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SPEAKER: OK, well, while we still have people filtering in, I will kick us off in order to not get us started late because this is, in fact, the inaugural seminar for the Global Development Distinguished Speakers series. So welcome-- you're here at the first, the very outset. I am thrilled with the person who will be our speaker today, but it's not my job to introduce him.
I just wanted to highlight the fact that this is a series that hopes to bring two to three very distinguished speakers to the Department of Global Development each year, and we are finally getting to kick it off. I'm delighted to see a room full of actual humans-- that's wonderful. I believe there are also-- not to ignore them-- a lot of people online. I don't know quite how many, but thank you to them as well for attending.
I want to quickly acknowledge the committee that works on this speaker series. So the chair of the committee is Ed Mabaya. He unfortunately did a lot of arranging, but could not be here today. My fellow committee members include Chris Barrett and Julie Finkelstein, and I am also on that particular committee. So if anybody has ideas for future Distinguished Speakers, please feel free to reach out to one of those folks.
Beyond that, it's my pleasure today to do what I always find a little bit odd-- introduce the introducer. So I'm delighted today to introduce to you Professor David Lee. David is in the Charles H. Dyson School of Applied Economics and Management in the College of Business. So he has an appointment there working on emerging markets and development.
He also has an appointment in the College of Agriculture and Life Sciences, and particularly an appointment here in Global Development. So one of our fellow faculty members, David, you can see, is very well appointed. He's appointed in lots of units. I will turn it over to David to introduce our speaker for today.
DAVID LEE: Thank you, Margaret. Welcome, everyone. It's my great pleasure to introduce today's distinguished speaker, Johan Swinnen, and welcome him back to Warren Hall, where he received his PhD-- if my math is correct-- 30 years ago. So welcome back. Dr. Swinnen is Director General of IFPRI, the International Food Policy Research Institute in Washington, and Global Director for Systems Transformation in the CGIAR, which I think most of you know is a consultative group on international agricultural research.
He has a diverse and distinguished record in academia and international development institutions. I'm just going to take a couple of minutes to highlight some of the main points here. He was a Professor of Economics and Director of the Center for Institutions and Economic Performance at Catholic University of Leuven in Belgium, prior to joining IFPRI, and Senior Research Fellow at the Center for European Policy Studies in Brussels.
Prior to that, he's held positions as Lead Economist at the World Bank, Economic Advisor to the European Commission, Visiting Professor at various universities, including Stanford, and has been an advisor to a wide set of institutions, including the OECD, FAO, and the European Bank for Reconstruction and Development. He has published widely, including several books in the areas of agricultural and food policy, international development, global value chains-- which of course, since the onset of COVID, has been a very timely and important area, and more generally in associated areas-- international trade and so on.
Most recently, his 2018 award-winning book is entitled, The Political Economy of Agricultural and Food Prices, and that's published by Palgrave and Macmillan. He's a Fellow of the Agricultural Applied Economics Association and the European Association of Agricultural Economists, and served as President of the International Association of Agricultural Economists from 2012 to 2015. In addition to his position at IFPRI, he is co-chair of the Think20 Task Force on Climate Change, Sustainable Energy, and Environment, a commissioner in the Food Systems Economics Commission, a member of the Champions 12.3 Leadership Group to reduce food loss and waste, which addresses the SDG target 12.3 on reducing food waste, and the Africa-Europe Strategic Task Force on Sustainable Agriculture and Food Systems. So Johan Swinnen is here today to discuss the subject of a major recent IFPRI study, Transforming Global Food Systems after COVID-19. Jo?
JOHAN SWINNEN: Can you hear me? I did the first thing right.
[LAUGHTER]
Thanks very much to all. Thanks very much, David, for this very kind introduction. Thank you also, Ed, who is somewhere out there I think for inviting me [INAUDIBLE] Thursday or Friday at this workshop, which Chris Barrett organized together with IFPRI.
This is really for me, personally, an amazing place to be, an amazing invitation. I spent three and a half very intense years of my life in this hall. My office was 45 over there. That must have changed a little bit.
But I'm [INAUDIBLE] stayed, so this room, I had many meetings here, both listening to speakers, but also graduate student meetings, et cetera. And so a lot of things have changed, but I'm really happy that this room is still here. I noticed that the hall's table is preserved. I also think it's fantastic. My supervisor is still in the room, so that's still the same.
I walked through the campus over the weekend and the college town, and a lot of things have changed. I think what has changed was all of [AUDIO OUT]. [INAUDIBLE] and [INAUDIBLE].
OK, this is the title for my talk. I invented it over the weekend, actually-- "Global Food Security in CCC Times." I used it in my presentation on Thursday, and people kept referring to it, so I'm now going to use it as an acronym. So CCC refers to climate, conflict, and COVID. And so I will talk about climate change, COVID, and about conflicts in my presentation.
Then I will talk about IFPRI studies. And I think it's a wonderful institution. So I've been here two years and then a couple of months-- is the combination of different methodologies that they use. They are really big-time into field research, and we have a big nutrition group, our economists. We have a lot of people on the ground doing surveys, doing experiments as well.
At the same time, there's a lot of model-building going on in IFPRI, and there's a lot of other types of methodologies. And so what's nice is that we can cover a lot, too. You can also draw on different acts of methodologies. And I think the power is if you can complement them well because they enrich a lot of things they do.
OK, so let me get started here. I'll start with The Economist for June, 2013. So it's less than a decade ago. And so the [INAUDIBLE] was about "Towards the end of poverty." You see this is the down slope. Almost two billion people in poverty around 1990, to going out by the middle of this century, even 2030. It's very [? rural. ?]
And if you look at the percentage of hunger and food security, it's very similar. OK, so there was actually a question mark at the end of the picture there. We'll just leave it there. But you see [INAUDIBLE] these are data from the FAO, both in terms of the number of people in being hungry, being malnourished, and the percentage of the global population. And those declined very significantly over this 10-year period and continuing the trend moving forward.
