“Affordable” Food Panel

Oct. 1, 2013

“International Food Systems: Affordability” C. Jerry Nelson, Professor Emeritus of Plant Sciences Office: 109 Curtis Hall Phone:(573) 882-2802 email: [email protected]

Affordable food:

Food that is available and priced so it is consistent with household income as affected by cultural and social factors. As incomes increase there is greater demand for: - animal products (meat, milk) - higher quality products (processed, taste)

International dimension:

Depends on whether or not the person/family lives on a farm or in an urban area.

Subsistence farmer:

Cost is mainly for seed and minimal inputs with little consideration of land and labor costs. Farm size is small. Even though most staple food is grown on the farm, some is purchased or bartered locally to balance diets and have food year round.

Non-farmer (urban):

Cost is higher than for the subsistence farmer since price includes labor and other production costs plus middleman, transport and storage costs. So overall, food costs are higher in urban areas than for the subsistence farmer.

Subsistence agriculture is not efficient or sustainable 1. Compare Kenya, Vietnam and North Korea 2. Ratio of rural income to urban incomes 3. What criteria to compare?

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Education level of rural people Access to technology Infrastructure (education, loans, markets) Birth rate Incentives to increase production

Comparative Analysis Among Countries Country Kenya Vietnam North Korea Government/Economy 1 Cap/Cap Soc/Cap Soc/Soc Foreign Investment (jobs) Low Medium Very little Land ownership/expansion Low High Not option Education level of rural people Low Medium Low Access to technology Low High Low Infrastructure (loans, markets) Poor Good Fixed Children per family 3-5 1-2 1-2 Incentives to increase production Low Good Very Low Gross National Product (GNP) Low Medium Very Low Access to food for rural pop Medium High Medium Access to food for urban pop Medium High Low 1 Cap=capitalistic, Soc=socialistic

Summary of Main Points 1. Affordability is different within the population 2. Policies relative to government are strong influence Policies on land tenure/ownership

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Loans for input costs Market and distribution structure 3. Education is critical for affordability 4. Not universal in what to improve (country specific) - Need to carefully evaluate each situation - Develop specific strategies to achieve solutions

C. Jerry Nelson, Professor Emeritus of Plant Sciences Office: 109 Curtis Hall Phone:(573) 882-2802 email: [email protected]

Dr. Scott Brown Division of Applied Social Sciences College of Agriculture, Food and Natural Resources [email protected]

Website: amap.missouri.edu

In the discipline of economics, “affordable” food means . . .

Food affordability measures the ability of consumers to purchase food, their vulnerability to price shocks, and the presence of programs and policies to support consumers when shocks occur. The Global Food Security Index The Economist Intelligence Unit

Affordability Defined by the Global Food Security Index 1) AFFORDABILITY 1.1) Food consumption as a share of household expenditure 1.2) Proportion of population under global poverty line 1.3) Gross domestic product per capita (PPP) 1.4) Agricultural import tariffs 1.5) Presence of food safety net programs 1.6) Access to financing for farmers 2.75 22.2% 2.5 20.2% 2.75 22.2% 1.25 10.1% 1.75 14.1% 1.375 11.1% ||||||||||| |||||||||| ||||||||||| ||||| ||||||| |||||

Global Food Affordability And Percentage of Food Consumption Relative to Household Expenditures - 2013 Source: The Global Food Security Index

Undernourishment is strongly associated with a low food security ranking - 2013 Source: The Global Food Security Index

Wide Range of U.S. Production Alternatives Emerging

Commodity Production

Driven by large economies of scale No direct link between producers and consumers May have other externalities

Local Production

A more direct link between producers and consumers Usually smaller so there are fewer economies of scale How does consumer utility compare between these alternatives?

How do these production alternatives affect global affordable food outcomes?

Do these different production methods coexist?

Comparison of Local Versus Commodity Beef

Comparison of Washington, DC Area Milk Chains 1Mainstream chain revenue allocations are calculated from the Virginia State Milk Commission Presumed Costs reports, Eastern Market, for plastic half-gallon 100+ cases. Estimates are based on 3-month averages from September November, 2009. These reports do not specifically identify revenue allocations for the Maryland and Virginia Cooperative or its retail customers and are representative of the milk industry in the DC area in general.

2Revenue shares calculated for Trickling Springs milk sold as MOM’s private-label milk. Trickling Springs-labeled glass bottles add $0.30 per half gallon to the retail value, which accrues solely to the retail stores.

3Mainstream: Based on September-November 3-month average class 1 price announcement for Federal Milk Order Number 1, Frederick, MD/New Holland, PA ($14.95/cwt). Direct: the dairy farm also operates as the processor.

4Includes the estimated portion of producer revenue attributed to costs of processing and home delivery. Total per unit revenue for the producer is 1.22+2.03 = 3.25 ($/half gal.).

5Calculated as the difference between raw product costs in the VA Presumed Costs reports and the class 1 price announcement (i.e., producer revenue). Includes revenue that may accrue to the cooperative or third-party milk haulers.

6Mainstream: Calculated as the difference between wholesale delivered costs and raw product costs from the VA Presumed Costs reports. Includes revenues attributable to delivery to the retail stores. Intermediated: Trickling Springs operates as both the processor and distributor to retail stores.

7Mainstream: Median retail price of half-gallons from January to December, 2009. Direct: Half-gallon prices listed on the South Mountain website as of December 2009. Intermediated: Median retail price of half-gallons from January to December, 2009.

