Ching-Cheng Chang Institute of Economics, Academia Sinica

Dept of Agr Econ, National Taiwan University APEC Research Center for Typhoon and Society

Disaster Risk Management (II):

Food Security

1

Outlines

• Climate Risk o Monsoon o ENSO o Sea Level Rise (SLR)

• Implications for Food Security

• Adaptations o Options o Cases

• Conclusions

2

Background-1 • Natural hazards may well increase in both frequency and

intensity under projected climate change and their impacts

enhanced because of anthropogenic activities.

Source: EM-DAT: The OFDA/CRED International Disaster Database.

Background-2

• Agri-food system is prone to 2 types of climate risks:

o Climate change – Long-term shifts in mean values o Climate variability–

• Changes in temperature, wind fields, hydrological cycles, ... etc. at annual to decadal time scales

• May well increase both in frequency and intensity under projected climate change

• Induce secondary hazards which claim lives and incur large economic losses long after event passes.

• Impacts are enhanced because of anthropogenic activities

4

1. East-Asian Monsoon

• Observations since 1950s:

o Weakening of summer and winter monsoon

o Moving southward where both land and sea

surface temperature rise

• Examples o Thailand Flood, 2011 (684 death)

o Typhoon Sendong in southern Philippines,

2011 (>900 death, 70,000 families affected)

5

The 2-metre-high inundation has affected the Rangsit campus of Thammasat,

north of Bangkok.

The 2011 Thailand Flood

A United States Navy helicopter surveys flooded areas in the

outskirts of Bangkok.

Photos Source: Wikipedia website, the free encyclopedia (http://en.wikipedia.org/wiki/File:2011-10-24_Thammasat_University_Inundation_(006).jpg and

http://en.wikipedia.org/wiki/File:Helicopter_survey_of_flooding_in_suburban_Greater_Bangkok,_22_October_2011.jpg ).

2011 Thailand Flood Monthly rainfall from Jan-Oct Flooding area

• 18-67 mm of rainfall above normal since March, 2011

• Mostly in N.E. and Central provinces

Data Source: Thai Meteorological Department

Photo Source: Esri, http://www.esri.com/services/disaster-response/floods/index.html, Oct 2011. 7

Source: United States Department of Agriculture, Rice Yearbook 2011.

Thailand is the largest exporter of rice

8

Export volume of Thai rice, Jan. 2010- Nov. 2011

1,303,448

696,180

718,111

661,439

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000exp

ort v

olu

me (to

n)

month

Source: Office of Agricultural Economics, Thailand, Agricultural Statistics,. http://www.oae.go.th/oae_report/export_import/import.php

9

World Price: 1997~2011, Monthly (5% broken milled white Thai nominal quote)

Source: International Monetary Fund 10

2. El Niñ o Southern Oscillation (ENSO)

Risk

Enhance variability of precipitation and stream

flow

Lead to greater risk of droughts and floods

Examples:

1997-98 in Indonesia: caused substantial threat to

rural livelihood

2010-11 in Queensland: Flood

11

Schematic diagram of multi-scale interaction for heavy rainfall in Queensland during Dec. 2010

Reference

1. National Climate Centre, 2011. An extremely wet December leads to widespread flooding across eastern Australia. Special Climate Statement, 24.

2. Australian Government Bureau of Meteorology, http://www.bom.gov.au

3. Climate Prediction Center, National Oceanic and atmospheric administration, http://www.cpc.ncep.noaa.gov

12

Queensland Flood

Consequences on Agro-Food System

Physical Damages

Crops/Animals

Rural infrastructure/Logistics

Raised global raw commodity price

Wheat : • Australian export 60%-70% of annual production

to overseas markets (52 countries)

• World wheat indicator price (US hard red winter) rose to USD380/ton on 9 February 2011.

• The highest since June 2008. 13

International Grains Council Export Prices (Weekly, Updated: 14 Feb 2011)

14

3. Sea Level Rise (SLR)

• Long-term threat to agriculture

• Recent Projections by 2100

o Annual:

• Raper and Braithwaite (2006) project SLR caused by melting glaciers and icecaps will fall between 0.046 and 0.051 m

• Meier et al. (2007) estimate an additional 0.1 to 0.25 m. o Cumulative

• Rahmstorf (2007) projects a cumulative SLR of 0.5 to 1.4 m.

• Dasgupta et al. (2009) projects 1 to 3 m of rise but indicates as much as 5 m is possible if unexpected rapid breakup of Greenland ice cover and West Antarctic ice sheet occurs.

