4 results
13 - What are grain reserves worth? A generalised political economy framework
- from PART 3 - POLITICAL ECONOMY
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- By C. Peter Timmer, Harvard University
- Edited by Prema-Chandra Athukorala, Arianto A. Patunru, Budy P. Resosudarmo
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- Book:
- Trade, Development, and Political Economy in East Asia
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 19 May 2017
- Print publication:
- 14 November 2014, pp 235-248
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Summary
What explains volatility in world food prices? Are the ‘fundamentals’ of supply and demand the basic factors? Can national or international policies towards food grain reserves help to stabilise food prices? What are food stocks ‘worth’ if the levels of grain reserves, especially in large countries, affect food trade policies in these countries? This effect would be the reverse of the usual causation where policies can directly affect the levels of both public and private stocks.
There are four basic ways the economics profession thinks about these questions.
The first is second nature to economists, who use basic supply and demand models as the fundamental explanation of price formation. The ‘fundamentals’ approach uses these models to generate an equilibrium price, where the global level of stocks is an exogenous factor that influences the probability of a price spike when there are shocks to supply or demand. A number of well-calibrated models using this structure are used routinely, especially by international research centres such as the Food and Agriculture Organization (FAO), the Food and Agricultural Policy Research Institute (FAPRI), and the International Food Policy Research Institute (IFPRI) to understand the impact of changing trends in supply and demand, and shocks, to food prices.
The second approach explicitly introduces the storability of the commodity into price formation. The supply of the storage model brings in expectations and makes stock levels endogenous with price formation. To be empirically useful, however, reasonably accurate and timely data on levels of stocks held by commercial trade are critical. These models have a long history, but the standard reference remains Williams and Wright (1991). A modern application with important implications for the role of biofuels in food price formation is Roberts and Schlenker (2013).
The third approach recognises that such stock data are often not available for commodities where individuals and small firms hold a major share of stocks between harvest and consumption, a factor that is especially important for the world rice market (Timmer 2009b). To cope with this reality of the industrial organisation of some commodity markets, a behavioural model adds hoarding by individuals, with levels of stocks in the hands of these agents largely unobserved but important for short-run price formation. In this approach, ‘non-traditional speculation’ in financial and commodities markets can also impact price formation without having a visible impact on measured stock levels (Timmer 2012).
Foreword
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- By Professor C. Peter Timmer, Harvard University
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- Book:
- Poverty and Global Recession in Southeast Asia
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 30 November 2011, pp xix-xxiv
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Summary
This volume deals with poverty and food security, two themes related to my own work over the past several decades, the impact of food price volatility on the poor, and the role of structural transformation as a pathway out of rural poverty. This foreword is designed to illustrate the links between these two topics and to highlight several of the important findings in the chapters that follow. To do this it is useful to put poverty and food security into a historical perspective using the structural transformation as a framework. Historically, structural transformation has been the only sustainable pathway out of rural poverty. It is a general equilibrium process, intimately linked to what is going on in the rest of the economy (Timmer 2009). As Chairman Mao once put it, “the only way out for agriculture is industry”.
There are four basic patterns to a successful structural transformation and these have been remarkably uniform:
(1) A declining share of agriculture in value added in the economy (share of GDP) and employment (share of the labour force). Because labour productivity starts out lower in agriculture than outside, there is a gap between the share of agriculture in GDP and in employment, a gap which is gradually eliminated as agriculture is integrated into the rest of the economy. However, recent experience shows this gap often widens before it starts to narrow.
(2) A commensurate rise in the share of urban/industrial/modern service activities. (3) Migration of rural workers to urban settings to allow this transformation to take place.
(3) A demographic transition with rapidly falling mortality rates, slowly falling fertility rates, and a subsequent period of rapid population growth, which offers a “demographic bonus” when dependency rates drop to low levels for several decades.
The basic cause and effect of the structural transformation is rising productivity of agricultural labour. There are three basic ways to raise labour productivity in agriculture:
(1) Through higher prices for agricultural output (make it worth more in real economic terms, which may well be happening in the current economic era).
(2) Use of new technology to produce more output for a given amount of labour.
(3) The migration of agricultural workers to other occupations with higher productivity, without lowering farm output (the classic Lewis model of development).
