Food prices and diet costs in China and worldwide: Guiding

Food prices and diet costs in China and worldwide: Guiding food systems for nutrition and health William Masters Friedman School of Nutrition and Department of Economics, Tufts University [email protected] Yan Bai International Comparison Program and Development Data Group The World Bank [email protected] 13th CAER-IFPRI Annual Conference Building Sustainable and Healthy Food Systems in China October 28-29, 2021 https://sites.tufts.edu/foodpricesfornutritio

Food prices and diet costs in China and worldwide New work to guide food systems for nutrition and health We use food prices to measure cost and affordability of a healthy diet – Use consumer prices for retail items (not farm products, as in agricultural food price indexes) – Add up prices using least-cost items to meet health needs (not actual consumption, as in a CPI) – This kind of “basic needs” basket dates to Stigler (1945) but newly possible to do everywhere Allen (2017) in AER; Omiot & Shively (2017) in AFJAND; Masters et al. (2018) in AJAE Various other papers, leading to the UN SOFI reports: FAO, IFAD, UNICEF, WFP and WHO (2020, 2021) Today will show – – – – Global results used by UN agencies and the Food System Summit Role of sustainability in diet costs and affordability Role of COVID in food prices and affordability Role of climate and seasonality, including initial application to China

New methods reveal whether a country’s food system brings healthy diets within reach Governments pursue what they measure The Food Prices for Nutrition project helps governments measure the cost of healthy diets, for use in guiding policies and programs to make Food preferences, convenience and healthy diets affordable for all other goals (including Healthy diets food security, (meet food group diet diversity, recommendations) sustainability, equity and Nutrient adequacy inclusion) (avoid deficiencies and excesses of essential nutrients ) Daily energy Caloric adequacy (short-term subsistence) Source: Food Prices for Nutrition (2021). https://sites.tufts.edu/foodpricesfornutrition

The least-cost diet approach measures food access as affordability of a healthy diet Source: UN Food System Summit (New York: United Nations): https://www.un.org/en/food-systems-summit/news/making-food-systems-work-people-planet-and-prosperity; https://foodsystems.community/healthy-diets-from-sustainable-food-systems-for-children-and-all-coalition

Affordability of a healthy diet is necessary but not sufficient for consumption of a healthy diet Many foods are available at each time & place – For affordability, focus on least-cost items that meet dietary needs Our innovation is to measure the food environment with thousands of modeled diets, one for each time, place and person (or household) Previous work focuses on the cost of all foods for CPI to measure inflation, or the prices of farm commodities, rather than the retail items we use – For different needs, have 4 steps of diet qualityEAT-Lancet diets Designed for health and sustainability Healthy diets “Cost of Recommended Diets“, based on 10 national governments’ dietary guidelines Nutrient adequacy “Cost of Nutrient Adequacy”, based on upper and lower bounds for 23 essential micro- and macronutrients Daily energy “Cost of Caloric Adequacy”, sufficient for short-term survival and work

How do we define and measure the cost and affordability of “healthy & sustainable” diets? Cost of energy and essential nutrients – Daily energy is the most basic human need – Nutrient adequacy to avoid deficiencies was key 20th century discovery, now in the 21st century we include upper bounds for toxicity and chronic disease – Results are sensitive to food composition data & differences in nutrient needs Cost of a healthy diet in terms of food groups – Dietary guidelines are based on epidemiological evidence about food groups including aspects of the diet beyond just essential nutrients – Guidelines are official national policy; we use ten examples from around the world Cost of a healthy and sustainable diet – EAT-Lancet commission reference diets target health and also limit intake of environmentally harmful foods (especially meat) Affordability depends on income – We take account of income distribution, and of non-food needs

How do we obtain comparable prices for each type of food? National statistical agencies collect retail food prices for their CPI to track inflation, following the UN system of national accounts – Typically 50-150 food items, to represent national average consumption – CPI weights each price by the item’s share of total spending – Underlying data may be confidential, publish only averages Market information and early warning systems aim to guide agricultural intervention & nutrition assistance – Prices are reported quickly for places at risk of undernutrition – Coverage is limited to 80-90 low- and middle-income countries – Item selection is limited to foods most widely used by the poorest The International Comparison Program (ICP) uses select items to compare currencies across countries Choice of items limited to standard products sold in multiple countries Global and regional lists for 2017 include 787 items Prices for 2021 being assembled now, will have more green leafy vegetables

