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Organización de las Naciones Unidas para la Agricultura y la Alimentación

THE ECONOMICS OF HUNGER IN LATIN AMERICA1 José Luis Vivero Pol Food Security Officer, Initiative “Hunger-Free Latin America and the Caribbean” FAO Regional Office, Santiago, Chile. Email: Joseluis.vivero@fao.org

1.- BACKGROUND: LATIN AMERICA CAN BECOME A HUNGER-FREE REGION 1.a.- Hunger situation in LAC 1.b.- Commodity prices and income inequality are the major determinants of food access 1.c.- Hunger and poverty are related but not equal 2.- THE COST OF HUNGER IS MUCH HIGHER THAN THE COST TO ERADICATE IT 2.a.- Hunger impairs human development and reduces lifetime earnings 2.b.- Better nutrition is a necessary condition to higher economic growth, more trade and improved competitiveness 2.c.- The economic costs of hunger: billions in lost productivity, earnings and consumption 2.d.- It is cost effective to eradicate hunger 3.- MORE AND BETTER INVESTMENTS IN HUNGER HOTSPOTS AND RURAL AREAS 3.a.- Investment in agriculture lags where hunger is most prevalent 3.b.- Public investment fails to reflect the importance of agriculture 3.c.- Development assistance does not target neediest countries 3.d.- Giving priority to rural areas 4.- CONCLUSIONS 4.a.- Eradicating hunger as a “sinequaenon” requisite to meet the MDGs and accelerating progress towards the social cohesion 4.b.- The keys to progress in reducing hunger: the successful countries 4.c.- The costs of missing the World Food Summit goal 1

This paper is based on data and information already published by FAO in its series “ The State of Food Insecurity in the World” between 1999 and 2006, and hence it does not intent to be an innovative paper but rather a compilation adapted to the regional circumstances.


THE ECONOMICS OF HUNGER IN LATIN AMERICA José Luis Vivero Pol Food Security Officer, Initiative “Hunger-Free Latin America and the Caribbean” FAO Regional Office, Santiago, Chile Hunger eradication can be achieved in Latin America and the Caribbean, and it is a condition sinequaenon to reach all the eight MDGs and the well-know paradigm of social cohesion. Moreover, research has proven that is less costly to eliminate hunger than to coexist with it, as the economic costs of hunger (direct and indirect) are paramount, resulting in reducing GDP growth and increased social expenditures. Undernutrition severely damages competitiveness as it affects cognitive and physical abilities of workers, limiting entrepreneurial innovation and unskilled workforce. 1.- BACKGROUND: LATIN AMERICA CAN BECOME A HUNGER-FREE REGION Daunting as the task of eradicating hunger from our region may sound, achieving this accelerated rate of progress is also eminently possible. Quite frankly, the question is not whether we can afford to invest the resources, the energy, and the political commitment required to fight hunger. Rather, we must ask whether we can afford not to do so. The answer is that we cannot. The price we pay for this lack of progress is heavy indeed. The hungry themselves pay most immediately and most painfully. But the costs are also crippling for their communities, their countries and the global village that we all inhabit and share. To cite just one example, every year, 6 million children under the age of five die as a result of hunger and malnutrition in the world. Too often, eliminating hunger has been relegated to a shopping list of development goals. All of these goals are interconnected through the fatal nexus of poverty and social exclusion. Every one of them deserves and demands our support. But we must also have the vision and the courage to set priorities, recognizing that lack of adequate food threatens people’s very existence and cripples their ability both to benefit from opportunities for education, employment and political participation and to contribute to economic and social development. Box 1: Some facts on hunger and economy – we know how to, we can and we must end hunger in LAC now Fact number one: to date, efforts to reduce chronic hunger in the developing world have fallen far short of the pace required to cut the number of hungry people by half no later than the year 2015 (see graph). We must do better. Fact number two: despite slow and faltering progress on a global scale, numerous countries in all regions of the developing world have proven that success is possible. More than 30 countries, with a total population of over 2.2 billion people, have reduced the prevalence of undernourishment by 25 percent and have made significant progress towards reducing the number of hungry people by half by the year 2015. We can do better. Fact number three: the costs of not taking immediate action to reduce hunger at comparable rates worldwide are staggering. This is the central message I would like to convey to readers of this report. Every year that hunger continues at present levels costs more than 5 million children their lives and costs developing countries billions of dollars in lost productivity and earnings. The costs of interventions that could sharply reduce hunger are trivial in comparison. We cannot afford not to do better.

