africa Asia Sources: WFP INTERFAIS, OECD-FAO Agricultural Outlook Database, authors calculations Sources: WFP INTERFAIS, OECD-FAO Agricultural Outlook Database, authors calculations 6

7 3. Substitution Global Food Assistance Shipments (grain equivalent millions of mt) Total Emergency P&P Source: WFP INTERFAIS 7

8 3. Substitution Food Assistance Flows and Commodity Prices ($US/mt; grain equivalent millions of mt) Weighted Price (L) Food Aid (R) Sources: WFP INTERFAIS, OECD-FAO Agricultural Outlook Database Sources: WFP INTERFAIS, OECD-FAO Agricultural Outlook Database, authors calculations 8

9 3. Substitution Type equation here. CFGB do donors substitute between commodities (within categories) when relative prices change? % P change, Maize 70 Rice 139 Wheat 55 Sources: FAO GIEWS substitution for relatively cheap commodities could ameliorate effects of rising prices 9

10 Substitution culturally-appropriate food unsavoury history of surplus disposal and export-market development unwanted commodities (maize in DRC; Reed & Habicht, 1998)) in-kind donations Japanese in-kind rice donations (grain equivalent 000 of mt) URAA 10

11 3. Substitution modelling food assistance shipments double hurdle/selection models bilateral volumes of aggregated commodities Nunn and Qian (2010); Langlois (2010); Neumayer (2005) donors decisions on how much, not what commodity what happens to composition of baskets when relative prices change? identification strategy Q cereals ki,t = f(?, P i,t, P j,t,, P n,t ) who demands FA commodities? use recipient data instead of donor data identify price effects without modeling how much to donate model commodity shares within baskets s ki,t = α ki + n γ ij j=1 P j,t + β ki X k,t + ε ki,t k = country i = commodity (in grain equiv. mt) shipment size (X k,t ) is exogenous, commodity groups are separable, nutritional objective commodity share of food assistance basket = f X, P 11

12 3. Substitution Variable Mean Std. Dev. Maximum Minimum Maize share Rice share Wheat share Maize price ($US/mt) Rice price ($US/mt) Wheat price ($US/mt) Food Assistance (mt, 69, , ,263, grain equivalent) Annual, panel from , 114 countries, 2026 observations Data sources: WFP INTERFAIS, FAO GIEWS Price Effects on Commodity Shares, cereals (country FE, PCSE) Wheat Rice Maize Constant a a a ( ) ( ) ( ) P wheat b ( ) ( ) ( ) P rice c ( ) ( ) ( ) P maize ( ) ( ) ( ) Total a a a ( ) ( ) ( ) Observations 2026 R Summary Statistics - Cereal Model Note: Superscripts a, b, and c denote significance at the 1%, 5% and 10% levels, respectively. 12

13 3. Substitution Share Elasticities - Cereals (country FE) Wheat Rice Maize P wheat b P rice c P maize Total a a a Note: Superscripts a, b, and c denote significance at the 1%, 5% and 10% levels, respectively. Share Elasticities - Pulses (country FE) Beans Lentils Peas Soybeans P beans P lentils a c c P peas a c P soybeans b Total a a Note: Superscripts a, b, and c denote significance at the 1%, 5% and 10% levels, respectively. 13

14 3. Substitution i. regional variation in diets may impact donors willingness to substitute disaggregate panel into 7 regions (central Asia, east Asia, south Asia, eastern Europe, Latin America, Middle East & North Africa, sub-saharan Africa) baseline results very robust (except LAC) Share Elasticities - Cereals (LAC, country FE) Wheat Rice Maize P wheat b b P rice P maize b b Total a a c Note: Superscripts a, b, and c denote significance at the 1%, 5% and 10% levels, respectively. ii. assistance categories (Emergency vs. Programme & Project) baseline results robust for Emergency, not for P&P iii. delivery modes (in-kind vs. LRP) - Japan effect (+) basket size effects for wheat for LRP, (-) basket size effects for rice for in-kind 14

15 Summing Up A. Local and Regional Procurement donors moving towards LRP degree of insulation from price shocks is variable spectre of export restrictions... B. Commodity substitutability cereals no significant substitution effects rice share declines with increasing basket size pulses significant substitution effects bean share declines with increasing basket size are there significant overall cost savings (as share of total expenditure)? 1 Cereals vs. Pulses Value shares 0.5 Cereals Pulses 0 Data sources: WFP INTERFAIS, FAO GIEWS 15

16 4. Summing Up B. Commodity substitutability price volatility can be good for food consumers (Barrett & Bellemare, 2011) depends on storage substitution C. The future Food Assistance Convention volume vs. value commitments fortification export restrictions WTO 16

17 Price Effects and Substitutability of Food Assistance Commodities The Onion, May 5, 2008 Ryan Cardwell, University of Manitoba