15

Impacts on Agricultural Land

• Inundate 0.39% to 2.10% of global cropland • Occurs in ag land in SE Asia, E Asia, S Asia, SE US

Constitutes a threat to rice

0

5

10

15

20

25

Bangladesh

Brazil

Central A

meric

a

China

East A

frica

Egypt

India

Indonesia

Japan

Korea D

PR

Korea R

ep

Mya

nmar

Oth

er Asia

Pakista

n

Philippin

es

Taiwan

Thailand

Vietn

amUSA

South A

meric

a

West

Afri

ca

%

5 meter

4 meter

3 meter

2 meter

1 meter

Source: Dasgupta et al. (2009). 16

Implications on Food Security-How to Measure?

Economic Model with Adaptation Options

Food price, Production, GDP, Social welfare

General Circulation Model (GCM) Statistical Model (Historical Data)

IPCC Scenarios (SRES)

Crop Yield Response Model

-- To Estimate Climate and Non-Climate Impacts

Example on SLR: Study by Chen, Chang and McCarl (2012) on agriculture in Taiwan

• Methodology

o Dual effects of

• SLR on cropland use

• Global warming on crop yields

o Partial-equilibrium agricultural sector model

• Simulation Results

o For SLR up to 5 meters

• Lose 5% of total crop acreage and 16% of rice acreage

• Economic damage ranges: NT$0.8~o 4.1 billions

o Adaptation options (Criteria: welfare offset)

• Farm level: Technological change

• Market level: Free trade

18

Adaptations—What Are the Options?

• A survey of options by R Barichello & B Gilmour

“Moving Beyond Market Volatility towards Agri-food System Resilience”, presented at 2011 PECC Agri and Food Policy Forum, Dec 1-2, 2011, Taipei

1. Adapt to increased volatility

2. Add resilience by increasing income

• Farm level

• Supply Chain

• Market/Policy level

19

Production Volatility

Price Volatility

Production & Price Volatility

Options –A Tool Box

o Farm Level:

• Diversification, insurance

• Add value to move away from raw product

• Adopt agricultural research

o Supply Chain level:

• Add value by moving up value chain

• Improve food research

• Invest in better infrastructure

• New distribution methods (network v.s. hub and spoke)

o Policy/Market level:

• Hedging options, price pooling,

• Food reserves

• Insurance tools

• Information (monitoring, early warning) 20

Farm Level

• Diversification--oldest risk mgmt tool o During price spikes, many would stay in their

commodity, preferring to capitalize on the high returns o Can include off-farm activities

• Add value--shift to high-valued products o Shifting downstream stabilizes farm returns o Higher incomes also provide a within-family buffer

• Adopt research findings on o Improved varieties, o input applications o management procedures

21

Supply Chain Level

• Increase value-added o business strategy for increasing profits and reducing risks

• Food manufacturing research o find substitutes for more scarce, price-volatile inputs o find new formulations to reduce cost squeeze

• Invest in better infrastructure or new distribution methods o generate higher incomes o better able to accommodate price volatility

• Hedging and insurance tools o allow off-loading of price

22

Market/Policy Level

• Hedging, Price pooling: o averaging prices across time period or spatial sales to

stabilize price variability

• Safety Net policies o Can take form of crop insurance, revenue insurance o Compared to price support: more flexible, less

commodity-specific, not as trade distorting o Question:

• Lack of producer support leads to higher subsidy levels, making it more costly

• may not be an option for most developing countries

23

Market /Policy Level

• Food Reserves

o Emergency Reserves

• For humanitarian uses only

• Modest size, 5% current food aid flows

o Strategic Reserves

• International Coordinated grain reserves,

• Regional or Country level reserves

o Questions:

• What are the optimal stock levels?

• How to implement and finance?

• Transparent governance structure that can release stocks at times of market stress only 24

Case Studies

• Farm-Supply Chain Response

• Country-Regional Response

25

Case Study 1- DouNan Farmers’ Association (FA)

Yunlin County DouNan Town

• Total Population: 47,000 • FA members: 9,107 • safety labeling system demo in

2003.

26

Business Weekly Cover’s Story

Business Weekly • 15 young farmers constitutes

the farming team

• Each can earn 3 million NTD

(100,000 USD) per year

27

Satellite System-1

• Concept: FA responsible for marketing and planning.