Democratic records in Latin America and the Caribbean (LAC herafter) have not contributed much to reach a fair and acceptable standard of living for millions of people in the region and, therefore, disaffection of great part of population towards democracies non-responsive to the citizens is widespread in the LAC region.

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As stated by a WEF recent report, economic inequality and social exclusion are great risks to democratic systems and sustainable economic growth. In general, countries that succeeded in reducing hunger were characterized by more rapid economic growth and specifically by more rapid growth in their agricultural sectors. They also exhibited slower population growth, lower levels of HIV infection and higher ranking in the UNDP’s Human Development Index. These findings are consistent with previous analyses that helped shape the World Food Summit Plan of Action and the anti-hunger initiative put forward by FAO at the time of the World Food Summit: five years later. They highlight the importance of a few key building blocks in the foundation for improving food security – rapid economic growth, better than average growth in the agricultural sector and effective social safety nets to ensure that those who cannot produce or buy adequate food still get enough to eat. Box 2: Present Challenges to Agriculture: hunger stands at the forefront Agriculture faces four challenges in becoming sustainable. First, hunger: today more than 850 million people lack sufficient food for an active and healthy life. How will we become able to feed them? Second, trade: negotiations have been suspended primarily because of disagreements on agricultural protections. How do we reach a consensus acceptable by all parties? Third, the environment: agriculture has a tremendous impact on the two most pressing environmental issues: global warming and access to water. How can agriculture minimize its environmental impact? And fourth, health: from obesity issues to supply chain security, the impact of agriculture on health has become a major issue in the public debate. How can our food become more healthy? http://www.socialenterpriseclub.com/conference/

1.a.- Hunger situation in LAC Latin America and the Caribbean is home to some 6 percent of the developing world’s undernourished people. With growth rates exceeding 4% in the last three years, food security should be given highest priority, not just to meet the MDG goal 1, but to completely eradicate hunger from this region. With a reduction in the number of undernourished people from 59 million in 1990–92 to 53.4 million in 2003–04 (from 13% to 10%), the region is making progress towards the World Food Summit target, although the pace needs to be accelerated. Progress is uneven and mostly concentrated in the subregions of South America and the Caribbean. Central America, on the other hand, has witnessed an upward trend in both numbers and prevalence. In Mexico, prevalence remained unchanged at a relatively low level while the number of undernourished people increased. There is a divergence in country progress towards the WFS target. A few countries – Cuba, Guyana and Peru – have already met the target while Chile and Uruguay are very close. Ecuador and Jamaica have reduced the number of undernourished people by around 25 percent. Brazil and Suriname have shown similar progress. Most countries in South America have advanced towards the target, but a significant increase in hunger was recorded in the Bolivarian Republic of Venezuela. Setbacks have also been recorded for most Central American countries, especially Guatemala and Panama. Haiti saw a reduction in the number of undernourished people but, at 47 percent of the population, the prevalence of undernourishment remains by far the highest in the region. 1.b.- Commodity prices and income inequality are the major determinants of food access Overall, per capita dietary energy supplies are higher in the region than in both Asia and the Pacific and subSaharan Africa, and per capita GDP is the highest among developing country regions. A key factor underlying food insecurity in the region is high income inequality, which reflects unequal access to productive assets.18 Inequality causes an uneven distribution of the fruits of economic growth and acts as a brake on poverty reduction. The region is more urbanized than other developing country regions, but in many countries the share of the rural population is still high. Furthermore, in most countries the incidence of extreme poverty