What did we discover about food prices and diet costs? The cost of energy sufficient, nutrient adequate and healthy diets by country income group in 2017 The least-cost items in each place generally have similar prices for lower- and higher-income people Smaller step up, due primarily to lower prices for dairy Cost of recommended diets 3.50/day Cost of nutrient adequacy 2.00/day Cost of survival 0.75/day Source: Figure 2 of Herforth et al. (2020). Cost and affordability of healthy diets across and within countries. Background paper for The State of Food Security and Nutrition in the World 2020. FAO Agricultural Development Economics Technical Study No. 9. Rome, FAO. https://doi.org/10.4060/cb2431en

What did we discover about affordability around the world? Cannot afford sufficient daily energy (global total 185 million, ave. cost PPP 0.79) Percent of population, by country in 2017 Cannot afford a nutrient-adequate diet (global total 1.5 billion, ave. cost PPP 2.33) Africa: 596 million Cannot afford a healthy diet (global total 3.0 billion, ave. cost PPP 3.75) About 3 billion people (38% of the world population) could not afford a healthy diet in 2017 Monitoring diet cost and affordability complements other ways of measuring poverty and food insecurity: 690 m. below 1.90/day (World Bank) 653 m. undernourished (PoU, from 1960s) 1.9 b. experience food insecurity (FIES) Latest updates (through 2019) are here: S. Asia: 1.3 billion SE Asia: 326 million Africa: 829 million Source: FAO, IFAD, UNICEF, WFP and WHO (2020). The State of Food Security and Nutrition in the World 2020, FAO, Rome. Details at https://sites.tufts.edu/foodpricesfornutrition

Does adding sustainability criteria raise diet costs? Diet costs at each level of national income (2017, in US dollars at PPP prices) Healthy diet (meets national dietary guidelines) Nutrient adequate (within bounds for 23 essential nutrients) Calorie adequate (energy balance) Source: Food Prices for Nutrition (2021). Data shown are national averages for 166 countries in 2017, in US dollars at 2017 PPP price levels. Chart omits two small countries with outlier national income levels, Singapore (240/day) and Qatar (260/day). Regression line is cubic function of income, and methods for diet cost are as defined in the technical background paper accompanying SOFI 2020 (Herforth et al. 2020).

Does adding sustainability criteria raise diet costs? No, because least-cost healthy diets already use very few animal foods Diet costs at each level of national income (2017, in US dollars at PPP prices) * EAT-Lancet reference diet (flexitarian version) Healthy diet (meets national dietary guidelines) Nutrient adequate (within bounds for 23 essential nutrients) Calorie adequate (energy balance) Source: Food Prices for Nutrition (2021). Data shown are national averages for 166 countries in 2017, in US dollars at 2017 PPP price levels. Chart omits two small countries with outlier national income levels, Singapore (240/day) and Qatar (260/day). Regression line is cubic function of income, and methods for diet cost are as defined in the technical background paper accompanying SOFI 2020 (Herforth et al. 2020).

COVID resilience is mostly about shocks to income Number of people in 63 LMICs who would not be able to afford a healthy diet 141 million people (6% rise) With COVID in 2020 Without COVID Proportion of the cost of a healthy diet that people would be able to afford 2021 2022 100% 75-100% 50-75% 25-50% 0-25% Source: Laborde D. et al., COVID-19 pandemic leads to greater depth of unaffordability of healthy and nutrient-adequate diets in low- and middle-income countries. Nature Food 2, 473–475 (2021). https://doi.org/10.1038/s43016-021-00323-8. Details at https://sites.tufts.edu/foodpricesfornutrition

COVID impacts also include higher farm-to-retail margins, and hence higher food prices Monthly change in global consumer price indexes for food versus other items (180 countries, Jan. 2019 – Feb. 2021) 3% rise in real food CPI since March 2020 (and does not follow commodity prices) Association with cumulative COVID case counts Larger (5%) rise in countries with higher case counts Source: Bai, Y. et al., Food prices in a pandemic: Global data show higher costs for nutritious food groups (2021). https://doi.org/10.21203/rs.3.rs-710555/v1.

