CHAPTER 2 FOOD AVAILABILITY

Sizeable falls in livestock and grain production in the Russian Federation in the early 1990s have inspired three concerns about the food security of the country. First, to what extent has food availability changed in the transition period? Second, to what extent has the country become more dependent, perhaps overly dependent, on imported food? And, third, to what extent is food availability of outlying areas threatened by the falling production trend?

This chapter considers these questions related to food availability. Changes in total food use as well as the mixture of food available were measured in order to address the first question. Contrary to fears inspired by falls in food production, the total calories available per capita per day actually decreased only slightly over the period 1992-1999. Although there have been sizeable changes in the mix and sources of food available, the availability of food in the Russian Federation today is actually higher than in other countries with similar incomes per capita and average food availability is far above the minimum level established by FAO and WHO.

The second question is addressed by computing import dependency ratios derived from Russian State Statistical Committee data. These ratios show no uniform trend towards increasing food import dependency in the Russian Federation in the 1990s. Moreover, the level of import dependence does not appear to be high by international standards, with the sole exception of sugar. Import dependency ratios are much smaller than in Europe, Japan, Central America and developed market economies. Dependency ratios in the country are also less than for the group of transition economies (including CIS countries) and least developed economies (except for meat).

Last, the extent to which food security in the Russian Federation is threatened by barriers to regional food availability within the country is considered. On this issue there does not appear to be sufficient evidence to assert that administrative trade barriers threaten the food security of the population. However, these barriers do raise the price of food for food-importing regions. Much of the increases in grain prices for food-importing regions of 1997-1998 seem to have derived from increased administrative barriers.

In conclusion, on average, the Russian Federation does not appear to be food insecure by measures of food availability. Food availability does not seem to have fallen significantly in the transition period. Last, availability of food in the Russian Federation today is actually higher than in other countries with similar incomes per capita.

Changes in food availability in the transition period

Paradoxically, the question of how overall food consumption has changed during the transition period is seldom raised. Certainly, the prima facie evidence gives little reason to doubt that the Russian Federation has become more food insecure in the 1990s. From 1992 to 2000, real Russian GDP fell by 24 percent (IMF, 2002), while the real gross agricultural product fell by 29 percent (Goskomstat, 2000a). In fact, most of the fall in production has been of livestock products and feed grain, and the population has substituted other foods to compensate for the fall in production of livestock products. Food availability measured in terms of calories therefore fell by only 3 percent from 1992 to 1999. Though the mix of food available to Russians in this period has certainly changed, the food security of an average Russian during this period does not seem to have been threatened, judging by total calories available. The total calories of an average Russian diet (2 879 per capita per day) are quite above the FAO/WHO guideline for minimum dietary energy requirements for the country (1 970 calories per capita per day).^[5]

Food availability measured by per capita dietary energy supply

A measure of food availability must aggregate the availability of a great number of different foods using a common numeraire. Economists use money as a common numeraire to compute a monetary value of a basket of goods. Nutritionists use calories as a common numeraire to compute the nutritional value of a basket of food. The most commonly used measure of food availability is per capita daily dietary energy supply (DES) in calories. FAO calculates DES based on the food use element of food balances. Food balances contain commodity-specific data in primary (before processing) equivalent on various sources of food supply (domestic production, changes in stocks, trade) and various uses or disappearance of food commodities (feed, seed, industrial and waste). The quantity of food available for human consumption is obtained by estimates based on the growth in final food production.^[6] Then, information on the nutrient content of food commodities is used to convert data on food availability into calories, grams of protein and fat, and other nutrients. Food balance data is available each year for most countries worldwide. So DES can be calculated for most countries using a standard methodology each year. This allows international comparison of food availability between countries and over time.