But [INAUDIBLE] is that 2015 was a turning point. 2015 marked that. So what we've seen since then is that actually, the trend stabilized and then reversed. So towards the end of hunger-- looks like we may get there, even by the end of the 2030, as part of the [INAUDIBLE] objectives, but it is still happening right now. And so the three seeds really play an important role in that now [INAUDIBLE].
Another point, which is a broader issue, is that we have certain [INAUDIBLE] as economists, agricultural economists, [INAUDIBLE] economists. And so we've learned a lot in terms of poverty and hunger. But we are looking now is to have [INAUDIBLE] with the food systems. Last year, the United Nations Food System Summit, is really trying to mount global efforts to not just look at one dimension of food, but really look at it as food systems.
So we want to try to integrate other things we knew were important but were kind of analyzed by different field, different people, different institutes, and try to create something much more integrated. In the interim report, which came out last year, our Global food [INAUDIBLE] report, we really talked about food system transformation. So this is the five dimensions that we try to look at and see as part of this broader focus on the issue.
So one is not just the quantity of food but the quality of food. Resilience-- how resilient is your system against shock that you get. Inclusiveness-- so this is a complement of poverty [INAUDIBLE]. Also, the broader idea of, for example, gender inclusion and other social groups in society, whether they are part of growth or harm reduction, et cetera. Sustainability, and then also still the efficiency [INAUDIBLE]-- when you're an economist, you're looking at as well, so the broader picture.
So let me give you just a little bit of numbers on these things. So if we look beyond [INAUDIBLE], we look at all nutrition more broadly defined-- and so then there are this development, which you see and which is increasingly described, is about the triple burden of nutrition. And so we have a lot of people who cannot afford a healthy diet-- [AUDIO OUT]-- referred to as the Lancet diet. It was a big project which was done together with the EAT Foundation and The Lancet, which is a medical journal, and they identified what an optimal diet would be. And if you calculate how many people can afford this, it's not very few, but many people cannot.
If you look at it a bit more narrow, in terms of nutritional deficiencies-- [AUDIO OUT]-- billion people are estimated to have this. And at the same time, we see a very strong increase in the world in people who are overweight and obese. And so now we have a whole set of countries which are not just facing one or two of these problems, but facing all three of these problems.
And so the colors here on the global map indicate the intensity of these combined problems. I have a slide-- the next one, this is an example from Nigeria. It'll be a bit more specific. And here you see that 35% of the children are stunted, as an indication of not enough food, while at the same time 21 million Nigerians over the age of 15 are overweight. And so they're part of the same country.
The color bars there, they basically compare the Nigerian average diet with what is presented as the EAT-Lancet Global Reference Diet. This is a healthy diet. And so the different colors refers to different food groups or elements of food.
And so you see the left-hand column-- that's the average of Nigeria. This is for the poorest group in Nigeria, and this is for the richest group of the population of Nigeria. And you see there's huge differences between them. And so for example, if you look at fats and sugar, there you see that the poorest groups are actually close to the reference diet, to a healthy diet, but the richest group consumes much too much fat and sugar, compared to a healthy diet.
If you look at starch-- cereals, for example-- it's a bit the opposite. And so the share of food or the consumption of cereals is the highest in the poorest group in society. And so this is not exception. This is a fairly typical dietary distribution, if you want, social distribution within societies in poor countries.
Then if we look at another element of these different transformation goals-- this is the environmental angle or the sustainability angle, if you want. And so I think this is not a surprise to you. You all know roughly the picture. You may not know exactly the numbers.
But the global food system as a whole-- and so this here refers to the entire system. And so for example, the green is about livestock production, the blue is about crop production. But this is also the marketing, processing, and retailing, et cetera. And as a global-- as a system, as a whole, we consume about 30% of energy in the world and we produce more than 20% of greenhouse gases.
The estimates vary between 17% and 35% or something, so a lot of variation there, depending on what assumptions that you make. But it's big. And so that also means that it is a major source of problems in climate change. It's also-- has the potential, then, to also be a potentially important contributor to a solution, I think, if you think the reverse way.
Let's take a look at what factors are correlated with this transformative transition, if you want, from a decline in the number of hungry people in the world to an increase again. And so here, as economists, the first thing you look at is basically income-- here measured as economic growth. And so on the right-hand panel, you see over the past-- since 2000-- last 20 years, how economic growth has evolved.
The green line is all the low- and middle-income countries. The orange line is Sub-Saharan Africa. And there you see-- well, this is the economic crisis of 2009, so everything went down there all over the world.
But overall, Africa had significantly positive growth rates for almost 20 years, but since 2015, which is also the period when this thing started stagnating, you see that the growth rates are actually, on average, negative in Africa. So incomes have gone down and/or have not grown as much as they have before. This is from-- I put the slide in because I thought it was really interesting.
Uma Lele, who is another famous Cornell-- I should not say "another"-- is a famous Cornell alumni. She just has a book out. It's called Food for All, where, together with three co-authors, she writes about the contribution of international organizations to food-- to basically reducing hunger and reducing poverty in the world. Fantastic book. This is one slide that she used. She came to present at IFPRI a couple of weeks ago.
And so what you see here-- this is an indicator of productivity growth in the world. TFP stands for "total factor productivity." And so what you see-- this is for different parts of the world, how productivity has grown since 1960. So it's a very long period.
And you see Sub-Saharan Africa here, again, is the slowest, particularly over the last 30, 40 years. And here you clearly see that it's stagnating. And this is consistent with what you see here as well. So productivity is stagnating and incomes are stagnating or even declining.
Climate change. I'm sure you know, this is just a number that illustrates it or a graph that illustrates it-- that you see the picking up also, since 2000 and 2010, of the growth of climate change. And this interacts with food security in a number of ways. I'll come back to that later as well. And then the other one, which I thought was most surprising seeing-- this is an indicator of conflict.
And so this is 2010 here, so this is 2015 where we see the turn-around. And so what you see is that before, we were roughly-- the forcibly displaced people in the world were around-- so this can be people having to leave their home, their villages within a country, or they can migrate internationally-- was around 40 million but over the last decade, really, you see a very strong increase in the number of forcibly displaced people. And of course, conflict is a very important source of acute food insecurity.