Diet cost data can guide national policy towards resilient food markets Energy shares of least-cost diets Seasonality of diet costs and cost by food group in Tanzania, Malawi and Ethiopia Source: Bai, Y., E. Naumova and W.A. Masters (2020). Seasonality in diet costs reveals food system performance in East Africa

What does our whole-diet approach reveal about food prices within China? Seasonality of food prices by region in China Animal-source foods FG Egg and dairy products Item Egg Milk powder Milk Beef Pork Meats Mutton Chicken Ribbonfish Sea shrimp Grass carp Fish and Silver carp seafood Carp Crucian carp Bighead carp Yellow croaker East Middle North Northeast Northwest South Southwest 32.9% 31.0% 39.0% 39.1% 32.3% 16.6% 16.0% na na 0.5% 0.3% na na na 0.6% na na na na na 0.7% 4.1% 3.8% 3.1% 4.1% 2.6% 2.6% 3.1% 18.3% 18.3% 16.1% 21.2% 16.3% 18.2% 18.6% 3.5% 5.6% 3.4% 2.7% 3.1% 3.5% 3.3% 4.3% 8.4% 5.3% 6.7% 5.9% 3.1% 6.1% na na 1.6% na 2.6% 4.4% na 9.2% na 2.0% na 2.5% 7.4% na 3.1% 2.5% na na na na 2.9% na na na na na na na na na na na na na na 7.5% 6.4% 3.1% 4.1% na 4.1% 2.8% 2.5% 1.5% na 2.1% na na na 2.1% na na na na 3.4% na Among animal foods, eggs are the most seasonal item Packaged foods FG Item Soy oil Soy Blended oil Oil Peanut oil Rapeseed oil MSG Sugar Brown sugar Soyabean sauce Discretionar Vinegar y foods Salt Spring water SSB Fast noodle Cookies East Middle North Northeast Northwest South Southwes 0.6% na na na na na na na na na na na na na na na na 1.0% na na na na na na na na na na na na 0.7% na 1.1% na na na na na na na na na na na na na na na na 1.0% na na na na na na na na na na na na na 1.8% na na na 2.7% na na 1.7% na na na na na na 0.9% na 1.1% 0.9% na na na na na na na na na na na na na na na na 1.5% Source: Bai, Y., and W.A. Masters (in preparation), Seasonality of food prices in China. Food Prices for Nutrition project working paper. Boston: Tufts

In China, vegetables have by far the most seasonality in retail consumer prices Vegetal foods FG Item Starchy Potato Pulses Tofu Pear Orange Fruits Apple Watermelon Banana Cabbage Chinese caggage Pepper Rape leaves Carrot Celery Eggplant Vegetables Radish Garlic springs Tomato String bean Bell pepper Chinese chives Cucumber In northern regions, watermelon prices fluctuate by a factor of 2-3x East 25.9% na 19.3% 12.3% 17.1% 120.9% 7.9% 10.4% 51.9% 32.5% 39.1% 16.1% 30.6% 62.9% 21.5% 35.5% 43.8% 65.0% 38.7% 42.8% 74.5% Middle 29.7% na 10.1% 10.7% 12.2% 116.5% 8.7% 12.9% 42.0% 53.0% 21.2% 18.9% 17.2% 103.8% 24.3% 37.4% 60.1% 88.7% 61.7% 49.6% 85.7% North Northeast Northwest South Southwest 49.9% 54.7% 52.1% 11.9% 20.6% 1.4% na na na na 10.2% 8.3% 8.9% 12.3% 11.3% 10.9% 5.7% 17.5% 17.6% 10.8% 18.1% 22.2% 13.0% 16.5% 13.7% 195.8% 334.8% 209.2% 33.1% 26.8% 9.3% 9.8% 6.2% 11.5% 8.6% 56.6% 77.3% 48.2% na 10.6% 33.2% 20.9% 24.2% 24.1% 15.1% 84.8% 112.4% 106.9% na 44.5% 33.1% 45.2% 33.2% 20.2% 7.7% 35.1% 37.6% 31.6% 8.0% 15.1% na 31.6% 10.5% 13.3% na 172.8% 115.9% 140.8% 30.1% 43.8% na 16.1% na 22.6% 17.0% 48.7% 38.8% 44.9% 18.9% 22.1% 91.2% 102.1% 102.3% 8.9% 32.7% 88.2% 109.8% 84.8% 45.3% 28.2% 97.3% 115.4% 110.4% na 44.1% 102.6% 130.7% 98.8% 27.1% 21.5% 102.6% 115.8% 97.7% 29.0% 51.7% Source: Bai, Y., and W.A. Masters (in preparation), Seasonality of food prices in China. Food Prices for Nutrition project working paper. Boston: Tufts

