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Working Paper No. 01/2011, Brussels Zahrnt, Valentine (2011)

While concerns for food insecurity in EU that underlines the CAP are largely unfounded, enhanced agricultural research, conservation of the environment and support to developing country agriculture are more appropriate for fighting global hunger.

The global food crisis between 2006 and 2008, when food prices reached astronomical levels, has rekindled concerns about food security globally, including the developed world. This is amply illustrated by the fact that recently the Common Agricultural Policy (CAP) of the European Union has put its major thrust on food security in the European region in future. The proposed reforms in the post 2013 CAP for the multi-annual budget framework for 2014 to 2020 is adopting a long-term food security goal. Based on this understanding, greater protection to European farmers in terms of farm incomes, subsidies and tariffs are included in the draft CAP by the EU.
           
Zahrnt in his paper critically examines the issues related to the upcoming CAP reforms, including the rationale of making food security in EU region a basic premise of agricultural policy. The author precisely deals with three questions in relation to the CAP. First, he examines to what extent there is the possibility of food security in EU being endangered, including in extra-ordinary situations. Secondly, the author tries to locate appropriate policy instruments that can preserve food security in the region in the longer term. Finally, the paper assesses the ways in which EU can contribute to ensuring food security in the developing world, where hunger is a more generic problem presently. The study uses secondary data and a qualitative analysis of the literature on the subject to delve into these various important issues.
           
The author contends that as per the scientific definition of food insecurity, the EU is well above the recommended threshold energy intakes required for food security. The Minimum Energy Dietary Requirements (MDER) estimated by the FAO for enumerating a person as not hungry is less than 2000 Kcal per day per person, while the recommended per day per person energy intakes for a healthy life is 2000 Kcal for women and 2500 Kcal for men. The author points out that the 2007 average food energy supplies and intakes for a person in EU was 3466 Kcal per day, far above the threshold norms. The high income levels in the EU are primarily responsible for this high nutritional intake.

In fact, food expenditures constituted only 12.8 percent of total household expenditure in EU-27 and even a drastic rise in prices, say doubling of food prices, will not lead to any food insecurity but probably cause a cut-down in consumption of luxury food and non-food items. The author argues that while EU faces no food insecurity in the short and medium-term, there might be long-term food security concerns in extra-ordinary situations. In this regard, it is important to note that the per capita food grains output has increased steadily from 1.6 tons in 1961 to over 2 tons in 2005. The stagnation in per capita food production in recent years have been more due to land-set-aside policy based on environmental concerns and partially due to some reduction in tariffs, which were initially quite high for the regions. In case there is any serious decline in production due to natural factors or catastrophes, EU can still bring in set-aside land into production or shift land being used for producing bio-fuels and livestock production to cereal production and compensate the trends.

In terms of food imports, EU is not strictly dependent on imports for maintaining food security but is self-sufficient in terms of production of food staples. The agricultural imports items for EU are more of a luxury nature like tea, coffee, lobsters, etc. Even in case there is some shortfall in staples production, the author strongly argues that competitive food import markets can be effectively used to cover that shortfall. He reasons that food import markets are neither volatile nor do they require large investments, say in pipelines like for oil markets, for functioning properly.

In this respect, one feels that the author is overlooking some of the recent volatility of food prices, particularly due to speculation in commodity futures markets and also due to the new-found strong linkages that have emerged between oil and food prices, post the diversion of cereals and edible oils to bio-fuels production. The volatility in food markets is probably set to be of a different scale from what has been experienced by the world till now.

Finally, the paper puts forth the proposition that farm income support and market price support provided to EU farmers are inefficient precisely because these measures create large distortions to the cost of cultivation and promote production that is inefficient in terms of input-use; rather a more positive contribution by the EU in the realm of food security can be to invest in food production in poor developing countries where hunger is an integral part of society. The author concludes that higher food production with increasing productivity in the developing and less developed world can be much more effective in eradicating global hunger than through protection to EU farmers through higher income support.

Essentially, the conclusion from the assessment of global and EU food insecurity is that given the fortified food security situation in the EU, the sizeable price protection given to EU farmers boosts inefficient agricultural production. In contrast, a rejuvenation of food and agricultural production in the developing world can generate income in the hands of poor Third World farmers and address the problem of global hunger more suitably.