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and food insecurity is higher in rural areas than in urban ones. Rural and agricultural development has a major role to play in alleviating hunger and extreme poverty, especially among small-scale producers and indigenous communities. Ensuring access by the poor to productive resources – land, capital, technology and education – is of particular importance. The food economy is characterized by deep structural changes – the diffusion of new forms of food retail, including supermarkets and hypermarkets, and the consolidation of the food industry. Ensuring that smallholders and poorer farmers are not marginalized is a challenge to be faced. In many countries, export earnings are critical for ensuring staple food imports. For countries with a high degree of export commodity concentration, export earnings and the livelihoods of individuals who depend on agriculture and related activities are vulnerable to international price fluctuations. For instance, the dramatic decline in coffee prices in recent years had severe negative repercussions on food security in Central American countries. In several countries in the region, susceptibility to natural shocks intensifies the vulnerability of the poorest sections of the population. Examples over the last decade include the El Niño phenomenon, which caused droughts and flooding in the Caribbean, Central America and the Andean countries in 1997 and 1998, and hurricanes Georges and Mitch, which destroyed lives, crops and infrastructure in many Caribbean and Central American countries in 1998. 1.c.- Hunger and poverty are related but not equal Measures of food deprivation, nutrition and poverty are strongly correlated, although are not exactly the same. Whereas according to FAO, in LAC there are 53.4 million of hungry people, CEPAL estimates that extreme poverty (measured based on the Basic Food Basket) affects XX million people and the World Bank has recently downsized its figure of extreme poverty in LAC to XXX. Countries with a high prevalence of undernourishment also have high prevalences of stunted and underweight children, although figures normally differs significantly. In these countries, a high percentage of the population lives in conditions of extreme poverty. While poverty is undoubtedly a cause of hunger, hunger can also be a cause of poverty. Hunger often deprives impoverished people of the one valuable resource they can call their own: the strength and skill to work productively. Numerous studies have confirmed that hunger seriously impairs the ability of the poor to develop their skills and reduces the productivity of their labour. 2.- THE COST OF HUNGER IS MUCH HIGHER THAN THE COST TO ERADICATE IT Too often, the eradication of hunger has been looked upon as a by-product rather than an important cause of economic growth. One consequence has been a tendency to rely on the normal processes of economic development, the workings of the market and the stimulus of liberalized trade to bring about the elimination of hunger. But widespread hunger impairs the economic performance not only of individuals and families but also of nations. As the link between more rapid agricultural growth and success in reducing hunger suggests, to ensure that development and trade lead to sustainable reductions in hunger they must be accompanied by policies and investments that provide access to food for the hungry and promote growth in the rural areas where three-quarters of the world's hungry people live. 2.a.- Hunger impairs human development and reduces lifetime earnings Estimates of the indirect costs of hunger are generally based on studies that have measured the impact of specific forms of malnutrition on physical and mental development and have established correlations with reduced productivity and earnings. These studies have shown, for example, that: • Stunted adults are less productive and earn lower wages in manual labour. Low birthweight (LBW) and protein-energy malnutrition cause stunting.

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Every year of missed schooling during childhood cuts deeply into lifetime earnings. LBW, stunting and micronutrient deficiencies have all been associated with reduced school attendance. One study found that malnutrition during critical months of development cost children an average of 4.6 centimetres in stature and almost a year in the classroom. Those seemingly small losses in height and education translated into estimated losses of 12 percent in lifetime earnings.

Reduced cognitive ability, measurable in lower scores on IQ tests, leads to reduced productivity and earnings. Iodine deficiency, which affects an estimated 13 percent of the world's population, has been associated with losses of 10 to 15 points on IQ tests and 10 percent in productivity.

Every child whose physical and mental development is stunted by hunger and malnutrition stands to lose 5 to 10 percent in lifetime earnings. On a global scale, every year that hunger persists at current levels causes deaths and disability that will cost developing countries future productivity with a present discounted value of US$500 billion or more.

Widespread hunger and malnutrition impair economic performance not only of individuals and families, but of nations. Anaemia alone has been found to reduce GDP by 0.5-1.8 percent in several countries. Studies in several countries estimated conservatively that the combined effect of stunting, iodine deficiency and iron deficiency reduced GDP by 2 to 4 percent