There is a difference between structural food insecurity and acute. And so this is clearly a very important factor in there. I'll come back to conflict at the end of my presentation, when I'll talk about Russia and Ukraine and how that's affecting global food security.
So here, this is a picture from the Global Report on Food Crisis, which comes out every year now. IFPRI contributed background studies to this report. And so this is food crises. So it's a different indicator than we used before, in terms of food security. But you see that in this episode, they look at three different indicators.
One is conflict, weather-- climate change, and economic shocks. And so some of the COVID effects are coming-- COVID affects food security through different ways, but part of it comes because of job losses and income losses. You see the numbers are big. But the importance of conflict in this crisis effect is very, very, very strong, as comes out of this report.
And again, the map here indicates the locations in the world. And you can see that the most important issues there are in the parts of the world which are also the poorest parts in the world. Let me then talk a bit about COVID. At IFPRI, we've done a lot of work-- David, how long was my talk?
DAVID LEE: [INAUDIBLE]
JOHAN SWINNEN: OK, great, thank you. So this is early estimates that we did with our model base. And so we estimated that the impact of global poverty would be very large, and that it would mostly concentrate in Sub-Saharan Africa and South Asia. What's interesting is that these are some of our revised model estimates. And we initially predicted the impact would be about double in Sub-Saharan Africa compared to South Asia.
It turned out actually that the impact in South Asia was worse than we expected, and the impact in sub-Saharan Africa was a bit better-- or a bit lighter, if you want-- than we had initially predicted. And so it's also interesting, of course, when you are confronting your own predictions with reality later-- what did you do wrong? And of course, COVID was something-- a pandemic which was fairly unique, in the sense that we did not have any experience in terms of making these predictions, how the impact would actually work, the mechanisms and so on going through.
Then when we estimate the impact on global nutrition, there you see-- this is what economists would normally predict, that if people lose their job, lose their income, what happens if you shift your diet or dietary patterns? You move away from the more expensive foods to the less expensive foods, typically-- less expensive foods which still keep you alive. And so that is what you see. You see a shift from animal products, from fruits and vegetables, towards more staples production-- sorry, staples, basic grains, et cetera, consumption.
And that is roughly what also the data later show. And I'll show you a number of actual data that we have observed. In terms of how it's affecting food security and nutrition security, there are a number of factors why poor people are disproportionately affected. The first one is the most obvious one-- is they spend a large share of their income on food. And therefore, obviously, if they are losing their job, they're losing their income, then essentially, this is disproportionately impacting the food security of their households.
One important difference between poor people and middle-income people or rich people is what's their production factor? Their main production factor is physical labor. They typically have very little land, very little capital. They skills they have are also very different, typically, from rich people. And so what they need to earn a living is physical capital-- go out.
And of course, that's the production factor which was most affected by COVID-- either directly because it affects your health, or indirectly, because of the restrictions which are imposed on using physical capital. For example, you could not go out and work in a whole series of activities. Another factor is that COVID caused more disruptions, both in the private food value chains and in the public food value chains.
So it disrupted, for example, school feeding programs, other social programs, et cetera, particularly in the early months. And then it also affected the food value chains. I'm sure you've all seen reports, media stories, even studies on how some of the food value chains have been disrupted. I'm going to come back to this because it turns out that our food value chains have held up much better-- they have been more resilient-- than we anticipated ex-ante-- let's say in the early months of COVID-19.
But again here, labor intensity plays an important role. The more labor-intensive these value chains are-- again, associated with poorer societies-- the more the disruptions played a role because that's exactly the thing which was restricted by the regulations. Then the poor people have typically less access to health services, and they are especially vulnerable within even the poorest groups-- parts of them are groups-- within these groups, which are particularly vulnerable, particularly children, women, and people who had to migrate, either from the countryside to the city or across the border to earn a living. So that's what's meant with migrants here. And so people who had to send remittances home. So remittances were heavily affected in several cases as well.
Here's some data. These are data from IFPRI studies in Ethiopia. And so on the left-hand side, so that's the income effects. So it's actually urban Ethiopia-- Addis Ababa is where the data are from. So this is the percentage of the households that have much lower incomes.
And so you see that the poorest groups in society were much more heavily affected than the middle-income groups and the richest income groups in this region, in terms of the impact on their income. If you look at the nutrition, there you see that in this case, dairy products is an indicator of a more healthy diet-- in this particular case in Ethiopia in Addis.
And you see that there's two things to note. One is that there's a negative relation already before. So January, February-- that's prior to COVID. And you see that the consumption is significantly higher in the richest group than in the middle-income group, and certainly than in the poorest group. And you see also that the decline, which is the difference between the orange bar and the green bar, is only a small decline here for the richest groups and a much larger decline for the middle-income groups and the poorer groups, which is consistent with-- one would predict.
This is data from India, from a study there. And there we looked at access to services of poor people, and how those access to services were affected by COVID. And here the blue line is the pre-COVID situation, and the green and orange line is the post-COVID situation. One is in April-- the other one is in July. This is one month after COVID hit-- or two months-- and the other one about five to six months.
And so you there's been very strong declines in, for example-- this is growth monitoring, immunization services for children, counseling on health and nutrition. You see here that there's actually been a growth in the public distribution of food. This is food safety programs.
And that's something which is a very positive observation we see across the developing countries-- is that there's been a very large investment in food safety programs in many countries in the world. And this is also reflected here. This is a government response to COVID and to the worsening food Security situation.
This is from Nigeria, and here also it's about school feeding programs. And so the left-- this is all about the pre-COVID situation. This is about the post-COVID situation. And you see, the first thing is that the numbers here-- the bars are much higher in the post-COVID situation compared to the pre-COVID situation. So these are indicators of hunger-- skipping a meal, running out of food, not eating for a day.