DES calculations can be very useful, but they reflect food availability, not consumption. Consumption information can only be estimated through household surveys.^[7] The Russian Statistical Committee (Goskomstat), for example, provides measures of per capita food consumption based on household budget survey information. The Goskomstat estimates of consumption differ significantly from the DES estimates based on food disappearance data (Table 2). The differences in the two series are quite interesting, for they indicate sugar and bread sales and purchases that are significantly higher than consumption. This is consistent with the widely reported diversion of sugar for manufacturing moonshine as well as significant feeding of bread to animals on private plots. Korbut (2001) found that the population of Russia has been consuming significantly less than it purchases of bread and bread products since 1994. The ratio of tonnes of bread and bread products sold to that consumed is now about the same as in 1990, when it is known that significant amounts of bread were fed to animals, much was wasted and there were significant price controls. The larger availability of fruits and potatoes may indicate significant private wine manufacture and potatoes fed to livestock, though this is difficult to show without further study.

TABLE 2
Per capita dietary energy supply and consumption estimates, 1999

Sources: FAOSTAT, Goskomstat (2001b).

The structure of commodity supply and use, 1992-1999

Despite the large decrease in commodity production from 1992 to 1999 outlined in Chapter 1, nearly all the reduction in use were for seed, feed, waste and industry. The caloric equivalent of food use of commodities in the Russian Federation from 1992 to 1999 decreased only slightly from 2 940 in 1992-1994 to 2 860 in 1997-1999.^[8] The stability of food availability in the Russian Federation at just under 3 000 calories per capita per day suggests that there has been little deterioration in food security if interpreted as a decrease in overall food availability from 1992 to 1999.

Estimates of the structure of agricultural commodity domestic supply and use according to FAO commodity balances in terms of calories for 1992 to 1999 are shown in Figure 5. This figure is an aggregate of all Russian Federation commodities estimated by FAO, divided according to supply and use category. Caloric values of domestic supply and use are based on FAO nutritive conversion factors. Total calories per year for each element are divided by the number of days in the year and by the total population of the country in order to render a caloric equivalent of food supply and use elements per capita per day.

FIGURE 5
Commodity supply and use (calories/capita/day)

Source: Author’s calculations from FAOSTAT.

The stacked bar graph in Figure 5 illustrates the caloric value of domestic supply produced or imported in the given year.^[9] The two elements of the stacked bars are production for domestic use and imports. The area graph in the figure shows domestic use of commodities in each year in caloric equivalent. Note that total domestic supply produced or imported each year is not equal to total use of each year. This discrepancy is accounted for by stock changes. In some years farms and importers supply more than the amount utilized in the country, in some years less. When domestic supply exceeds use in any given year, there is an increase in stocks. When use exceeds domestic supplies, stocks decline.

Although total food availability hardly changed from 1992 to 1999, the source of that food may have changed away from food purchases and toward food produced for self-consumption. The extent of this phenomenon is difficult to gauge exactly, but there is much information that lends support to the widespread impression that Russians have become more dependent on household farming for self-consumption. Since 1990, a trend toward increased production on private plots can be observed (Table 3). Though not all private plot production is used for self-consumption, much of it is.

TABLE 3
Private household contribution to gross agricultural output, 1990-1998 (percentage of total)

Source: Goskomstat (1999a), p. 19

The structure of food use, 1992-1999

Although the caloric equivalent of total food use hardly changed from 1992 to 1999, its structure - the sources of available food - changed quite profoundly. The percentage of available fat derived from animal products fell rather rapidly over this period, while calories and protein remained nearly constant (Figure 6). At the same time, the percentage of calories, protein and fat from vegetable sources increased. From a nutritional point of view, these are quite positive developments.

A more detailed analysis of the numbers behind Figure 6 show that the portion of calories derived from milk, sugar and sweeteners and vegetable oils increased, while the portion from animal fats and butter, meat, eggs, fish and fruit declined from 1992 to 1999 (Appendix Tables A.2 and A.4). These changes reflect the reduction in purchases of meat as consumer income fell. These trends are consistent with per capita consumption data results in terms of calories in the household surveys conducted by Goskomstat for 1995-1999 (Goskomstat, 2000b, p. 136; Goskomstat, 2001a, p. 24).