12 - The Supermarket Revolution with Asian Characteristics
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- By Thomas Reardon, Michigan State University, C. Peter Timmer, Center for Global Development, USA
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- Book:
- Reasserting the Rural Development Agenda
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 04 July 2007, pp 369-394
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Summary
Introduction
The world has been fascinated by the extremely rapid growth of trade and industrialisation in the Asian region over the past several decades. The demand and supply, i.e., the imports and exports, of this vast region affect global food markets. Much attention has been paid to the domestic food markets of the region, in particular the supply-side transformation wrought in the 1960s/1970s by the Green Revolution.
However, a new wave of profound transformation has been occurring in the 1990s/2000s, this time from the demand side, sparked by a relatively sudden and massive evolution of the retail sector. A supermarket1 revolution has swept much of the emerging-market areas of the Asian-Pacific region – – i.e., East Asia (excluding Japan) and Southeast Asia — and is brewing now in South Asia. Supermarkets have been traditionally viewed by development economists, policymakers, and practitioners as the rich world's place to shop. But supermarkets have ceased to be the exclusive domain of rich consumers in the capital cities of Asia. The rapid rise of supermarkets in Asia (and elsewhere in the developing world) in the past five to ten years has transformed food markets — at different rates and depths across regions and countries.
This retail transformation is, in turn, transforming other segments of food markets such as the wholesale, processing, and farming sectors. The changes are “privatizing” the food system, “integrating” a formerly highly decentralised and fragmented market, and “globalizing” and “regionalising” the food system of Asia, thereby bringing competition from national, regional, and global actors into all segments of the food system. Such profound change in domestic markets has development and trade implications.
This chapter treats these changes and presents emerging evidence and hypotheses concerning their implications. We focus, in particular, on one aspect of the food industry transformation in Asia — the rise of supermarkets and its implications for small farmer development. We start by discussing the patterns in the spread of supermarkets in Asia. We then present the changes in the procurement systems of supermarket chains and their relation to the overall transformation of all the three segments of the food industry. We also explore the market-condition implications of the change in the downstream portion of the food system for small farmers. We conclude with policy and research implications.
6 - Food Policy in East Timor: Linking Agriculture, Economic Growth and Poverty Alleviation to Achieve Food Security
- from PART IV - Agriculture and the Rural Economy
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- By C. Peter Timmer, University of California
- Edited by Hal Hill, Joao M. Saldanha
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- Book:
- East Timor
- Published by:
- ISEAS–Yusof Ishak Institute
- Published online:
- 21 October 2015
- Print publication:
- 30 August 2001, pp 99-109
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Summary
No country can survive for long without reasonable guarantees of food security for the vast majority of the population, and East Timor is no exception. There are multiple ways of achieving food security, but a guarantee of stable food supplies in urban markets is a quite separate concept – and governmental task – from guaranteeing that each household has adequate access to food, even in rural areas. Stabilizing market supplies requires little more than a competent government with reasonable access to foreign exchange. Ending hunger at the household level requires the elimination of poverty, which even the most effective government can only hope to accomplish over decades or generations. Integrating these two tasks and coping with the vastly different time horizons involved is one of the central roles of government. This effort will define its approach to food policy.
FOOD POLICY AND FOOD SECURITY
The links connecting food policy, food security and the role of government depend to a high degree on the nature of the economy and the set of institutions embedded in the society and political economy. From this perspective, East Timor faces an extraordinary challenge. The conclusion of the Joint Assessment Mission to East Timor sponsored by the World Bank in 1999 emphasized both the difficulties and the importance of these linkages:
Defining priorities amongst so much destruction is a difficult task. Yet two areas stand out as requiring urgent attention if East Timor's economy and society are not to flounder.
51. The first is agriculture. Without agricultural recovery, East Timor's population will remain dependent on food aid for some time to come. Aside from causing immediate suffering, this may also produce long-term economic distortions in the shape of irreversible rural-urban migration, and a culture of dependency amongst rural households …
52. The second urgent priority is to reconstitute capacity in the state. This is critical to prevent a situation of complete laissez-faire caused by the absence of civil regulations, taxation, dispute-resolution mechanisms and non-military law and order functions. It is also a key pre-requisite to the sustainability of developmental initiatives in the longer-term (World Bank 1999d: 15).
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