Kota university day presentation

Hemesiri Kotagama, Salwa Al Jabri,
Houcine Boughanmi and Nejib Guizani
Impact of Surge in Food Prices on
Household Food Security in the
Sultanate of Oman
Hemesiri Kotagama

World Bank Press Release:
March 2011
 Costs for some basic foods are nearing or
beyond the peaks of 2008.
 The World Bank expects volatile, higher than
average grain prices until at least 2015.
 In the poorest countries, where people spend
up to two-thirds of their daily income on food,
rising prices are re-emerging as a threat to
global growth and social stability.
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Street reactions to food price surge …
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Food Prices and Food Security
 Food Security exists when:
o all people,
o at all times,
o have physical and/or economic access (income and
prices) to
o sufficient, safe and nutritious food to
o meet their dietary needs and food preferences
o for an active and healthy lifestyle.
 World Food Summit,1996
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Scope of the study: Economics
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Food in Oman : Macro-facts
 Oman would continue to depend on imports for significant proportion of
its food requirements, which stand at 100% in case of rice, 80% for meat
and 60% for fruit and vegetables.
 The estimated cultivated area was 175 000 feddan in 1999 and remained
same after ten years (175 000 feddan in 2009) correlated with a small
change in the estimated production (1,287 000 ton in 1999 and 1,187 000
ton in 2009).
 Oman is import depended on food.
Hemesiri Kotagama

Food in Oman: Household
 The average food consumption in the Sultanate of Oman is 1.89 Kg /person /day
compared 2.5 Kg/person/day by an average American
 An average Omani family (average of 8 persons) spends about 161.439 OR for food (MNE,
2001) and it has increased to 205.365 O.R in 2008 (MNE, 2010).
 Expenditure on food, is the largest percentage of the total household income which was
about 31% (MNE, 2010). In the United States of America the share of food expenditure of
the household income is about 13% and it is 17% in Canada, 45% in Indonesia (FAO,
2010).
 A family is classified as poor if it spends more than 60% of the household expenditure on
food (MNE, 2010).
 Based on this standard 12% of Omani families are classified as poor based on Household
Expenditure and Income Survey conducted in 2007-2008 compared to 8% in 1999-2000
(MNE, 2010).
 It is apparent that there has been a slight increase in the poverty level in Oman.
 Surge in food prices could be a reason for increased poverty.
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Consumption of energy, protein and fat in Oman ( per person
per day) from 2005 to 2007 (MNE , 2009)
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Objectives of the study: Short-run
 Analyze whether an average Omani family consumes the
recommended nutrient intake for healthy life from the actual
consumption of food.
 Estimate the monetary value of the Nutritionally Adequate and
Preferred Least Cost Diet (NAPLCD) for an Omani household
(Benchmark, year 2003).
 Estimate the impact on NAPLCD based on increased food prices
(compared to benchmark).
 Estimate measures that account changes in food security of Omani
households with increasing food prices.
– Food security headcount (F0)
– Food security gap (F1)
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Objectives: Long-run
 Decompose the impact of growth in per capita
income and its distribution on changes in food
security in Oman.
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Food Security Threshold:
NAPLCD Model
Objective function:

n
i
ii XPMin
1
… Eq.1 (Cost of food)
Subject to:
j
n
i
iij NXa 1
…Eq.2 (Nutritional requirements)

n
i
iii XX …Eq.3 (Food preferences)
0iX
Where:
iP = Price of food (OR/Kg)
iX = Quantity of food (Kg/Day/Family)
i = Number of food items, 1, … n.
ija = Amount of nutrient j in food i (Relevant unit/Kg of food)
j = Number of nutrients, 1, … m.
jN = Recommended nutrient intake for nutrient j (Relevant unit/Family/Day)