Combining these findings with available data on the prevalence of various forms of malnutrition in populations makes it possible to construct provisional estimates of the costs of hunger on national and global scales. A thorough review of the available evidence, for example, indicates that switching one LBW infant to non-LBW status could yield almost US$1000 in benefits over any given person´s lifetime. With about 20 million LBW children born every year in developing countries, the costs of doing nothing for one more year add up to around US$20 billion. These benefits include estimates of reductions both in the direct costs of neonatal care, illness and chronic diseases and in the indirect costs of productivity lost as a result of shortened working lives and impaired physical and cognitive development. Since the benefits are estimated as the current value of increased productivity over the course of a lifetime, a discount value must be applied to account for inflation and the probability that any given individual may not survive or work throughout the normal span of working years. 2.b.- Better nutrition is a necessary condition to higher economic growth, more trade and improved competitiveness Hunger in childhood impairs mental and physical growth, crippling the capacity to learn and earn. Evidence from household food surveys in developing countries shows that adults with smaller and slighter body frames caused by undernourishment earn lower wages in jobs involving physical labour. Other studies have found that a 1 percent increase in the Body Mass Index (BMI, a measure of weight for a given height) is associated with an increase of more than 2 percent in wages for those toward the lower end of the BMI range. Micronutrient deficiencies can also reduce work capacity. Surveys suggest that iron deficiency anaemia reduces productivity of manual labourers by up to 17 percent. As a result, hungry and malnourished adults earn lower wages. And they are frequently unable to work as many hours or years as well-nourished people, as they fall sick more often and have shorter life spans. To defeat poverty, physical and mental nourishment is a prerequisite. Certainly, unhealthy and weak children find it difficult to attend school and those who are capable of attending school may face obstacles in having sufficient focus to process and maintain information. Parents struggle daily for mere survival. Subsequently, education of children may rank low on the list of priorities for those families living in poverty. Those who are ill-fed tend to end up both physically shorter and less mentally agile than otherwise would have been. Hunger

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also spurs millions of children to drop out of school in order to scavenge for food, and those who manage to attend school despite empty bellies find it excruciatingly hard to concentrate. Likewise, workers who are feeble and or experience chronic malnourishment will not work up to their capacity or potential. There are also social and political problems resulting from chronic hunger and deficit nourishment. Several studies show that in societies and communities that experience these problems there is greater civil unrest, less security, and greater political instability. Consequently, corporations avoid investing in these societies and governments fail to provide adequate public service including education and health care. In this case, malnourishment is both a cause and consequence of poverty. Both conventional wisdom and reality reveal that corporations seek to sustain their competitive positions. Therefore, they compete by recruiting and retaining mature and capable workers. Workers with deficit nourishment are likely to have a disadvantage in the marketplace and experience difficulty with proper placement and productive work habits. Simply, corporations search for talented and productive employees in the market. Societies and communities that experience hunger and chronic malnourishment are not the usual place where corporations compete for skilled and productive workers. Reducing hunger, therefore, is a precondition for nurturing talent and accelerating human capital formation, what are both requisites to spur competitiveness. In fact, there is a clear correlation between hunger (measured as undernourishment) and competitiveness in LAC (see graph 1): Engagement in trade has been one of the most effective means in reducing poverty and improving the welfare of people. Countries and communities that have flourished economically across history have a record of engaging and pursuing trade. In today's marketplace, countries and cities that actively participate in open trade such as Singapore, Hong Kong, Finland, Luxemburg etc have achieved remarkable per capita income and offer their citizens ample economic, social, and educational opportunities. It should be mentioned too that countries that engage actively in trade have successfully established political and legal institutions. These institutions have been the backbone for both political and economic stability. Indeed, adequate legal institutions have been instrumental in protecting property rights, improving investor confidence, and enhancing competition; consequently increasing foreign investment and creating more jobs and wealth. Trade, therefore, is an effective means to rescue communities from the state of poverty and hunger. 2.c.- The economic costs of hunger: billions in lost productivity, earnings and consumption Estimating the millions of human lives cut short or scarred by disability leaves no doubt that hunger is morally unacceptable. Calculating the value of lost productivity in dollars suggests that allowing hunger to persist is simply unaffordable, not only to the victims themselves but to the economic development and prosperity of the nations in which they live.