FIGURE 6
Percentage of calories, protein and fat available from animal products, 1992-1999

Despite the changes noted above, in general, the overall structure of food availability from 1992 to 1999 remained rather constant. Russians received slightly more than 40 percent of their total calories from cereals, 11 to 13 percent from sugar and sweeteners, 3 to 4 percent from vegetables and fruits, 5 to 7 percent from vegetable oils and 23 to 26 percent of their calories from livestock products.

Russian dietary energy supply in international comparison

It is helpful to understand the place of Russian levels of dietary energy supply in their international context (Figure 7). In general, there are two important determinants of the level of DES in a country. There is a positive correlation between the level of income (GDP per capita) and DES (FAO, 2000d). This relationship, though, tends to weaken as income increases. Engel’s law states that consumers spend a smaller portion of their income on food as their income increases. The second determinant of DES in a country is the physical minimal energy requirement. Since requirements for different age/sex groups are different, this indicator is a weighted average, based on the structure of the population.

FIGURE 7
Comparisons of per capita DES (average 1996-98) and GDP (1999)

Sources: FAOSTAT, World Bank (2002).

The overall level of dietary energy supply in the Russian Federation is about in the middle between sub-Saharan Africa and the United States (Figure 7). On average, the availability of food in the Russian Federation appears entirely adequate. Food availability is even higher than in a number of countries with higher GDP. This indicates that, relative to its income, Russians consume more calories than would be expected. For instance, in Figure 7, South Americans on average have a higher income, but lower caloric intake. This discrepancy may mean that income in the Russian Federation is undercounted. The shadow economy in the country is known to be substantial. Some have estimated it at 25 to 50 percent of GDP (Kaufmann and Kaliberda, 1996). Another possible explanation of higher food consumption in the Russian Federation relative to GDP is a holdover from the Soviet days when food production and consumption were highly subsidized. Korbut (2001) reports that many regions still subsidize production and consumption of staple foods, particularly bread. The positive effect of bread subsidies on total caloric intake may be large, given that Russians obtain most of their calories from cereal products.

Third, differences in climatic conditions (more calories are required in cold climates) may also explain part of the difference in calorie consumption between the Russian Federation and countries with similar income. However, differences in climatic conditions account for a comparatively small portion of the total calories required by humans for normal nutrition. According to FAO/WHO/UNU guidelines, Russians require about 10 percent more calories per capita per day for light activity than populations living in the warmest climates (Table 5).

Comparison with other transition economies

From 1992-1998 the dietary energy, protein and fat supplies of the Russian population deteriorated about average compared with other transition economies. A comparison of changes in food availability of transition economies illustrates that the DES, protein and fat contained in food available to Russians deteriorated significantly more than that in the Baltic and Caucasus countries and quite a bit less than that in Belarus, Ukraine and Central Asia (Table 4). These results are consistent with observed trends in both agricultural and overall economic reforms. The Eastern European, Baltic and Caucasus countries have reformed agriculture most effectively through the introduction of individual farms and widespread private ownership of land. These regions have also seen deeper economic reforms leading to economic growth. Belarus, Ukraine, the Russian Federation and Central Asia have retained large farms with serious problems of corporate governance and unclear land tenure. Despite recent economic growth in the Russian Federation and Ukraine, these countries still lag behind Eastern European countries in the depth of reforms (Csaki and Tuck, 2000).

Estimates of food inadequacy from DES data

The average level of DES is insufficient for characterizing the level of food inadequacy in a country. This is because accurate measurement of the extent of food inadequacy requires estimates of the distribution of food within the population. FAO has developed two indicators of food inadequacy, which are analogous to the headcount and income (or expenditure) gap measures of poverty. The first indicator is the prevalence of food inadequacy, the portion of the population whose food consumption is inadequate. The second indicator is the intensity of food inadequacy, showing the additional amount of food needed to eliminate the prevalence of food inadequacy.