Farmer’s

Association

Process

Storage

Package

Market

Super market

Export

farmer farmer

farmer farmer

Custom

farming team

Marketing

Information

Products

Planning

28

Sales Group Farmers’ association (3 people)

Lease Land

Management Production Marketing

inform harvest

Manage Cultivate Sale

landlord

landlord

landlord

Domestic

Supermarkets

Foreign Market

1. Responsible for leasing farm land.

2. Monitoring crop growth

1. Till, fertilize, sow, harvest with mechanical power

2. Efficient soil conservation practices

1. Use cold chain to provide off-season products for better price

2. Direct marketing to reduce transaction costs

- Satellite System - 2

Tenant farmer Field Managers

(6 people)

Custom Farming Machinery operator (6 people)

29

Local Background

Potato

Others Beef

Sorghum

Rice

Cows: 380 heads

Value: NTD34,200,000

Area:150 ha

Value: NTD57,960,000

Area:35ha

Area:10ha

Value: NTD1,000,000 Area:450ha

Value: NTD162,000,000

Ist Crop 2nd. Crop

March-Jun Rice, Sorghum

July-Oct. Rice, Sorghum

Winter Crop

Nov.-Feb. Potato

30

DouNan FA’s Strategic Planning

Innovation need Investment in

o Hardware

1. Large Agricultural Machineries

2. Processing plant for post-harvest handling (washing, classifying, and storage) of tuber and root vegetables .

o Software

1. GAP and Produce Safety Labeling System

2. GIS Monitoring System

31

Reduce Agr Waste - Life Cycle Concept

Life Cycle

Recycle crop

and animal

wastes as

organic

fertilizer and

feed

Local feed and beef production to substitute import

1. Convert idled land into specialized production zone to reduce import

2. Convert rice production to upland crop to save water and prevent land subsidence

Organic

Fertilizer and

feed

Crop

Production

Iivestock

husbandry

32

Custom Farming Team in DouNan

33

34

Tractors

Purchased from

the U.S.

Modified and

adjusted by

Farmer’s

Association

35

Carrot Seeding

Average

Labor:Acre = 1：1

36

Carrot Seeding

DouNan

Labor:Acre = 1：1

37

Potato Seeding

Average

Labor : Acre = 20-25:2

38

Potato Seeding

DouNan

Labor:Acre = 5：3

39

Pesticide spraying

Average

Labor:Acre = 5：5

40

Pesticide spraying

DouNan

Labor:Acre = 2：8

Machine purchased from Japan

41

Cultivation

Average

Labor:Acre = 1：0.7

42

Raising Soil

DouNan

Labor:Acre = 1：3

43

44

Frozen Storage

• 50% of potato

harvested are

stored in freezer

waiting for better

prices

• Manager control

the whole system

on smart phone

or computer

45

RFID system

• All relevant data

of potato are

saved in a small

chip (for each

group of potato)

• It help manager

to understand

and control

inventory better

46

Carrot Washing Carrot Classification

• Process either carrot or potato

•Machine: purchased from New Zealand (for processing kiwi fruits)

•Agent: Korean company (also the provider of the electronic control panel)

47

Monitoring room

Packaging

Invest in field monitoring software -GIS

• Displaying and integrating the data at different levels.

• Directly perceived, easy to use

• Combing with GPS locational coordinates

Land Information

Crop Information

Plot Numbering

Information

48

GAP produce-safety labeling system

Know the position by

searching land section

and plot number.

Divide types of

crops by colors.

Carrots

Potatoes

49

Marketing Contract with Large Retailers

50

Case Study 2- Country-Regional Policy Response

51

Food Security in Taiwan-1

0

5

10

15

20

25

30

35

40

45

50

1962 1968 1974 1980 1986 1992 1998 2004 2010

%

Year

Proportion of GDP from Agricultural Sector and Industrial Sector

Agri-sector Industrial Sector

• GDP share from agriculture is below 2.5% • Food self-sufficient ratio dropped to 32%

52

Food Security in Taiwan-2

• Small Scale farming Low Farm Income o Can not achieve economies of scale on small and

fragmented farms. o Per capita farm income is only 70% of non-farm.