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The costs of hunger to society come in several distinct forms. Perhaps the most obvious are the direct costs of dealing with the damage it causes. These include the medical costs of treating both the problem pregnancies and deliveries of anaemic, underweight mothers and the severe and frequent illnesses of children whose lives are threatened by malaria, pneumonia, diarrhoea or measles because their bodies and immune systems have been weakened by hunger. A very rough estimate, apportioning medical expenditures in developing countries based on the proportion of disability-adjusted life years (DALYs) attributed to child and maternal undernutrition, suggests that these direct costs add up to around US$30 billion per year - over five times the amount committed so far to the Global Fund to Fight AIDS, Tuberculosis and Malaria. These direct costs are dwarfed by the indirect costs of lost productivity and income caused by premature death, disability, absenteeism and lower educational and occupational opportunities. Provisional estimates suggest that these indirect costs range into the hundreds of billions of dollars. Both the direct and indirect costs represent the price of complacency, of allowing widespread hunger to persist. Both are unacceptably high, not only in absolute terms but in comparison with estimates of a third type of costs - the costs of interventions that could be taken to prevent and eliminate hunger and malnutrition. Numerous studies suggest that every dollar invested in well-targeted interventions to reduce undernourishment and micronutrient deficiencies can yield from five times to over 20 times as much in benefits. Box 3: Hunger as an obstacle to education One reason that the drive for universal primary education has lagged is the persistence of hunger and malnutrition. Just as lack of education condemns people to lives of poverty and hunger, hunger and malnutrition deprive millions of children of the opportunity to acquire an education. Poor, food-insecure families often cannot afford school fees and depend on children, particularly girls, for tasks such as fetching water and fuelwood. Also, poor health and stunting caused by malnutrition often prevent or delay enrolment in school. In a number of countries in Latin America, more than half of all children from the poorest 40 percent of the population never even enrol in school. Attendance and completion rates are lowest among rural children, especially girls. In almost half of 41 countries in Africa, Asia and Latin America included in a recent survey, primary school attendance in rural areas fell 20 percentage points or more below attendance in urban areas. The “gender gap” between school attendance and attainment for boys and girls is often two to three times greater in rural areas. In several Latin American countries, primary school completion rates among rural girls fall below 50 percent. Hunger and malnutrition impair children’s performance even when they do attend school. Low birth weight, proteinenergy malnutrition, anaemia and iodine deficiency all impair cognitive abilities and reduce children’s ability to learn. Even mild to moderate levels of stunting have been associated with significantly lower mental capacity and school performance. Iron-deficiency anaemia, which affects more than half of all school-age children, damages their ability to learn by eroding attention span and memory.

2.d.- It is cost effective to eradicate hunger The reduced productivity, truncated working lives and suffocated opportunities of 799 million hungry people in the developing world hamstring economic progress and fuel environ-mental degradation and conflict at the national and international levels. Clearly, the cost of inaction is prohibitive. Fortunately, the cost of progress is both calculable and affordable. The currency most urgently needed is not dollars but commitment. At a side event of the World Food Summit: five years later, in June 2002, the FAO Secretariat presented a draft out line for an Anti-Hunger Programme, a strategic, cost-effective framework for national and international action to reduce hunger through agricultural and rural development and wider access to food. According to FAO figures, public investment of US$24 billion a year would be enough to jump-start an accelerated campaign against hunger that could reach the WFS goal. Over a ten-year period, that investment would pay for targeted interventions that would save the lives of almost 900000 children and yield long-term gains in productivity worth more than US$1 billion. Taken in perspective, the price tag is startlingly low, dwarfed by

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the more than US$300billion that the OECD nations transferred to support their own agriculture in 2001. As the economist Jeffrey Sachs has pointed out, in comparison to a global economy measured in the trillions, US$24 billion could be considered a "rounding error", representing barely five cents for every US$100 of income. And the payoff would be impressively high. FAO has estimated that achieving the WFS goal would yield at least US$120 billion per year in benefits as a result of longer, healthier and more productive lives for several hundred million people freed from hunger. The cost of the programme would be widely shared. Of various conceivable options, the Anti-Hunger Programme assumes that the costs would be shared equally, 50-50, between the international donor community and the developing countries themselves. On average, across all developing regions, this would require a 20 percent increase in developing countries' budgets for agricultural and rural development. For the developed countries and international financing institutions, it would represent a doubling of concessional funding to agricultural and rural development. This would restore official development assistance to the level before a steep decline in the 1990s that hit hardest in precisely those countries where hunger is most widespread, as documented in this report. Simply stated, the question is not whether we can afford to take the urgent and immediate action needed to reach and surpass the WFS goal. The question is whether we can afford not to. And the answer is an emphatic, resounding no. 3.- MORE AND BETTER INVESTMENTS IN HUNGER HOTSPOTS AND RURAL AREAS 3.a.- Investment in agriculture lags where hunger is most prevalent An overview of the data on private investment, public expenditures and external assistance to agriculture in developing countries shows that the sector receives less investment and support in the very countries where hunger and poverty are widespread. Most of the investment required to stimulate growth in the agricultural sector comes from private sources, mainly farmers themselves. A look at capital stock per agricultural worker in the primary agriculture of developing countries shows that it is extremely low and stagnant in countries where prevalence of undernourishment is high, as compared to those that have managed to reduce hunger. And the investment gap is growing. Good performers in hunger reduction have had strong growth in capital stock in agriculture since 1975. In all other categories, investment has increased little, if at all. And in the group of countries where more than one-third of the people are undernourished, the value of capital stock in primary agriculture has declined in real terms over the past quarter century. 3.b.- Public investment fails to reflect the importance of agriculture Public investment in infrastructure, agricultural research, education and extension is essential in stimulating private investment, agricultural production and resource conservation. But actual public expenditures for agriculture and rural development in the developing world do not reflect the importance of the sector to the national economies and the livelihood of their populations. In fact, government expenditures on agriculture come closest to matching the economic importance of the sector in those countries where hunger is least prevalent. For the group of countries where undernourishment is most widespread, the share of government spending devoted to agriculture falls far short of matching the sector's importance in the economy. The trends are also discouraging. During most of the 1990s, the agricultural orientation index (calculated as the ratio of the share of agriculture in total public expenditures to the share of agriculture in GDP) increased in the countries with the lowest prevalence of undernourishment while decreasing in the countries where the prevalence was highest.