TABLE 4
Changes in dietary nutritive supply for transition economies, 1992-98

Source: FAOSTAT

The FAO methodology for deriving country-level estimates of food inadequacy relies on a distribution of food access expressed in dietary energy terms, generated from per capita DES data from food balance sheets and estimates of variations in food distribution derived from income distribution data. A cut-off point based on country-specific minimum energy requirements is then applied in order to derive the percentage of people with inadequate food consumption. Minimum food energy requirements for each country are calculated by FAO based on guidelines set by a Joint FAO/WHO/UNU Expert Consultation on Energy and Protein Requirements (1985). The minimum daily energy requirement for a country population is a weighted average of energy requirements for light activity for various age and sex groups.

The FAO methodology for estimating food inadequacy is described in The sixth world food survey as follows.^[10]

1. It is assumed that the pattern of the distribution of per capita dietary energy (calorie) consumption within each country is log-normal so that the levels of energy consumption throughout a population can be calculated simply from the mean and standard deviation (SD).... Thus, based on the per capita DES derived from FAO food balance sheets and on an estimated value of the coefficient of variation (CV), the distribution of per capita calorie consumption is generated for each country....

2. Based on nutritional considerations, an estimate is made of the minimum per capita dietary energy requirement (cut-off point) below which the average person’s intake is considered to be inadequate; the average person is defined as the weighted average of one person from each of the age-sex groups adopted for estimating energy requirements.

3. The next step is to calculate the proportion of the population that consumes less than the minimum requirement, using the distribution of per capita calorie consumption (obtained following step 1 above) and the minimum per capita energy requirement.

4. Finally, the calculated proportion is multiplied by the size of the total population to obtain an estimate of the number of people who have inadequate access to food.

FAO estimates of food inadequacy in the Russian Federation are about average for middle-income countries and low compared to most developing countries (Table 5). On average, available food more than adequately covers the minimum energy requirement in kcal/person/day. Actual per capita supply of food per day in 1996-1998 (2 840 calories) was 44 percent higher than the minimum energy requirements recommended by FAO for the country (1 970 calories). This is a better-than-average safety margin compared with the other countries and regions shown in the table. The Russian Federation in this respect is comparable to other countries in transition and middle-income countries, and significantly better off than most developing countries. The percent of food inadequacy is about average(6 percent) when compared to other transition economies, but far less than that of developing countries. This figure is nearly the same as for Mexico (5 percent), but much lower than that for developing countries as a whole (17 percent) and for sub-Saharan Africa in particular (34 percent).

TABLE 5
Indicators of food inadequacy for selected countries and regions

Source: Regional DES and minimum energy requirement estimates based on figures in SOFI 2000, FAO (2000c).

The depth of hunger in the Russian Federation also seems to be relatively mild compared to developing countries. The depth of hunger is measured by taking the difference between a country-specific minimum energy requirement and the dietary energy supply of individuals suffering from food inadequacy expressed in kilocalories per person per day. The higher the number, the deeper is hunger (FAO, 2000c, p. 2). The depth of hunger in the Russian Federation is more than that of developed countries. For example, hunger depth in the country was calculated at 170 calories, while that in the UK, Germany, France and Japan, for example, was 130 calories. But the Russian deficit is quite a bit lower than that for such developing countries as Bangladesh (340 kcal), Thailand (260 kcal), Iraq (210 kcal) and Somalia (490 kcal). The Russian deficit is similar to such countries as Jordan, Turkey, Lebanon and Costa Rica, which are also middle-income countries.