< 1.0 ha 1.0-2.0 ha 2.0-3.0 ha 3.0-5.0 ha 5-10 ha 10 ha >

No of farms

562,415 117,884 32,849 18,511 6,885 1,672

% in total

76.0% 15.9% 4.4% 2.5% 0.9% 0.2%

53

Food Security in Taiwan -3

• Aging Farm Population: – Average age of farmers is 61. – 46% of farm population is above 55 yr old

Total 15-24 25-34 35-44 45-54 55-64 65 ~

Farm Population (1000 person) 533 9 43 91 142 158 89

% in total 100% 1.69% 8.07% 17.07% 26.64% 29.64% 16.70%

55 and above 46.34％

54

55

Food Security in Taiwan -4

• Natural disasters are on the rise in the recent years

Landslide Flood

Case of BULOG

• Major STE in Indonesia, from 1970s to mid 1990s

• Government procurement price as a standard price to buy from farmer during the peak of harvest season

• procure about 7% of the total production

• Distribute rice at subsidized price to the poor family

• Conduct market intervention using available stock.

• Question: Mixed reputation

• partly for corruption

• partly for its market effects and costs

56

57

Regional Issues- Rising Natural Disasters but Less Food Aids

World Food Program (WFP) reveals that the volume of global food aids deliveries has decreased in the past years, despite a growing need of emergency food aids.

Several of WFP’s projects could face a break in food supplies because of low funding or spiked food price led to food aid shortage.

58

“…the importance of social protection measures such as

safety nets and other policies that protect the most

vulnerable from shocks such as natural disasters.

In this context, we agreed to examine the feasibility of

establishing cooperative approaches to address emergency

food needs.”

2010 APEC Niigata Declaration on APEC Food Security

59

APEC Food Emergency Response Mechanism (AFERM)

To address a state where a member economy suffers from natural calamities and is unable to cope with its own food stocks

Taiwan proposal under the principle of voluntary contribution, collective action, risk-sharing and self-management.

60

AFERM Information

System

1. Data Collection & Analysis

2. Emergency Assessment

Network of Virtual Emergency Food Stocks 1. Earmarked 2. Self-managed 3. Fully-granted form

Collective Action; Mutual-assistance;

Risk-sharing;

AFERM Steering Committee

AFERM Secretariat

1. Decision-making & operation 2. Coordination with NGOs, donors, and recipients

Functional Concept of the AFERM

Operational Procedures

61

Request Recipient economies

AFERM Steering Committee

Donating Economies

Release

Deliver by humanitarian groups

DISASTER

AFERM Secretariat

Notify

Coordinate

63

• The SC hold an e-conference and check the AFERM information system to determine the amount of rice available in the nearest donating economy

• If necessary, trans-Pacific economies will also donate

64

• Humanitarian groups of the donating economy A ship

the food aids to the airport in city Y of economy X.

65

• A government agency of Economy X and a NGO

load the food aids into trucks and deliver to a

staging point for distribution.

Case of ASEAN Integrated Food Security Framework (AIFS)

Strategic Plan of Actions (agreed and approved)

1 Reserve: strengthen food security by establishing ASEAN Plus Three Emergency Rice Reserve

2 Trade: implementing the ASEAN Trade in Goods Agreement in food products

3 Information: reinforcing ASEAN Food Security Information System

4 Production enhancement: knowledge and technology, climate change adaptation

Source: RS Natawidjaja, “Rice Price Instability: Impact on Agrifood Chains with Indonesian Perspective”, presented at 2011 PECC Agricultural and Food Policy Forum, Dec 1-2, 2011, Taipei

Commitment

ASEAN 87,000 t

Japan 250,000 t

Korea 150,000 t

PRC 300,000 t

Total 787,000 t

EAERR Delivery (2004-)

Cambodia 434 t

Indonesia 286 t

Lao PDR 20 t

Myanmar 320t

Philippines 1,445 t

APTERR Earmarked

stock

Stockpile

APTERR: ASEAN+3 Emergency Rice Reserve

Source: RS Natawidjaja, “Rice Price Instability: Impact on Agrifood Chains with Indonesian Perspective”, presented at 2011 PECC Agricultural and Food Policy Forum, Dec 1-2, 2011, Taipei

Conclusions

• Great variety of options to make ag-food system more

resilient to climate risks

• Many components should included o Private actors as well as Public policy

o National effort or with International cooperation and

coordination

o Risk reducing/sharing as well as income/efficiency

enhancing measures

• Most policies require careful, critical appraisal

before being accepted

• Need analytical tools

• Need to collect information

How to deploy and use them adequately and effectively? 68

Future Research

Take into account uncertainties in

Scientific Info (Hazard, Exposure)

– Climatologically/meteorological dynamics – Climate simulation modeling – Downscaling method/local impact – Future development scenarios

Human Behavior (Vulnerability)

Decision-making process “Life is a chance”

Government Actions

• How costly they are • Decision-making process • Institutional failure

69

Q&A

70