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3.c.- Development assistance does not target neediest countries Development assistance is critical for very poor countries with limited ability to mobilize domestic private and public savings for investment. It is particularly critical for agriculture, which is largely bypassed by foreign private investors. And yet official development assistance to agriculture declined by an alarming 48 percent between 1990 and 1999 in real terms. It also appears that external assistance to agriculture (EAA) is not related to need. Data on EAA for 1997-99 indicate that countries where less than 5 percent of the population was under nourished received more than three times as much assistance per agricultural worker as countries where more than 35 percent of the population was undernourished. Moreover, although EAA per agricultural worker declined across all categories in the 1990s, the countries with the highest prevalence of undernourishment were the hardest hit. In those countries, EAA declined by 49 percent in real terms, leaving it at less than 40 percent of the level per agricultural worker in countries with the lowest prevalence of hunger. The message is clear. Directing sufficient resources to agriculture and rural development will increase productivity, employment opportunities and access to food, particularly in the rural areas and countries where hunger is most common. Many of these countries are badly starved of investable resources. International assistance to them, starting with a lasting solution of the debt problem, would be a tangible sign that the commitments to reach the World Food Summit goals are being honoured. 3.d.- Giving priority to rural areas Given the importance of hunger as a cause of poverty, illiteracy, disease and mortality, given the fact that 75 percent of the world’s hungry people live in rural areas, it is hardly surprising that these same rural areas are home to the vast majority of the 121 million children who do not attend school, of the nearly 11 million children who die before reaching the age of five, of the 530 000 women who die during pregnancy and childbirth, of the 300 million cases of acute malaria and more than 1 million malaria deaths each year. Clearly, to bring these numbers down, to reach the MDG targets, priority must be given to rural areas and to agriculture as the mainstay of rural livelihoods, through sustainable and secure systems of production that provide employment and income to the poor, thus improving their access to food. Yet, in recent decades, agriculture and rural development have lost ground on the development agenda. Over the past 20 years, resources for these sectors have declined by more than 50 percent. That must change. And we can be encouraged by signs that it is indeed changing, that both national governments and international donors are recognizing the critical importance of rural areas as the location and agriculture as the engine for reaching the MDGs. The United Nations Millennium Project has stated that “the global epicenter of extreme poverty is the smallholder farmer�. If increased recognition leads to scaled-up action, the MDGs can still be reached. 4.- CONCLUSIONS To bring those households that strive to survive below the food security threshold to a minimum standard of living whereby his everyday food is, at least, guaranteed three times per day, one needs to combine two elements: a) Promoting national markets (local consumption) and exporting opportunities so as to boost demand to generate stable employment and better investments. b) Strengthening the role of the State (the public sector) as driving and regulatory force to foster those market niches, meanwhile guaranteeing social safety nets to cover minimum basic rights and needs of the most vulnerable households (the hungry people).