And the other thing-- what one can see is that the difference between the blue and the green bar is smaller in the post-COVID situation than in the pre-COVID situation. And that's a bad sign because it means that this is access to food services-- school feeding services. And so the school feeding programs have an impact, much more in the pre-COVID situation than they had in the post-COVID situation. So again, indicating that-- this is what I would call the disruption of the public value chains, if you want, food value chains.
Women have been especially vulnerable to the situation. There's a number of reasons for that. One is in terms of health measures, which are typically different, or access to help, income shocks, which are different between the two groups, between men and women. And from a dynamic perspective, probably the third one is the most important one, as it affects the empowerment of women in the household, it affects the decision-making in the household. It also affects children's schooling, particularly girls' schooling. And that, as we know, is really having a long-term effect-- the loss of schooling, in terms of labor market participation and a number of other factors in the long run.
And so the key point from the policy perspective is that once one realizes that means if you design programs to aid, that means you have to basically anticipate this gender effect to compensate extra for that and build that into the programs, in terms of targeting, in terms of delivery mechanisms, et cetera. Here is data from a study in Myanmar that we did. And there we found that this is shocks due to reductions in domestic remittances. This is a combination of actually survey results and modeling some of that.
Now we see that the rural female-headed households have significant higher income fall than the rural households, on average, compared to-- the male ones would probably be here somewhere because these are part of the rural overall. And you see this is consistent with these gendered effects of COVID.
And the point-- I already said a little bit about this. So what we see is that social protection programs have been expanded quite significantly during COVID times. And so on the one hand, in places or in regions where they didn't exist, they have been introduced in many cases, or where they did exist, they have been scaled up to cover a much larger part of the population.
I think the important point from a long distance-- not from a long distance, from a long-run perspective-- is that this could potentially have a very important long-run effect if these programs remain in place. And if it's more an institutional thing rather than a budget thing, that means once you build institutions, there's local ownership of these institutions, and this can have a really important long-run effect beyond COVID. So in that way, I think COVID has also introduced a number of innovations which really have long-term effects. And we'll have the same thing in private value chains-- I'll talk a bit about in a second.
In terms of trade restrictions, I think some of it you know. The left here-- this is an interesting graph, I think. We have been collecting data on these trade restrictions. And so this is a period of literally 11 days-- from the 13th of March to the 24th of March in 2020.
And you see this is Africa closing. So this is the borders of the countries in Africa which are closing their borders for trade. And it goes very fast in this period. And this had a number of effects. And of course, the logic why governments did it is very understandable.
They wanted to prevent COVID coming into the country through, basically, people trespassing the borders and commodities trespassing the borders. But it affected particularly informal traders. And that's, as you know-- a lot of poor people are depending on informal trade-- also a lot of informal food trade-- for their living. And so it had a big, major effect on that.
The right-hand picture is a bit different. This is about countries which were imposing export restrictions on their food in the world trade. And so here, I think we have some successes, also some good news to report. You see initially, there was a very strong growth in the number of countries that imposed export constraint and food export constraint
But we had learned from the crisis-- there was a big spike in global food markets in 2007, 2008. And so that spike was exacerbated very strongly by all the exporters closing their borders. And so the effect was that-- there was already a shortage on the global markets. By closing that, the price effect became much larger and the crisis became much [INAUDIBLE].
And so very early on when this started happening, a lot of international organizations, such as the World Bank, the FAO, IFPRI as well, and World Economic Forum and so on, stood up and said, listen, you cannot do this. Please do not do this. You're going to make things worse. And so it's interesting to see that several of these countries have actually revoked these export constraints in a relatively short period-- so we're talking about-- this is the end of March here till basically July here, so in a couple of months.
And part of it was also we were better prepared. We had better data on what the stocks were in the world. And so we could say, listen-- you don't have to close the border. There's enough food in the stocks, et cetera to deal with this problem. So please do not introduce emergency measures.
On value chains-- let me say a few words there. I think I already said something-- I think our food value chains, both local ones and global ones, have been affected for sure. There's been a lot of reports. But I think across the system and across the different countries in the world, et cetera, they have been much more resistant than we had feared they would be in early 2020.
And so the resistance comes. It varies because we have global and local value chains, but also it depends on-- heavily depending on labor, heavily depending on technology, digitals, et cetera, large versus small, commodities and short- and long-run staples versus fresh. But all these things matter, of course. But what we see-- we've seen a tremendous amount of innovation in these value chains.
And innovation can from social innovations. They can be institutional innovations and technological innovation. And in terms of technological innovation, we've seen a tremendous amount of digital growth-- e-commerce, which has expanded particularly in the lower middle-income countries. But even in Africa, et cetera, in some parts, you've seen a significant growth of e-commerce and ICT.
And then also things like companies just reorganizing themselves-- instead of depending on one particular harbor from which the commodities would come in, they would now source from different places in order to become, from a more institutional perspective-- more resilience-- that if something would happen in one particular place, they could source things from another place. And so it's very interesting to talk to private-sector people who are engaged in these things, both small-scale business people and people running multinationals, how they have dealt with it. And they said, in a number of cases, we had made plans to introduce certain new technologies for the next 15 years. We introduced them in six months because we had to.
But it's not just in that, but also, for example, school feeding programs, where kids were getting better nutrition from coming to the school-- that the schools themselves or the local authorities organized to bring the school meals to the houses so that children could still have access to that. So it's also on that level. It's not only in the private sector.
This is an interesting slide. I got this from our work in Myanmar. And there, we asked households, which factor has affected you most, in terms of your household welfare, if you want? And so this also confirms the arguments I was making earlier, that the supply chain disruptions have been important from, let's say, an absolute perspective. But in relative terms, basically, household income and job losses have been much more important as a concern, as a factor affecting people's welfare. And so the supply disruptions have been relatively limited-- certainly in this comparative perspective.
This is related to that to some extent. So we looked here how COVID-19 affected the-- so the change in GDP means the change in the value added along the value chain. And so this is the total economy. This is for data for Indonesia. And so here we have Indonesia, Ghana, and Nigeria. I picked out the Indonesia one.