The pattern of seasonality varies by product and region 350 350 WATERMELON Watermelon 40 40 Percentage PERCENTAGE POINTS points 30 210 20 140 10 70 0 0 0 0 0 JAN East 2 Middle MAR 4 North JUL 8 Northwest SEP 10 South NOV 12 0 JAN 2 MAR 4 MAY 6 JUL 8 SEP 10 NOV 12 Southwest Pork EGGPLANT 25 25 PORK Percentage PERCENTAGE POINTS points 200 MAY 6 Northeast Eggplant 200 Percentage PERCENTAGE POINTS points 20 150 15 100 10 50 0 EGG Percentage PERCENTAGE POINTS points 280 Eggs 5 0 0 0 0 JAN 2 MAR 4 MAY 6 JUL 8 SEP 10 NOV 12 0 JAN 2 MAR 4 MAY 6 JUL 8 SEP 10 NOV 12 Source: Bai, Y., and W.A. Masters (in preparation), Seasonality of food prices in China. Food Prices for Nutrition project working paper. Boston: Tufts

Conclusion: Use of existing consumer price data can complement other methods to monitor food systems For many people (3 billion, 40% of world), healthy diets remain beyond reach – Perishable or bulky foods are more costly to grow and distribute than starchy staples, vegetable oil and sugar – Seasonality as well as other price volatility is an important constraint on year-round access – Affordability requires income growth and safety nets, as well as food system change to lower prices – Adding sustainability criteria does not raise diet costs, because least-cost items are not resource-intensive For most people (4.9 b., 60%), healthy diets are affordable but often not chosen – Price barrier is not insurmountable; other factors often drive choice preferences (food culture, taste and satiation) meal preparation (time, fuel, water, equipment) marketing of packaged foods (availability and advertising) – COVID lowered income and raised food prices, but magnitude is not yet known Many next steps, including new work in China

https://sites.tufts.edu/ foodpricesfornutrition Thank you! The Food Prices for Nutrition project (https://sites.tufts.edu/foodpricesfornutrition) is conducted at Tufts University jointly with Anna Herforth, and with IFPRI (led by Derek Headey) and the World Bank (led by Nada Hamadeh, with Yan Bai and Marko Rissanen), with numerous students at Tufts including Robel Alemu, Leah Costlow, Rachel Gilbert, Elena Martinez, Julia Matteson, Kate Schneider, Aishwarya Venkat, Jessica Wallingford, and also faculty collaborators Steve Block, Shibani Ghosh, Elena Naumova and Patrick Webb. In-country studies have been led by Stevier Kaiyatsa (Ministry of Finance, Malawi), Fulgence Mishili (Sokoine University, Tanzania), Daniel Sarpong (University of Ghana), Fantu Bachewe (IFPRI-Addis) and Kalyani Ragunathan (IFPRI-Delhi) among others. We thank the many price collectors and contributors to other databases on which we rely, and are grateful for funding to the Bill & Melida Gates Foundation and UKAid, as well as complementary support from USAID. This project would not exist without the support and guidance of our BMGF program officer, Shelly Sundberg. Photo by Anna Herforth at Agbogbloshi market, Ghana

COVID impacts include higher food prices, especially for certain foods Average nominal prices by food group vs. cumulative COVID case counts (n 1,309 items from 86 countries, Jan. 2019 – Feb. 2021) Source: Bai, Y. et al., Food prices in a pandemic: Global data show higher costs for nutritious food groups (2021). https://doi.org/10.21203/rs.3.rs-710555/v1.