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4.a.- Eradicating hunger as a “sinequaenon” requisite to meet the mdgs and accelerating progress towards the social cohesion Any initiative geared towards social cohesion implies the elimination of hunger first, as it happens in Europe. However, hunger is surprisingly absent from the social cohesion agenda. Numerous articles published by FAO offer compelling evidence that the WFS target and the MDGs are interdependent and mutually reinforcing. Few of the MDGs can be achieved without substantially reducing hunger. By the same token, progress towards the other MDGs will accelerate progress on reducing hunger and poverty. Evidence clearly shows that failure to eliminate hunger will undermine efforts to reach the other MDGs as well. Data and analysis confirm that reducing hunger and malnutrition could have a decisive impact on reducing child mortality , improving maternal health, and on combating HIV/AIDS, malaria and other diseases. Hopes for achieving universal primary education and literacy, for example, will be thwarted while millions of hungry children suffer from diminished learning capacity or are forced to work instead of attending school. Low birth weight, protein energy malnutrition, iron deficiency anaemia and iodine deficiency are all linked to cognitive deficiencies. Hunger also limits school attendance. This steep increase for girls suggests one way in which reducing hunger would also accelerate another of the MDGs - promoting gender equality. MDG 3 calls for efforts to promote gender equality and empower women. In many impoverished rural areas, food insecurity and poverty sharply reduce school attendance of girls. Similarly, hunger and poverty frequently compel women to devote their energies to subsistence agriculture to feed their families, while men often migrate to cities in search of work. Reducing hunger would open the door to new opportunities for both women and men in rural areas. At the same time, numerous studies have confirmed that reducing gender inequality and empowering women would yield significant reductions in hunger and poverty. One World Bank study found that increasing women's primary schooling could boost agricultural output by 24 percent. Other studies have shown that increasing opportunities for women has a particularly strong impact on hunger because women devote much more of their income directly to feeding their families than men do. A similar case can be made for positive feedback between combating hunger and reaching other MDGs. The evidence is clear that hunger can lead to unsustainable use of resources and that environmental degradation contributes to hunger; that hunger is a major cause of maternal deaths and that poor maternal nutrition and health perpetuate hunger by increasing the number of children of low birth weight who suffer from impaired cognitive and physical development; that hunger contributes to the spread and lethal impact of HIV/AIDS, malaria and other diseases, while the AIDS pandemic has caused widespread hunger by decimating the agricultural workforce and leaving many rural households struggling to survive on the labour of orphaned children and elderly relatives. As this report documents, hunger and malnutrition are major causes of the deprivation and suffering targeted by all of the other MDGs (see table 1 below): • Hungry children start school later, if at all, drop out sooner and learn less while they do attend, stalling progress towards universal primary and secondary education (MDG 2). • Poor nutrition for women is one of the most damaging outcomes of gender inequality. It undermines women’s health, stunts their opportunities for education and employment and impedes progress towards gender equality and empowerment of women (MDG 3). • As the underlying cause of more than half of all child deaths, hunger and malnutrition are the greatest obstacle to reducing child mortality (MDG 4). • Hunger and malnutrition increase both the incidence and the fatality rate of conditions that cause a majority of maternal deaths during pregnancy and childbirth (MDG 5).

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• •

Hunger and poverty compromise people’s immune systems, force them to adopt risky survival strategies, and greatly increase the risk of infection and death from HIV/AIDS, malaria and other infectious diseases (MDG 6). Under the burden of chronic hunger, livestock herders, subsistence farmers, forest dwellers and fisherfolk may use their natural environment in unsustainable ways, leading to further deterioration of their livelihood conditions. Empowering the poor and hungry as custodians of land, waters, forests and biodiversity can advance both food security and environmental sustainability (MDG 7).

Table 1: Hunger impacts other Millennium Development Goals Goal

Selected indicators

Impact of hunger

net enrolment ratio

reduces school attendance

• •

literacy rate

• •

impairs cognitive capacity

under-five mortality rate

associated with 60 percent of child deaths

maternal mortality rate

greatly increases risk of maternal death

HIV prevalence among pregnant women

spurs migratory labour that increases spread of HIV

death rates associated with malaria

multiplies child death rates from two- to three-fold

proportion of land area covered by forest

leads to unsustainable use of forest lands and resources

Achieve universal primary education

Promote gender equality

ratio of girls to boys in primary education

may reduce school attendance more for girls

Reduce child mortality improve maternal health Combat HIV/AIDS, malaria and other diseases

