By the Blouin News Business staff

Global food security and affordability

by in Global Economy.

An Indian trader counts money as he deals in onions at a wholesale market yard in Hyderabad in a file photo. AFP/Getty Images

An Indian trader counts money as he deals in onions at a wholesale market yard in Hyderabad in a file photo. AFP/Getty Images

Food security is one of the biggest challenges for today’s global economy – and global stability. As the changing climate has a larger and more notorious effect on crops around the world, the plight for food resources will occupy a more important role in the geo-political agenda. The Economist Intelligence Unit (EIU) recently published its annual report on global food security, The Global Food Security Index 2014 (GFSI), which indicates that the overall situation improved in the last year: “it increased for 70% of the countries in the 2014 GFSI.” The report highlights the fact that the Food and Agriculture Organization of the United Nations stated that there has been an almost 3% decline in the number of people estimated to be experiencing chronic hunger today (approximately 842 million compared to 868 million a year ago). This caps off a quarter of a century of progress, with the number of undernourished individuals falling by 17% since 1990.

The global food security index is composed of three categories – affordability, availability, and quality and safety – which contain a subset of indicators that are used to evaluate programs, policies or practices that influence food security. Here, we will focus on the first one, which explores the capacity of individuals within a country to pay for food and the relative costs they may face under both normal circumstances and food-related shock. Note that lower spending on food as a share of  household consumption in most countries and better food safety net programs, mainly in Sub-Saharan Africa (SSA) and the Middle East & North Africa (MENA), has contributed to a notable increase in affordability.

The GFSI uses three indicators to directly assess the capacity of the average individual to afford food, which showed meaningful improvement overall in 2014:

Source: Global food security index 2014 (EIU)

Source: Global Food Security Index 2014 (EIU)

1) The first is food consumption as a share of household expenditure, which attempts to capture the relative importance of food in household budgets. The lower the relative household expenditure on food, the easier it is for a household to respond to price increases and shocks. Accordingly, the best performers devoted less than 15% of total household expenditure to food, with the lowest rates in the US and Singapore (both 6.7%). By contrast, countries that received the lowest scores had figures of over 50%. Rwanda (71.7%) and Madagascar (71.8%) had the highest percentage of household expenditure on food. Unsurprisingly, the highest-ranked countries were generally in North America and Europe, while the lowest-ranked countries were in Sub-Saharan Africa and Asia & Pacific.

2) The second indicator examines the proportion of the population under the global poverty line, defined as those living on less than US$2 per day (measured at PPP exchange rates). Those below the poverty line have very limited resources and considerable difficulty purchasing food. Fifty-six countries, all high-income, were tied for first with 0% of the population under the global poverty line. This is in marked contrast to the bottom 20 countries, which had an average of 81% of their populations under the poverty line. These economies were largely in Sub-Saharan Africa, although India, Bangladesh, Uzbekistan and Haiti were in the bottom group. There was little year-on- year change in these figures; most countries either remained the same or improved by less than 2 percentage points. Most of these gains occurred among countries with the weakest scores. Only four countries experienced a decline in score, including the Democratic Republic of Congo, which fell to last place with 95.2% of its population in poverty.

3) Gross domestic product (GDP) per capita (at PPP exchange rates) provides insight into the relative wealth of a country and the ability of the average citizen to consume. Understandably, countries with higher GDP tend to have higher food security. Most countries experienced slight improvements in their GDP figures over the past year. Nonetheless, these gains could not prevent score declines in countries that were unable to keep up with the higher pace of growth in better- performing countries. Australia had the largest score improvement (2.8), followed by the US (2.0), while the United Arab Emirates (3.0) and Spain (2.8) saw their scores decline the most.

Although developed, Western countries continue to have the highest levels of food security and sub-Saharan African countries remain at the bottom of the rankings, the gap between the highest and lowest performers has narrowed. Food security is a priority for governments around the world and its as important that the gap reduces each year. Policies aimed at addressing climate change should consider including affordability and food security into their legislation in order to address a pressing issue as soon as possible.