And so you have for the total economy-- it was minus 39%. This was measured over, I think, the first six months or something of COVID. The agrifood sector-- minus 18%. And then you see along the value chain-- so this is between the farmer and the consumer. We looked at farming itself, at the processing sector, and then at services-- so that's food services, where you can buy the food in the cities.
And this is not unexpected. It's the same thing in the US and in Europe in a way. It's the retail side, the services, the restaurants which have to close down, which were mostly affected. Processing, intermediate, and the farming itself have actually been relatively less affected in many countries of the world, including in this case.
And this is basically-- if you then look at the impacts on the whole economy-- so this is average impact per household-- that you see-- and the green is the national average. The yellow-orange is the rural average, and the red is the urban average. And you see that they are relatively close.
And the reason is you have two offsetting effects. One is that the dominant activity in poor countries in rural areas is agriculture. And you see that agriculture has been relatively little affected, compared to the services. But most of the poor people live in rural areas, and so therefore, if you have some income shock in poor areas, falling below the poverty line is much stronger there. So these two effects offset each other, in having-- that the average is relatively similar between urban and rural regions.
OK, then let me move to-- this was my second seed, the COVID. I'll move to another conflict-- the invasion of Ukraine and the conflict there. And so Russia and Ukraine are important in terms of their share in calories in the global market. They both contribute roughly 6%, and so that's very concentrated-- on the next slide-- I'll go there first and I'll come back to this one.
And so you see these are the data for Ukraine and Russia-- the share in the global market. So this is for barley, for maize, for sunflower, sunflower oil, and wheat. And you see particularly sunflower oil-- it's more than 70% of the global market which is produced there, with some of the core food grains-- like wheat, for example they play a really important role, 35%, 34%.
And you see that the distribution is different across different commodities, but also by the countries which are depending on imports from Russia and Ukraine. And so this map shows this. So this is the Middle East region. So this is Odessa here, through which a lot of the harbors in southern Ukraine-- a lot of the grain is exported from there. And so these are the countries close to Russia and Ukraine, obviously, depending on it.
So I'll go back now to the previous slide. So what was the case when the conflict broke out, when Russia invaded Ukraine? The food prices were already very high. So this is FAO data going back to 1960 again. So these are the nominal prices. So the yellow line.
And the line that really matters is the real prices, so you control for inflation in the real price. So this is the real price, and you see that this is the price spike in 2008 and in 2011. And you see that the prices-- and this is before the conflict-- were already at that level. So the prices were already very high before the conflict really started. And this is data from the inventories from the stocks.
And so this is the line of the previous price spike-- that's this one here. And so here, you see over the last two years what happened. You see that the rice situation is much better now because the rice stocks are much higher now, and have been growing in the past year, than in 2007 and 2008. And Ukraine nor Russia are major rice producers, so this market is not directly affected. Of course, there's spillover effect.
But you see the other markets-- the stocks have been going down over the past year. And they're actually lower than they were, or close to the point where they were in 2007, 2008. And this is for corn, soybeans, and wheat. And so that is really a serious cause of concern-- both of these indicators, actually.
I showed this. This is an example from a country which is very heavily dependent on grain imports, wheat imports-- and particularly from Egypt. Egypt-- wheat is really one of their staple grains. Very important for the basic diet for poor people in Egypt. And you see 85% of their grain imports from Russia and Ukraine.
It's very important. So it's a country which is directly affected very strongly. You can also see that the share has grown tremendously. So these data go back to 2001, and it was much smaller.
And one of the reasons was that in the 1980s, Russia was actually importers of grain to feed-- the livestock and dairy sector was massively subsidized under the Communist system in the 1980s still. And so with the liberalization, the subsidization of the livestock and the dairy sector has gone down, and they've transformed into a major grain producer and grain exporter over time. And you see the growth of the Russia and Ukraine grain sector, if you want, reflected in the growth of the Egyptian imports.
Why we should be really concerned today about the situation? The fact is in 2007, 2008, it was very concerning as well, but we didn't have this massive COVID problem that we had gone through, and all the income losses and the job losses and income declines. And so basically, the recovery from COVID is still going on, and therefore, this has come on top of that.
And so this plays a role both on the private side-- on the households themselves, how much assets do they still have, how much income do they have, or have again, or have not again. But it also plays a role on the government side because the governments have spent a lot of money in those social programs or health programs to deal with COVID, and basically, they may have little room to maneuver to expand social programs or food safety programs to protect against this rise here. So it works on both sides.
And as I showed you earlier-- so the malnutrition and hunger were already on the rise before COVID hit and before-- the high food prices are coming on board now. But this is more a general problem-- we don't know exactly how long these current challenges will persist there. There is some interesting-- these are very recent data. This is from a World Bank report which I received yesterday.
And so here you see-- these are price data for literally two days ago. And so here, you can see that this is the price spike after the Russian invasion. You see it really spiking up. And that in the last two weeks, the prices are stabilizing at this very high level.
Here, this is for maize and wheat-- they're coming down. And you see what I explained-- this is the rice price in this case. And you see there, the rice effect is significantly different from these other prices for obvious reasons. But of course, the spillover affects globally, but less direct effects.
OK, a big issue with this particular conflict is that Russia and Belarus are major exporters of different types of fertilizer. These are data for potassium fertilizer. And Belarus is not directly involved in the conflict, but there was big election issues prior to the conflict-- basically, over the past year. And so they are facing a lot of export sanctions as well-- Belarus-- and they are on Russia's side in the war here.
And so therefore, it's both of these countries where these exports are now blocked. And this is really having potentially major effect for many countries. And so here, this is the distribution of the countries not depending on food exports from the region, but on fertilizer exports from the region. You see a lot of the Sub-Saharan African countries here are very dependent on potassium fertilizer coming from Russia, Belarus.
And so this, of course, is going to affect the next harvest. And so the dynamic effects are really important there. You see here are the fertilizer prices, the fuel prices. And you see they have gone up very strongly as well over the past months, partly as a response to this. When we discussed this at the workshop on Thursday, your professor, Chris Barrett, actually commented on me and said that what this story is underestimating is the impact of the fuel crisis compared to the fertilizer prices.