Ensure environmental sustainability

Most, if not all, of the WFS and MDG targets can still be reached. But only if efforts are redoubled and refocused. And only by recognizing and acting on two key points: 1. without rapid progress in reducing hunger, achieving all of the other MDGs will be difficult, if not impossible; and 2. the fight to eliminate hunger and reach the other MDGs will be won or lost in the rural areas where the vast majority of the world’shungry people live. 4.b.- The keys to progress in reducing hunger: the successful countries In attempting to analyse the factors that fuel progress in reducing hunger, a combination of six indicators proved most successful at differentiating among countries grouped according to their performance between 1990–1992 and 1999–2001. These indicators include population growth, GDP growth per person, health expenditure as a proportion of GDP, the proportion of adults infected with HIV, the number of food emergencies and the UNDP’s Human Development Index (itself a composite of many economic and social indicators). Box 4: Comparing economic growth and the reduction of hunger in Peru and Botswana during 1990–2000 Both Botswana and Peru registered strong economic growth during the 1990s. But in terms of reducing the prevalence of hunger, the two countries parted ways. Peru reduced the prevalence of hunger by almost 70 percent to reach the MDG target 15 years ahead of schedule. In Botswana, on the other hand, the prevalence of hunger increased even as the national economy surged ahead. Tellingly, the agricultural GDP in Peru grew even faster than the rest of the economy, fueled in part by diversification into value-added, non-traditional exports that boosted farm incomes and created processing jobs. The agricultural GDP in Botswana fell by almost 40 percent. Many other factors contributed to the

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disparity between Botswana and Peru. Botswana has been hit extremely hard by the HIV/AIDS pandemic, for example, with more than 35 percent of the adult population infected. In Peru, the infection rate is less than 1 percent.

In the countries that succeeded in reducing hunger throughout the nine year period, GDP per capita grew at an annual rate of 2.6 percent – more than five times higher than the rate in countries where undernourishment increased in both subperiods (0.5 percent). The most successful countries also exhibited more rapid agricultural growth (3.3 percent per year compared to only 1.4 percent for the countries where hunger increased throughout the decade), lower rates of HIV infection, slower population growth and far fewer food emergencies. Many of the countries that have achieved rapid progress in reducing hunger have something else in common - significantly better than average agricultural growth. Within the group of more than 30 countries that are on track to reach the WFS goal, agricultural GDP increased at an average annual rate of 3.2 percent, almost one full percentage point faster than for the developing countries as a whole. Several of these countries have also led the way in implementing a twin-track strategy to attack hunger - strengthening social safety nets to put food on the tables of those who need it most on the one hand, while attacking the root causes of hunger with initiatives to stimulate food production, increase employability and reduce poverty on the other. 4.c.- The costs of missing the World Food Summit goal Coming at the costs of hunger from another direction, FAO conducted a macroeconomic study to estimate the benefits of reducing undernourishment by enough to meet the World Food Summit (WFS) target. The study estimated the value of increased production that would be unleashed by reducing the number of undernourished people in developing countries to around 400 million by the year 2015, instead of the approximately 600 million projected by a standard FAO model in the absence of concerted action to reduce hunger. Based only on the increased life expectancy associated with higher levels of food availability required to meet the WFS goal, the total discounted value over the years up to 2015 was estimated to be approximately US$3 trillion, which translates into an annuity benefit of US$120 billion per year. This calculation, too, almost certainly underestimates the true costs of hunger. But like previous estimates it clearly demonstrates that the costs of allowing widespread hunger to persist are extremely high and far outweigh the costs of decisive action to eliminate it. The FAO study estimated that an increase of just US$24 billion per year in public investment would make it possible to attain the WFS goal and reap US$120 billion in annual benefits. We do not have the excuse that we cannot grow enough or that we do not know enough about how to eliminate hunger. What remains to be proven is that we care enough, that our expressions of concern in international fora are more than rhetoric, that we will no longer accept and ignore the suffering of 53.4 million people who every night go to bed with empty stomachs in Latin America and the Caribbean. It is their right to have access to adequate food to live a healthy and productive life, and it is our duty to respect, protect and guarantee that right.

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The economics of Hunger in LAC (Vivero)  

1.­ BACKGROUND: LATIN AMERICA CAN BECOME A HUNGER­FREE REGION 1.a.­ Hunger situation in LAC 1.b.­ Commodity prices and income inequality are...

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