MARKETS AND DETERMINANTS OF FOOD PRICES - Food Security, Food Prices and Climate Variability - page 94

the Energy and Security Act that set this goal, President Bush called for a reduction of 20
percent in US gasoline consumption in ten years. This goal was to be met by setting a
Renewable Fuel Standard of 35 billion US gallons (130,000,000 m 3 ) by 2017 and by reform-
ing and modernizing the automotive Corporate Average Fuel Economy (CAFE) standards
(Schnepf, 2007). The impact of this ethanol standard on the commodity market was uninten-
tional, and is often cited as a contributing factor to the massive increase in global commodity
prices for many goods in 2007-08, and may be the source of much of the volatility of the
maize markets since the imposition of the standard (Diffenbaugh et al ., 2012).
Through modeling potential changes in corn production in the US and the price-production
relationship, Diffenbaugh et al . showed that if a strict, binding biofuels policy remains in place,
increasing temperatures in coming decades may greatly increase the volatility of the maize
market prices. Volatility in maize production due to increasing temperatures will further exacer-
bate commodity price volatility. These models, however, only address the direct impact of
climate on US maize production and ultimately on volatility of maize export prices.
How volatility in the export market affects local food production depends on the local
market structure. Corn prices in Mexico, for example, were affected by the US ethanol
market because US food producers started buying Mexican-produced corn when US produc-
ers switched much of their acreage to corn varieties used for ethanol production (Wise, 2012).
Wise (2012) estimates that commodity price increases in the Mexican food market due to
ethanol production has cost about US$1.5 billion from 2006-11. These costs have had a
significant negative impact on the poor in net-food-importing countries.
Food access and household food security
How does food price volatility on the global market impact local food access and food
security? This depends on the livelihood strategy of the community in question and how vul-
nerable the local market is to global food price volatility. Despite accelerating globalization,
local production remains at the center of how the world feeds itself. Food purchased from the
global commodity markets makes up only a fraction of the food available in a region, since
only a small portion of all food grown enters the international marketplace. Figure 5.2 shows
the role that household food production, off-farm income and the price of food has on
enabling access to food. Livelihoods reliant on work in urban or semi-urban areas are more
vulnerable to the availability of and access to public services such as environmental and health
services due to the higher prevalence of disease vectors and environmental contaminants that
can reduce health and nutritional status of family members (Ruel et al ., 2010).
Well-fed individuals are far more resistant to illness, whereas inadequate amounts of calor-
ies and micronutrients may cause not only malnutrition, but also intestinal disorders, chronic
non-contagious illnesses, anemia, micro-nutrient deficiencies and diseases transmitted by food
(Chiu et al ., 2009). Good nutrition depends on a set of non-food factors such as sanitary con-
ditions, water quality, infectious diseases and access to primary health care. Thus, having an
adequate amount of food for consumption does not assure nutritional security (Pinstrup-
Andersen, 2009). These ideas can also be termed “health security” and “nutrition security,”
although they are usually identified and determined by the individual. At the household and
community level, adequate food consumption forms the basis of health.
Increasing globalization of food markets and rising urban populations have made food
access the main driver of food insecurity in the world today (Eilerts, 2006). Few food security