 n
i
i
i
i
X
X
(Proportion of a food item over the total quantity of food)
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Food Security Measures: Concept
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Food Security Measures:
Head Count and Gap
𝐹∝ =
1
𝑁
𝑠−𝑦 𝑖
𝑠
∝
𝑞
𝑖 =1 . 5
Where:
Fα is food security index for α = 0, 1 or > 1 .
α is a sensitivity parameter.
N is the population size.
s is food security threshold, disposable income level below which the household is food
insecure. NAPLC is used in this study.
yi is (HDIF) disposable income for food of the ith
household.
q is number of households y < s (food insecure).
1. nehw F α = 0; Head Count Index of Food Insecurity (F0)
nehW α = 0 equation 5 will be as:.
𝐹0 =
𝑞
𝑁
F0 is referred to as the Head Count Index of Food Insecurity (HCIFI) as it is the ratio
between the number of the people who are food insecure (y < s) over the total population of
people (N), given the HDIF.
2. F when α = 1; Food Security Gap Index (F1)
When α = 1 equation 5 becomes:
𝐹1 =
1
𝑁
𝑠−𝑦 𝑖
𝑠
𝑞
𝑖 =1
F1 is a measure of amount of income that is required to bring all household that are food
insecure to s (food security threshold), weighted by population size and s.
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Conceptual illustration of the impact of increase in
income and improved income equality on food security
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Measures of Decomposition
 Food security measure at a time t (Ft) can be represented by equation 9.
Ft = F (s/ µt,Vt)
 Where:
 s is a food security threshold,
 µt is the mean of the distribution of disposable income for food,
 Vt is the variance of the distribution of disposable income for food.
 Decomposition
 Ft+1 – Ft = F (s/ µt+1,Vt) - F (s/ µt,Vt) + F (s/ µt+1,Vt+1) - F (s/ µt,Vt) + Residual ...Eq.10
 F (s/ µt+1,Vt) - F (s/ µt,Vt) is the impact on food security due to growth in income.
 F (s/ µt+1,Vt+1) - F (s/ µt,Vt) is the impact on food security due to change in income
distribution towards equality.
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RESULTS AND
DISSCUSION
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Percent change of food Consumer Price Index (CPI)
of all food in relation to base year 2003 (MNE , 2009)
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Percentage fulfillments of recommended levels of nutrients by
an Omani household (per day per family)
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Percent of income spent on food with increasing
household income
Income (OR/Month/Household) % Expense on food of total household income
less than 100 0.78
100-199 0.78
200-299 0.72
300-399 0.66
400-499 0.54
500-599 0.42
600-699 0.33
700 more 0.24
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NAPLCD value under different food
access scenarios
OR/ Month/ Household
Scenario / Year 2003 2004 2005 2006 2007 2008
Purchased food items (PFI) 153.140 154.539 158.001 159.343 168.654 198.900
Purchase food items and
restaurant food
(PFI+PFR) (70%) 173.272 174.855 178.772 180.290 190.825 225.048
Purchase food items and
produce
(PFI+FIP) (30%) 139.440 140.839 144.301 145.643 154.954 185.201
Weighted Average 163.123 164.649 168.430 169.895 180.064 213.093
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The Lorenz curves for income distribution
for years 1999/2000 and 2007/2008
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Measures of food insecurity revealing the
impact of price increases on food security
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The cost of alleviating food insecurity
Parameter Data and Estimate
1. NAPLC 2008 (OR/Month/Household) 213.00
2. Estimated F0 0.29
3. Estimated F1 0.07
4. Average food insecurity gap (OR/Month/Household) (Equation 8) 50.68
5. Oman's population (Million) 2.30
6. Number food insecure [F0X(5)] 0.67
7. Total food gap [(6) x (4) x 12 months] (Million OR/Year) 405.64
8. GDP 2008 market prices (Million OR) 23185.10
9. Food insecurity gap/GDP as % .5
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Decomposition of food security changes due
to growth and redistribution of income
Without a change in food prices
Income Distribution Change in incidence of Food Security
2003 2008
Actual
change
Growth Redistribution Interaction
Food Security Headcount
Rate (F0)
24.02 9.70 -14.32 -6.31 -6.92 -1.09
Hemesiri Kotagama

Conclusions
 The recent surge in food prices have decreased food security in Oman.
 However in the long-term food security in Oman has improved due increased
income and its equalizing distribution.
 Short term interventions by the government on assisting vulnerable low
income households would alleviate the situation.
 Continuing the implementation of egalitarian economic policies on
investments in regional rural development, education, health etc will revert
and further improve the food security situation in the Sultanate of Oman.
Hemesiri Kotagama

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