Adequate income is key to food security

M.A.P. Insights
Rolando T. Dy

Posted on December 22, 2015

Income adequacy is primordial to food security in developing countries. As consumers move to middle and high income, their choices expand to include food quality.

The high proportion of food spending makes the poor highly vulnerable to spikes in food prices. This was evident during the first half of 2014 when delayed rice imports caused rice prices to increase. Poverty incidence likewise rose to 25.8% from 24.6% in the first semesters of 2014 and 2013.

The National Economic and Development Authority attributed the higher poverty incidence to the spike in rice prices which rose 11.9% in the first semester of 2014 from only 1.7% in the first half of 2013. This was especially due to the delay in rice imports. It is evident that among the poor, price spikes can increase poverty incidence. The poor have a thin income buffer, unlike the rich.

In the recent Global Food Security Index (GFSI) based on the metrics of affordability, availability and food quality, the Philippines ranked 72nd out of 109 countries. Singapore, which imports 90% or more of its food supply, ranked 2nd. Similarly, Malaysia, which imports 35% of its rice, landed at 34th place.

Rice exporters did not fare better: Thailand ranked 52nd, Vietnam 65th, India 68th, Pakistan 77th, Cambodia 78th, and Myanmar 98th among the 109 countries (Economist Intelligence Unit and DuPont, foodsecurityindex.eiu.com).

A study of 30 low to high-income countries in Asia and Latin America showed a correlation coefficient of 0.82 between GFSI and per capita income.

Food spending generally declines as income increases. The average Filipino household earned P235,000 in 2012. It spent P83,000, some 42.8% of total spending (P193,000) on food, but the poor (the lower 20% of families) spent more at 62.3% as compared to 34.9% for the upper 20%.

In Singapore, a high-income country, food spending accounts for only 11% of total spending. During a 2012-2013 survey, of the average household income of S$10,503 per month, only 11.4% (S$1,188) was spent on food. Malaysians spent 2,190 ringgit a month in 2010, with about 24% going to food. (Exchange rate: S$1 = P33; 1 ringgit = P14).

Addressing the supply and quality issues are important but they are only second to the income issue. On food availability, supply must become efficient, driven by farm productivity, better logistics and reduction in food wastage to enhance availability and increase rural incomes.

Philippine farm yield is lowest in the Association of Southeast Asian Nations (ASEAN), which not only affects food supply but more so, farm income. Around 20 million of the nearly 26 million poor in the Philippines are directly and indirectly dependent on farming. Rural poverty at nearly 40% of rural folks is highest in the ASEAN.

Food waste is a factor. Globally, food loss is about 30% of the food supply. In 2014, the United Nations pledged to reduce by half the amount of food wasted by 2030. To curtail food waste in lower- and middle-income countries, the priority is to improve infrastructure so food does not begin to spoil while being shipped from farms to its final destinations. Recovering food that would otherwise be wasted is generally a win-win for food security and waste prevention (Roni Neff, 2015).

Growth in gross domestic product alone is not enough. Growth must benefit the poorer class. Inclusive growth is a humane strategy. Given the preponderance of the poor in the rural sector, agriculture and agro-industrial development is sacrosanct. Are the presidentiables listening? Or is it more of the same as the past presidents?

To prime inclusive rural growth, investments are needed. For investments to flow, policies must be reformed, the management nexus (national government-local government units) must be revisited, and market-farmers-fishers-driven budgeting must prevail. Development must close the poverty gap. More of the same polices and programs will not solve abject poverty and therefore, food insecurity. What good is plenty of food supply if the poor have little purchasing power? Productive farms and jobs that bring incomes to the table are key to food security.

(The article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the M.A.P.)

Rolando T. Dy is the Vice Chair of the M.A.P. AgriBusiness and Countryside Development Committee, and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.