The FAO estimates of food inadequacy have a number of limitations.^[11] First, they rely quite heavily on the accuracy of the underlying food balance data. Typically, the most accurate items in food balances are production and feed use, because information on area and livestock inventories is usually available. Food use, waste and stock changes are often estimated based on less information and are probably less accurate. Though food balances may be reasonably accurate for the purposes of assessing overall trends, items such as waste and food use in balances may not be accurate enough to produce robust estimates of available calories per capita. Second, estimates of available calories rely crucially on the accuracy of nutritive conversion coefficients for each food considered in the estimate of overall calorie availability. These coefficients vary from country to country, because the nutritive content of foods differs. But countries seldom update these coefficients to keep pace with changes in the nutritive content of food over time, and often take them from other sources, such as other countries or international organizations. Thus, their accuracy can vary substantially from country to country. Third, estimates of the coefficient of variation are taken from national household budget surveys when they are available. Such estimates are only as accurate as the surveys on which they are based.

The FAO estimation methodology has been criticized for underestimating food inadequacy in the world in general, though it is far from clear that the limitations in the methodology employed by FAO are as severe as has been claimed (Svedberg, 2001). However, even if FAO underestimates food inadequacy in the Russian Federation by 50 percent, so that the actual incidence is 9 percent and not 6 percent, food inadequacy in other parts of the world would have to be increased as well, since the same methodology is used for deriving those estimates. Even if the FAO estimate of Russian food inadequacy is lower than actual, it is still much less than in other areas of the world. Nevertheless, clearly, there is much room for further research into this crucial issue.

Changes in import dependency in the transition period

Food insecurity is widely used in the Russian Federation as an argument for government intervention in agriculture in the form of price supports, import tariffs or quantitative import restrictions. A number of Russian authors have suggested that the level of import dependence in the country is too high. For example, Khomiakov and Iskandaryan (1997) argue that food import constitutes more than 50 percent of total food consumption and that the optimal level of food import dependence should not be higher than 15 percent of domestic consumption. The estimates shown in Table 6, derived from Russian Goskomstat data, show that the actual level of the Russian Federation’s dependence on food imports is much less than 50 percent of consumption and even well below 35 percent for most commodity groups.

Liefert and Liefert (1999) made a more sophisticated estimate of Russian overall food import dependency. Their calculations make two major adjustments to take account of known drawbacks of Russian statistics. First, food import is adjusted upward by 20-30 percent in order to include barter trade and “shuttle trade” by small-scale food importers that are not recorded in official statistics. Second, domestic production is also adjusted upward to account for agricultural production underreported in official statistics. Liefert and Liefert estimated total food import dependency in the Russian Federation at about 20 percent.

There was no uniform trend toward increasing food import dependency in the Russian Federation in the 1990s (Table 6). The country’s dependence on imported grain - usually a basic needs indicator of food security - fell substantially from 1991 to the mid 1990s. The Russian Federation today is virtually self-sufficient in grain. The fall in meat production, in accordance with apparent Russian comparative advantage in crop production, means that the country imports about 30 percent of meat (primarily poultry and pork) from abroad. Russian oil crushing facilities are, on the whole, not competitive (in price and quality) with crushing facilities abroad. Thus, the Russian Federation exports oilseeds, rather than crushing and refining oil domestically.

TABLE 6
Import dependence ratios (percentage share of import in total availability of commodity)

Source: Author’s calculations based on Goskomstat food balance data.

TABLE 7
Food import dependency ratios: international comparisons

Source: FAOSTAT.

A comparison of the food import dependency of the Russian Federation with other countries using FAO food balance data shows that the level of import dependence in the country is not high by international standards, with the sole exception of sugar (Table 7). Import dependency ratios for the Russian Federation are much smaller than in Europe, Japan, Central America and developed market economies. Dependency ratios are also less than for the group of transition economies (including CIS countries) and least developed economies (except for meat). Only Eastern European countries tend to have lower food import dependence ratios than the Russian Federation. The notable exception is sugar, which has been the subject of a special import relationship with Cuba for many years. The Russian meat import dependency ratio is only slightly higher than in other countries.

