4 Food security developments

The issue of food security is important for the Peruvian authorities. Undernourishment exists in Peru, measured by the deficit between food availability and total requirement for some population groups. Although the issue is not identical with food self-sufficiency, development of the agricultural sector is also a priority. Major challenges facing Peru’s agriculture include a relatively high rate of poverty and the dualistic nature of agriculture, with a large subsistence sector side-by-side with a commercial sector.

In order to highlight the impact of the trade liberalization on food security, it would be useful to compare the different effects of the AoA on modern producers and small farms. The most likely groups to benefit from the reduction of trade barriers in foreign markets and the expansion of exports are commercial producers. The most likely groups to be negatively affected are small farmers, because the dynamic export products are not produced on small farms. That is, the winners and losers of the open trade policies are likely to be different, and it is often the poor who are hurt most. Thus, over the 1990s, fresh asparagus and processed asparagus have emerged as the most dynamic export crops, mainly produced by large farms. Exports of grapes and mangoes and other fruits were also growing, and they are also produced by high-income producers.

For a first approach to food security analysis in Peru, data on domestic production, imports, exports and consumption and per capita availability are provided in Table 23. We compare changes in availability and consumption for the previous period (1991-1995) to the post-UR period (1996-2000). Total apparent domestic demand (ADD) increased by 33 percent from the five-year period 1991-1995 to the five-year period 1996-2000: The total value of food availability increased from US$22.4 billion in the former period to US$29.8 billion in the latter period. The yearly food availability increased from US$4.49 billion in the former period to US$5.96 billion in the latter period (33 percent growth). The per capita per-year food availability increased from US$195 in the former period to US$238 in the latter period (22 percent growth). While some of this increase represents an inflationary decrease in the purchasing power of the US dollar, price changes alone account for only some of the growth. The conclusion is that food security in the country was maintained thanks to an increase in domestic output (35 percent) and helped by an increase of agricultural imports (36 percent). The population increase between periods was about 9 percent (equivalent to 1.8 percent yearly growth).

Table 23. ADD (US$ million)

Source: Webb and Fernandez-Baca (2001) and estimations by the author (see appendix).

Notes: The gross value of agricultural output is estimated from the agricultural GDP, adjusting it with a value added coefficient equal to 0.711 (from the 1994 Input-Output Matrix [INEI, 2000]). Agricultural GDP is taken from National Accounts; it is expressed in nominal soles and transformed to nominal dollars by using the yearly average exchange rate. Imports and exports are expressed in nominal dollars. ADD equals domestic output plus imports minus exports.

To overcome the problem of changing prices, FAOSTAT data on food balance sheets may be used to construct a table of food availabilities for the period being considered. Unfortunately, the food balance sheet information from FAOSTAT only presents the breakdown of food availabilities by food products for the period 1997-1997.^[90] Table 24 shows that, on average, the per capita per day food availability is above the minimum suggested for appropriate nourishment (2 500 kcal). The table also shows that Peruvian population is meeting their food needs basically with vegetable products (2 210 kcal or 87 percent). The available information does not allow changes in the per capita supply of kilocalories over time and their impact on food security to be calculated.

Table 24. Peru’s food balance sheet for 1997-1999 (average)

Source: FAOSTAT.

A fundamental variable for food security is the number of people in poverty and its evolution over time. The changes in the number of poor people (greatly correlated with those undernourished) throughout the 1990s is presented in Table 25 for the different regions in Peru. The percentage of poor people (people with an income under the poverty line) is higher in the rural areas (over 65 percent in the year 2000). However, because of the concentration of the population in the cities, the actual number of poor people is higher in the urban areas. Regarding the evolution of poverty, there were gains between 1994 and 1997 when the total percent poor decreased from 53.4 percent to 50.7 percent countrywide. The percent of poor people climbed back to 54 percent in 2000 because of the economic recession.

Table 25. Population in poverty (thousands)

Source: Webb and Fernandez-Baca (2001).

However, the number of extremely poor is the most relevant for the cause of food insecurity. These are the people with income under the subsistence line, that is, people who do not earn enough to cover the cost of the minimum food basket or the minimum number of calories per capita per day. The number of extremely poor or undernourished people during the 1990s is presented in Table 26. The number of undernourished people actually decreased from 18 percent in 1997 to 15 percent in 2000; this indicates an overall gain in nourished people over the 1990s. There was a particularly sharp decrease in the rural Coast and Sierra regions, although the proportion in the rural Amazon region increased. These figures suggest that any potential negative effects of agricultural trade trends on the rural poor were offset by positive developments in non-agricultural employment and in social welfare interventions.

Table 26. Population in extreme poverty (thousands)

Source: Webb and Fernandez-Baca (2001).

There are other important issues that should be included in a food security analysis. First, on the supply side, we should consider institutions and policies on research and development of new technologies to increase the productivity of low-income producers and households. Liberalization policies have facilitated the import of yield-enhancing inputs (fertilizers, seeds, chemicals), which assist in higher domestic production and export acceleration. Imports of agricultural inputs increased from 1.3 to 2.3 million tonnes from 1991-1995 to 1996-2000; the import value of agricultural inputs increased from US$227 million to US$341 million between the same periods.

Second, on the demand side, food security policies should review the real cost of food to the poor in relation to their real income, and food safety and quality requirements. On the demand side, the responsibility for stepping up food security of the poor in Peru is in the hands of the National Food Programme. Performance of this agency in the 1990s has been thoroughly reviewed, and it is widely credited for the upgrading of social welfare of the poor in the cities and rural areas of Peru.