And the argument that Chris was making was-- I'll come back to this in a second-- was the following. And he said basically, it's a value chain story. And the value chain story is that if you look at the share of agriculture in the total consumer expenditures, it's fairly low.
These are data from the United States. And so this line here-- so this is the share of what the farmer gets compared to what the consumer spends. And so the number here is around 15%. This is average for all agricultural commodities compared to all food expenditures.
But even if you look at the lower middle income countries, that is below 30% on average across the thing. And so that includes countries like China and India, even which are in there. And so that means that the cost effect of the fertilizer is going to be relatively less of a cost effect in food consumer expenditures compared to, for example, oil prices because oil prices are affecting all the stages of the value chain, in terms of cost of living for workers, cost of transport, et cetera.
So if anybody wants to do a PhD or something or a master's-- this is a good-- checking whether the argument is right. I had the slide here. I'm just going to show it. This is where the Russians are occupying Ukraine now-- I just put this slide. And this changes every day. So they're moving away from here and coming back here-- that's the latest.
But you see, these are the grain-producing areas-- the green ones here. And so a very significant share of that is now under war situations, really. So that's definitely going to have an impact on the harvest in Ukraine in the next season. All right, so we have now what is below it-- said food price spikes. Is that the new norm?
So when the food price spike hit in 2007, 2008, we said, well, the price in the world market had been relatively stable for quite a number of years. And suddenly, we had a spike. So a spike was considered abnormal, was different. And therefore, we should see the spike as being the exception to the rule.
If you now look at this graph, which is the same as I showed before, what's the rule here? Well, the rule is volatility. The rule is not stability. So we may be in for a world situation on global prices that the spikes are the norm and that stability is the exception.
If that's the case, that means we have to rethink, I think, our whole policy to deal with that and to say, OK, if that's the case, then we should have a much stronger focus on resilience, probably, than we had in the past. And so in the next slide here, I have how to enhance resilience and inclusion. There's a lot of work being done also on how to deal with it.
I think way to deal with it-- the way I've been thinking about it, but also based on our work, what we did over the past year, is the straight sets of policy measures that you have to think about. One is the best way of dealing with shocks is make sure they don't come. Now some of it cannot prevent. But there are shocks like climate change, which you can change, right? You can try to mitigate so that the impact-- that the frequency and the magnitude is going to be less than if you would not take action.
Then the second step is, if the shock is going to come, try to be aware of it, try to be ready for it. And that's where information, early warning systems can play a role. And that you are ready there to anticipate the shock, you protect yourself. You know it's going to rain or it's going to snow or there's going to be a drought coming, et cetera.
And the third one is then measures to absorb the shocks when it does hit you. And so for example, insurance programs play an important role, finance plays an important role, digital innovations play an important role in a number of these things. And then the last point here is that-- I think, certainly if we talk about food security and hunger, that resilience and inclusions are really strongly linked.
The one thing economists are not very good in dealing with is, what happens when your shock shocks your political system? When it causes demonstrations, whatever-- poor people coming on the street. And so that, of course, is a major shock. And so how do you build resilience then?
And their inclusion, in the sense that making sure that the poorest parts of society are well protected. So that's the inclusion of the resilience, if you want-- is really crucial because it makes your system as a whole more resilient than if you're not. David, I think I've used up my time, eh? So let me then end with-- I'm just going to skip these slides here and then end with this.
So this is the one that I showed. There-- is this long-term structural reversal? Or is it all a blip? And this is my last slide. So this is since 1970. And so this is the evolution there.
And so the question is, what are we going now? And I think our job, both in academia and in the policy world and all parts of society, is to try to get back on the green track and to prevent the red track from [INAUDIBLE]. Let me end here.
[APPLAUSE]
DAVID LEE: Thank you very much, Jo, for a very intriguing presentation. We have 10 or 15 minutes for questions, comments, both from the online population, I think-- [AUDIO OUT]-- know if there's something to bring to my attention? We'll open it up. Questions? One here.
AUDIENCE: So countries like Egypt have historically been very sensitive to changes in food prices, like bread riots and so forth. Do you anticipate we're going to see that?
DAVID LEE: Go ahead.
AUDIENCE: Countries like Egypt-- historically, if the price of bread changes, most people take to the streets. Is that in the future?
[AUDIO OUT]
JOHAN SWINNEN: Do I answer already? Well-- [AUDIO OUT] [INAUDIBLE] [AUDIO OUT]-- from the Ukraine crisis and the impact. And so one of them is on Egypt particularly. And so what we see is that the government has tried to stabilize the bread prices, really-- the ones which are in the official circles. But of course, a lot of it is in the private sector, and their prices have doubled already.
And so the mix is-- people will try to get it from the public sector, but of course, they also have to rely on the private sector. I certainly think it's dangerous. Now I think it's different from the previous one. Why? Because they have gone through the Arab Spring, which started 2011.
And so people have argued that the strong increase in grain prices and bread prices in 2008 and 2010 have really contributed to the [INAUDIBLE] Arab Spring. And so of course, now the political system has been totally changed now-- going back and forward. And so I think the pressure will be there. I also think that the resistance from the regime will be stronger because they're probably more aware that this could happen.
AUDIENCE: Thank you very much-- [AUDIO OUT]-- presentation. OK, can you hear me now?
JOHAN SWINNEN: I can hear you.
AUDIENCE: OK. So I've worked a lot with IFPRI as well. And one of the things we saw, even before COVID, was that when you look at the various declarations-- Malabo Declaration, for example-- that countries in Africa were not at that time already putting enough of what was required in agriculture, in terms of funding-- so whether this be government or private sector. And I just was interested to hear from you whether you have looked at that angle as well, to understand where would the funding come from? Because that's one of the things we need to do to fund agriculture. Thank you.
