Trade Liberalization and Food Security

Kym  Anderson,

Trade Liberalization and Food Security

Abstract:

Food security in a macro, global sense has never been greater. Yet, despite the improvement in food availability in recent decades, there are still large numbers of people undernourished in Asia and elsewhere. Furthermore, even well-nourished people sometimes feel "food-insecure" if their country is becoming more food import dependent or (even if a food exporter) is facing greater supply uncertainty and fluctuating food prices. Trade liberalization at home and/or abroad is often perceived to contribute to these apparent indicators of food insecurity. In particular, civil society groups in both rich and poor countries worry that efforts by World Trade Organization (WTO) to liberalize agricultural trade may be raising the mean and variance of the price of food, and that it may be restricting the freedom of national governments to pursue policies that reduce perceived food insecurity. The civil society groups also fear that industrialization in large reforming economies such as China and India, and the imminent accession of China to the WTO will force up food prices in international markets. This paper seeks to address these and related concerns. It does so by first exploring the relevance of various indicators of food security. While acknowledging that the most populous countries worry if domestic production falls short of consumption the paper suggests that the most reliable indicator of improvement in food security is the rate of poverty alleviation. Before examining how poverty and thereby food security is affected by trade reform, the paper summarizes the contributions of forces like economic growth and structural change to domestic food production and poverty alleviation. From here, the impact of trade liberalization is examined as projected by the global economic model. The results are not definitive, but they are not inconsistent with the notion that food security can be enhanced by trade liberalization. The final section of the paper suggests that if some domestic policy measures are accompanied by trade reform, the perceived food insecurity is more likely to be reduced.