Review of Main Points

• • • • • Food affordability definition differs around the world Economies of scale important drivers to large commodity production systems Local or hybrid systems provide food alternatives Feeding a growing global population requires technology Identifying externalities may give a “true” picture of food affordability

Dr. Scott Brown Division of Applied Social Sciences College of Agriculture, Food and Natural Resources [email protected]

Website: amap.missouri.edu

Charlie Hopper, Marketing Specialist Missouri Department of Agriculture 1616 Missouri Boulevard Jefferson City, Missouri 65109 Phone: (573) 522-4170 Fax: (573) 751-2868

Economy

(the whole)

Resources Ecology Community Economics (the transactions) $

Total Economy

The Laws of Economy and Nature The Conservation of Energy

-cannot be created or destroyed -changes in form (kinetic, potential) -can be removed from life cycle

The Conservation of Matter

-cannot be created or destroyed -changes in form (solid, liquid, gas) can be removed from the life cycle

The Necessity of Agents of Change

-form cannot change on its own

The Law of Action and Reaction

-for every action there is an equal and opposite reaction

Energy

“The Earth’s Economy” Carbon Cycle

Fossil fuel emissions Photosynthesis Animal Respiration Plant Waste Animal waste Decay / Mycorrhizee Organic Carbon Plant Respiration Fossil is mined when production exceeds Root Respiration consumption Excess organic carbon is banked as fossil fuel

Agriculture is the stewardship of the earth’s economy.

Energy

Cost

(What you give up)

Cost vs. Price

•Money •Time •Resources •Ecological •Community

Price

(What you pay)

Both are Absolute.

(Cost > Price = Deficit Spending)

What is value?

Values are the personal principles that determine what cost you will incur for the price you pay.

Extrinsic Supply Want Personal Intrinsic Demand Need Social Values are Subjective.

(what you will)

Food is Energy

Fossil Fuel Human Fuel 10 Calories In 1 Calorie Out

Peak Energy

Energy Stored in Matter

Annual Cost of Erosion Losing 10X faster than it is replaced 37,000 square miles of cropland 37.6 billion dollars in production Kansas loses 2” of topsoil per winter When matter is lost Energy is lost: E = MC2

Agriculture Economic Trends Since 1960

Percentage of Income Spent on Food Percentage of Retail Dollar to Farmer Percentage of On-Farm Income Total Farm Employment Total Farm Population Total Rural Population Percentage of All Jobs, Manufacturing Percentage of All Jobs, Service Production Expenses Farm Debt Household Debt 50% 50% 75% 95% 90% 50% 75% 50% 80% 70% 100%

Wendell Berry

“Eating is an Agricultural Act”

Agents of Change What makes you different?

With Reason Comes Understanding With Understanding, Responsibility

Be the change you wish to see in the world.

Charlie Hopper, Marketing Specialist Missouri Department of Agriculture 1616 Missouri Boulevard Jefferson City, Missouri 65109 Phone: (573) 522-4170 Fax: (573) 751-2868

Food Affordability

Sandy Rikoon [email protected]

Interdisciplinary Center for Food Security http://foodsecurity.missouri.edu

FOOD AFFORDABILITY (FA):

THE ABILITY OF A HOUSEHOLD TO PURCHASE THE FOOD NECESSARY TO MAINTAIN FOOD SECURITY.

• • • •

5-MINUTE AGENDA: How we measure FA Why should we care?

FA and food security Objective measure, subjective impacts

FA MEASURE (2013 HUNGER ATLAS): The percent of household income necessary to purchase 21 meals per household member --meal costs per person --median household income per person

Is food affordability a sufficient predictor of food security?

Other factors often influence the ability of households to make required purchases

Current research from Michelle Kaiser (Ohio State University) and Annie Cafer (University of Missouri) using Missouri Huger Atlas data and other measures

How much food does the household need to purchase with its funds ?

For households, the amount of SNAP benefits is critical

Can the household devote sufficient resources to food purchases?

Many households face tradeoffs between food and rent, utilities, health care costs, and transportation

Is the cost of food the only component of the food budget?

Available transportation Location of food sources

Take home Message

Food affordability is complicated by the household context It is not simply the cost of food, but the ability of households to devote resources to food and the diversity of food sources used by the household

Food Affordability

Sandy Rikoon [email protected]

Interdisciplinary Center for Food Security http://foodsecurity.missouri.edu

Debi Kelly Extension Associate and MO SARE Co-coordinator 234 Agriculture Engineering Building Columbia MO 65211-5900 573-882-1905 [email protected]

In the discipline of Sustainable Agriculture, “affordable” food means . . .

the farmer who grows/raises food receives a fair salary for the work they do; that they are able to live on the land comfortably.

• Work Perspective: How food is grown/raised – – – Economically viable Environmentally safe Socially acceptable

• Personal Perspective: How I prefer to feed my family – – – – – Fits my pocketbook Knowledge of food systems “Real” food Healthy and taste good Local

Review of Main Points

• • • Food needs to be grown/raised with the environment and social responsibility in mind Farmers are paid an acceptable salary Consumers pay an adequate price

Debi Kelly Extension Associate and MO SARE Co-coordinator 234 Agriculture Engineering Building Columbia MO 65211-5900 573-882-1905 [email protected]

Contact

Donna Mehrle, MPH, RD, LD MU Food Systems Network Co-coordinator [email protected]

Or Mary Hendrickson, PhD MU Food Systems Network Co-coordinator [email protected]