JOHAN SWINNEN: That's a very important question, very difficult question. I think part of it was actually with the slides I skipped here. Let me go back. I can't go back. So globally, I think there we have to look at [INAUDIBLE]-- [AUDIO OUT]-- there I think there is funding available. We spent-- [AUDIO OUT]-- I think almost a year-- [INAUDIBLE] across the world.
Now most of this spending is in [INAUDIBLE], but we certainly have a much better [INAUDIBLE] of the way this money spent. It says we know how we've done-- we have a big project called repurposing projects. So the idea is repurpose this $700 billion, which we've already spent, in order to do something that is right here and do better things with it, in terms of nutrition, in terms of climate change, in terms of biodiversity, et cetera. This, of course, is as I said, biased in the richer countries. In Africa, developing countries, it's much less the case there.
I think we just have to make it part of a global development pact in terms of that there should be significant investment in R&D and in a number of issues, including productivity. But again, research and development [INAUDIBLE] should be very involved. So for example, we know that research and development is crucial, whereas it takes a long time for some of these innovations to actually impact at the farm level.
But there's so much technology out there right now-- and again, technology [INAUDIBLE] and also talking about the numerous other innovations that are really about better management systems, better [INAUDIBLE] which are there and which is not used. And so a lot of it should be focused on making sure what is there, we are much better to make that available. Or make it used just a little bit.
AUDIENCE: Hi, [INAUDIBLE] a bit [INAUDIBLE] Can you just say whether you think we're going to see more localization of food chains-- countries wanting to--
JOHAN SWINNEN: I can't hear you very well.
AUDIENCE: --as they-- sorry?
JOHAN SWINNEN: I can't hear you very well.
AUDIENCE: OK, I will shout. I'm wondering if you think we'll see more localization of supply chains for food-- countries producing as much as they can of staples in their countries? And if you think that's good for the global food system or not?
JOHAN SWINNEN: Yeah, I think this goes back to the [INAUDIBLE] of global supply chains in, let's say, between '98 and 2000 and the year before, actually. I joined it, actually, just as an academic research. I was also supervisor at the World Bank. And so I think that the dichotomy between local and global is false. And it's false, I think, for two reasons.
The first one is conceptually. I think both have a role to play. And I think some things-- international trade will remain important, and it is very important, also as a mechanism of resilience, I think. At the same time, I think global supply issues are really important, were much more important in history than they are today.
And I think there's certainly a role of doing that for a number of reasons-- environmental reasons, social reasons, nutritious food. So that's the conceptual argument-- that I know are very superficial and happen together. But I think also, really, when you look at it, you see these things are growing together. If you look at [INAUDIBLE] and you see the growth of, for example, things like fair trade and organic, which-- they're not necessarily global versus global in their resolution-- they [INAUDIBLE] with actually very strong growth in the basic private sector supply chains as well.
And so you have to do trading [INAUDIBLE] then [INAUDIBLE] that's always there in the discussions. But I think in reality, it's much less an issue, actually, in terms of how we develop [INAUDIBLE]. And that doesn't mean that you can improve your supply chains. You can do it through imposing private standards or other standards on it-- for example, let's get rid of child labor in [INAUDIBLE]. That has nothing to do with local and global. I think you can get that achieved in different ways as well.
DAVID LEE: We have one question online. So the online question-- do you see current supply chain challenges as being alleviated in a couple of months or years? If you think it's the new normal-- a more fractured, a more difficult international supply chain?
JOHAN SWINNEN: I think the microphone's not working.
DAVID LEE: So question online-- do you see current supply chain challenges being alleviated in the coming months, years? Do you think this is a new normal, in terms of fractured and more difficult international supply chains?
JOHAN SWINNEN: Yeah, again, it's related to the answer I just gave. We have to-- early in the COVID period time, we saw a lot of reports in the news media about food, which was loaded on the field, trucks which were stuck on the borders, all kinds of food waste which brought tremendous disruptions in the supply chain. And all of that's real and that is there. But just think, when you look at these things, you have to look at the data.
So what's the standard? What is the aggregate effect? And there, I think the aggregate effects were very different from the media reports. And so they were spectacular and they're very important, and we should deal with it. [INAUDIBLE] food [INAUDIBLE] food was a major issue-- obviously, it's this big issue right now. And we're dealing with it.
But on the other hand, if you look at how it's really affecting things, we'll have to see. I think what we see now, in terms of the impact on trade, for example, with the disruptions from the exports of Ukraine and Russia, it's going to be a really interesting experience-- to what extent we want to complement that with basically, sourcing from different regions, for example, or basically, changes in the [INAUDIBLE].
It's hard-- I have to be careful how I say this. First of all, I'm not an academic. When you're an academic, you can say these things. It's all right.
[LAUGHTER]
He doesn't know how the real world works. [INAUDIBLE] explain efficient functions. But if you look at the Middle East, the countries like Egypt-- the importance of, for example, the grains in their diets is really large. It's probably higher than the EAT-Lancet diet would recommend. And so the issue that's there also, could this be a trigger for rethinking [INAUDIBLE].
And so I've been asking my colleagues at IFPRI about this, they're essentially saying that if you adopt such price increase or disruptions, then the basic assumption, I think, that economists call as-- you have the income effect and the substitution effect in choices. And that the income effects are much stronger than the substitution effects, in this case. And that means that if your basic foods become much more expensive, effectively, you've become poorer. And what do people do when they become poorer? You shift back to cheap foods, to basic foods, which is your staples.
So instead of consuming more vegetables, you're actually consuming less vegetables because you cannot afford them. You have to spend more money on the grain staples and so on. But I think this may be true. There may be also the short-run here versus the medium-run effect here-- that if these things stabilize a bit, the price effects go down a bit-- that maybe there is a substitution effect. And certainly, in terms of conceptually, it should help us to rethink that maybe a more balanced diet would actually be good also for these households.
DAVID LEE: We'll take one or two more. It's OK, just speak up. [INAUDIBLE]
AUDIENCE: Thank you so much. And I agree that the technology and innovation are the key to this food issue. But whole [? population ?] is relative than the geographic [INAUDIBLE]. What can be owned here cannot be used on some countries.