Interregional comparisons

The Russian Federation is a large country that is divided administratively into nearly 90 regions. The differences among Russian regions in terms of natural endowments and level of economic development are comparable to the gaps between developed medium-income nations and developing countries. The distribution of agricultural production does not coincide with the country’s population by region. Large differences in per capita production of food products in a well-functioning market economy are not a problem, but rather an indicator of existing comparative advantage and interregional trade potential. However, there are concerns (Serova et al., 2001; Korbut, 2001) that underdeveloped marketing infrastructure and barriers to trade in the Russiaa Federation create sizeable obstacles to the free movement of food, so as to threaten the food security of some regions. Although trade barriers have been outlawed by Presidential Decree several times (most recently in 2000), local governments still limit the flow of food products by imposing non-tariff measures, such as veterinary and sanitary controls. According to Korbut (2001), in 1999, 40 out of 78 regions had some form of restrictions on grain export. Perhaps partly as a result, 92 percent of grain produced in a particular oblast is also marketed within the same oblast.

It is difficult to say that administrative trade barriers threaten the food security of the population of the Russian Federation. However, these barriers do raise the price of food for food importing regions. The evidence seems to indicate that much of the increase in grain prices for food importing regions of 1997-98 derived from increased administrative barriers.

Descriptive statistics on the regional distribution of per capita production for principal food commodities illustrate that there are some regions that do not produce one or more commodities at all (Table 8). The difference between average and maximum per capita production is as high as a factor of 4-5 for grains, potatoes, vegetables, meat and milk. For sugar beet and sunflower seed, it is even greater (10-12).

There is ample qualitative evidence of increasing administrative barriers to trade in the Russian Federation. However, in order to understand the magnitude of these barriers, it would be best to have a quantitative measure of their effects. One such quantitative measure is movements in the coefficient of variation of commodity prices between regions from 1995 to 1999. The logic for interpreting this statistic is as follows. In a free market economy, prices between regions should differ by the amount of transportation costs between regions. Over time, these prices may converge due to a fall in transport and handling costs, but such increases in efficiency take time. In the short run, then, the change in prices in the country may depend greatly on administrative (and other transaction) costs. In an economy in which costs of transporting goods between regions, including physical transportation costs and administrative (transaction) costs, are declining, one would expect a measure of the variation of prices between regions to decrease. By contrast, in an economy in which transaction costs are increasing, one would expect the price variation between regions to increase.

TABLE 8
Descriptive statistics for regional distribution of per capita production, 1999 (kg)

Source: Author’s calculations based on data from Goskomstat.

Evidence based on the coefficient of variation of wheat prices indicate increasing administrative and transaction costs from 1995 to 1998 and decreasing costs from 1998 to 1999. The coefficient of variation of wheat prices in the Russian Federation increased steadily from 1995 to 1998, from 24.96 to 41.76. This is part of the evidence for increasing administrative/transaction costs. The second part of the evidence is that in 1999, after the abrupt rise in the rouble-dollar exchange rate, the coefficient of variation of wheat prices quickly fell back to the level of 1995 (to 23.12). This rapid elimination of the costs of transporting wheat between regions could not have come from a quick reduction in the physical costs of transportation. It must have come from a reduction in administrative or transaction costs. The rise in the coefficient of variation from 1995 to 1998 was most probably the result of rising administrative transaction costs.

Transaction costs of transporting grain between regions fell so rapidly from 1998 to 1999 due to an increase in competition in trade between regions. Increased competition came with an increase in interregional grain trade fuelled by the need to compensate for declines in import sources of supply. Korbut (2001) provides evidence of increased middlemen activity on the Russian domestic grain market after rouble devaluation. He also mentions a steady decline in profit margins of intermediaries after 1998, indicating increased competition among them. The results support the conclusions of Gardner and Brooks (1994) and Korbut (2001) that food prices in the country before 1998 were dominated by oblast- level regulations that broke the country up into a number of regional markets, rather than one nationally integrated market. However, the rouble devaluation of 1998 seemed to have a beneficial effect on competition in grain trade, forcing down administrative and transaction costs (Figure 8).

FIGURE 8
Percentage deviation of wheat prices from average in wheat deficit and surplus regions, 1995-1999

Source: Author’s calculations based on data from Goskomstat.