There are different ways for governments to respond to rising food prices. Many of these measures will be costly, implying that some groups in society will be gaining whereas others will be losing out. Some of these costs and resulting trade-offs may be avoided by focusing on measures that reduce inefficiencies, particularly losses and waste occurring in the various stages of the food supply chain from farm to fork.
LEI investigates this issue in the Middle East and North Africa (MENA) region, where rising food prices in the end of 2010 sparked a wave of civilian protests and subsequent demands for democratic reforms, known as Arab Spring.
Using LEI’s global economic simulation model MAGNET, LEI finds that agricultural growth by tackling food losses in MENA outperforms manufacturing and service-led growth when it comes to food security of the wider population. Specifically, food prices and rural poverty fall by more and the dependence on food imports from the world market falls rather than rises. Whereas efficiency gains in agriculture cause a fall in demand for agricultural labour, this strategy avoids fiscal consequences of tax or subsidy policies. Costs associated with measures to reduce food losses may counteract beneficial impacts and should be avoided as much as possible. Measures that may not be that costly include improving skills and knowledge of farmers leading to improved farming practices regarding the planting, growing and harvesting of crops.