I'm from [? Rwanda. ?] We still struggle for food production-- some of them simple irrigation systems. And here, we've struggled with it-- I would touch on precision agriculture. And we still see that this will take time for Africans who are still struggling with simple methods of irrigation, produce vegetables in some. So what can be done to make sure that we are moving together, tackling this food issue together, as we struggle for an equal world for equal dignity?
JOHAN SWINNEN: Well, I think that the big picture-- as you walk away, to think about-- this is related to the question that the lady asked. It has to do with-- when you think about innovation, you have bundles of innovation. Actually, in other universities, together with colleagues, we are really [INAUDIBLE] months ago. But those are innovations.
And they said, [INAUDIBLE] technology. But you need to have the institutions and the policies which support the updating of the technology or the distribution. And so this goes back to this tremendous amount of technology which is there right now, which is not used by farmers or the households or by the food sector, the training sector, whatever. And so the point there is that you need to make sure that the institutions are in place and the policy framework is there, so that people can use these technologies or want to use these technologies which are already there.
Access to finances is one of the most obvious. If you don't have financial resources, how can you invest in something? It just doesn't really matter how much technologies there are in that scenario. Or if incentive-- the [INAUDIBLE] framework [INAUDIBLE] have incentives to use it, it's not going to help. So we need all these different things in place. And so that's the bundles of innovations, I think.
DAVID LEE: We'll take one more.
AUDIENCE: Thank you very much for the fascinating talk. I have a question regarding developing countries and nations. Can you see on the policy side, internationally and nationally, interest for developing countries-- if there's more a push towards self-sufficiency in agricultural production, so that the countries are less vulnerable towards those import shocks? Can you see that this discussion's held at the international level and policy level?
JOHAN SWINNEN: Yeah, I think the food system-- [AUDIO OUT]-- now the United Nations last year. And it was in the summer, but it was more than a year preparation to do that, with a lot of people's participation, stakeholders from everywhere. It was really about that, I think-- really about rethinking our model from abroad, looking at the-- [AUDIO OUT] [INAUDIBLE] et cetera, and then productivity as well.
And it's sort of this whole set of discussions on policies to take things forward, et cetera, culminated in the Summit, which was in the summer in New York City. It was virtual, actually. And so the whole idea is how we've done that in [INAUDIBLE] national [INAUDIBLE] for transformation. And I think that's really where all the difference will be made.
But at least the [INAUDIBLE], the desire is there to have policy now in all the countries where different staples can be brought on board. And so that's clearly-- being an issue to the state [INAUDIBLE]. But with all these things, the design can be perfect, but if there is not the political will or the vision to actually-- and political will is the right word. [INAUDIBLE] process to actually make it happen, it may not result [INAUDIBLE].
DAVID LEE: One more.
AUDIENCE: My question is, can you assign a percentage on the impact of travel bans around--
DAVID LEE: Can't hear you.
AUDIENCE: --around the world, in terms of movement, of labor shortages. Has that played into the issue of food insecurity? My question to you is, the travel bans have been implemented around the globe, which are easing up now. Can you assign a percentage, in terms of the inability or the deficits, when it comes to food availability in some of these developing countries?
JOHAN SWINNEN: Yeah, I think the travel bans affected the food security situation mostly through [INAUDIBLE] again. So it was the fact that people were not-- who are the people who go and work abroad, bringing some money back home? Well, I guess I am, but that's more--
[LAUGHTER]
--but I am less food insecure than any of the people we're talking about who do it. And so you have many people in the rural areas who have at least one member or two members working in the cities and sending money back home, or they work in different countries-- and sending money back. And so the disruption of that-- the remittances is the word you always use for the money which they send back-- that really impacted, particularly early on.
In China, it was a very different situation there. Early on-- a scholar who's from Stanford has a really fascinating work on that. And they estimated the impact was huge in China. And that was because it was the Chinese New Year, when everybody was working in the cities, went back to their villages to celebrate New Year-- that's when COVID hit, and when they introduced the ban. So people could not go back to the cities.
And so they have used that-- because they have failed [INAUDIBLE]. They came up with a number which was phenomenal, in terms of income losses. And so it was much less an issue of food distribution-- which was also affected-- [INAUDIBLE]. So when food would move through, but it was the income losses which were really large. And for most countries, we just don't have the data as good as that case. But the effects are similar.
DAVID LEE: Thank you, everyone. And let's show our appreciation of Dr. Swinnen.
[APPLAUSE]
Distinguished Speaker Series lecture in Global DevelopmentAbstract: The COVID-19 pandemic and associated policy responses has significantly impacted food and nutrition security and livelihoods for large parts of the world’s population, most especially the poor in developing countries. The pandemic’s impact on food systems and value chains has varied, showcasing the ways in which e-commerce, technologies, and value-chain integration can help countries and regions become more resilient against future shocks. This presentation will delve into the wide-ranging impacts of COVID-19, and offer lessons for transforming food systems so that they are not only resilient, but also healthy, efficient, sustainable, and inclusive of the world’s most vulnerable people.Speaker:Dr. Johan Swinnen is Director General of the International Food Policy Research Institute (IFPRI), and Global Director of the Systems Transformation Science Group at CGIAR. Dr. Swinnen has published extensively on agricultural and food policies, international development, political economy, institutional reforms, trade, and global value chains. He holds leadership roles for various taskforces, including the Food Systems Economics Commission and the Think20 Task Force on Climate Change, Sustainable Energy, and Environment.Prior to joining IFPRI and the CGIAR, Dr. Swinnen was professor and director of the LICOS Centre for Institutions and Economic Performance at KU Leuven, lead economist at the World Bank, economic advisor to many international institutions, and guest professor at several universities, including Stanford University’s Centre for Food Security and the Environment.Dr. Swinnen earned his PhD from Cornell University and holds honorary doctorates from University of Göttingen and the Slovak University of Agriculture. He is a Fellow of the Agricultural & Applied Economics Association and the European Association of Agricultural Economists and served as president of the International Associatio
