1. MOBILISING THE FOOD CHAIN FOR HEALTH Workshop 25-26 OCTOBER, 2012, OECD CONFERENCE CENTRE, PARIS Prakash Shetty and Josef Schmidhuber The Nutrition Transition

2. Overview Part I: What makes a healthy diet? Part II: What is the nutrition transition? Part III: NCDs: The extent of the problem and its main manifestations Part IV: Nutrition transition, NCDs and the key drivers –Ageing populations, urbanization and income growth –Phenotypic and genotypic predisposition –Agricultural policies? – … many more! Overview

3. http://www.fao.org/docrep/005/ac911e/ac911e00.htm 1. What makes a healthy diet? The Nutrition Transition

4. Dietary Intake Ranges (1) (as a share of total energy intake) Dietary Factor Recommendations (WHO/FAO) Total Fat15 - 30% Polyunsaturated FA6-10 % Saturated FA<10 % Trans FA<1 % Total Carbohydrate55 – 75 % Free sugars*<10 % Protein10 - 15% * “Free sugars” refers to all monosaccharides and disaccharides added to foods, plus sugars naturally present in honey, syrups and fruit juices 1. What makes a healthy diet? The Nutrition Transition

5. Dietary Intake Ranges (2) (in g or mg/person/day) Dietary FactorFAO/WHO Recommendations Cholesterol< 300 mg/day Sodium chloride (sodium) <5 g/day (<2 g/day) Fruits and vegetables> 400 g per day Total dietary fiber/Non-starch polysaccharides (NSP) (>25 g, or 20g/d of NSP) from whole grain cereals, fruits, and vegetables 1. What makes a healthy diet? http://www.fao.org/docrep/005/ac911e/ac911e00.htm The Nutrition Transition

6. Overview Part I: What makes a healthy diet? Part II: What is the nutrition transition? Overview

7. The Nutrition Transition The shape of things to come... The Economist, December 2003

8. The Nutrition Transition

13. More fat and more saturated fat The Nutrition Transition

17. More Cholesterol The Nutrition Transition

21. More sugar, mostly hidden The Nutrition Transition

25. Overview Part I: What makes a healthy diet? Part II: What is the nutrition transition? Part III: NCDs: The extent of the problem and its main manifestations Overview

26. AT2050/80: provisional nutritional outcomes (global averages/aggregates) undernourished % of population with kcal/person/day obese %million>2700>3000%million 2005/071384457289570 205043309152151400 208021509866212000 The Nutrition Transition

27. Copyright restrictions may apply. Yach, D. et al. JAMA 2004;291:2616-2622. Deaths Attributable to 16 Leading Causes in Developing Countries, 2001 The Nutrition Transition

29. Global estimates of Hunger and Childhood malnutrition (UNICEF 2005) Almost 870 million people are chronically undernourished (FAO, 2012) The Nutrition Transition Unicef 2005

30. Micronutrient malnutrition (Micronutrient Initiative Report 2001) The Nutrition Transition

31. Burden of Disease attributable to Iron Deficiency (expressed as percent DALYs) The Nutrition Transition

32. Overview Part I: What makes a healthy diet? Part II: What is the nutrition transition? Part III: NCDs: The extent of the problem and its main manifestations Part IV: Nutrition transition, NCDs and the key drivers –Ageing populations, urbanization and income growth –Phenotypic and genotypic predisposition –Agricultural policies? – … many more! Overview

33. Ageing populations The key drivers

34. Source: World Bank

35. GDP Growth to continue GDP, trillion, $2004 percent per annum Developing GDP (left axis) Developing Rate (right axis) High-Income GDP (left axis) High-Income Rate (right axis) The key drivers Source: World Bank

36. The key drivers

37. Urbanization Changing food marketing chains and food habits Access of metropolitan areas to international food markets Formalization of the food chain, supermarkets Opportunity costs of food preparation: No time to prepare food, limited time to eat Convenience and fast food (salt, fat, sugar) Expending calories Sedentary lifestyles (public and private transportation, lifts, piped water, TV) The key drivers

38. Rural - Urban differences in Obesity prevalence The key drivers

39. Urban-rural difference in chronic disease risk in developing countries Urban (%) Rural (%)Reference NIDDM prevalence 8.2 2.4 Ramachandran (1998) CHD prevalence 46.1 5.0 Chadha et al. (1990) Cancer incidence 118.8 57.6 Gopolan (1997) Source: Shetty, P. in Macbeth and Shetty The key drivers

40. Genotypic and phenotypic predisposition Unmasked by urbanization, sedentary lifestyles and excess food consumption Thrifty gene (Pima Indians, South Pacific) Barker hypothesis and epigenetic effects The key drivers

41. Agricultural policies? The CAP? OECD support policies more generally? What about biofuel policies? The key drivers

42. Principal policy effects of the CAP 2001/03 MILLION €€/PERSON 1. Taxes  Taxes through higher prices than world prices -51,904-136.8  Other taxes on consumers -698-1.8 2. Subsidies  Subsidies from taxpayers to consumers 3,7629.9  Excess feed cost (not relevant as a food tax/subsidy) 5701.5 Net effect (total tax) -48,271-127 Source: own calculations (JS) based on OECD The key drivers

43. Price tax effect of the CAP by Commodity (main commodities only) 1986-881994-962001-03 Total (million €) per person (€) Total (million €) per person (€) Total (million €) per person (€) Oilseeds00.00 0 Eggs9002.72620.700.0 Wheat625418.413433.71570.4 Rice3771.13170.91800.5 Potatoes6191.89002.54441.2 Coarse grains704320.727037.45591.5 Sheep24977.413763.811132.9 Sugar26997.921005.827397.2 Poultry29508.7399511.031798.4 Pork447313.229738.1440111.6 Beef1020830.1720519.81047027.6 Milk1666749.11727847.41637343.2 Total546861614045211139615104 Source: own calculations (JS) based on OECD The key drivers

44. Consumer subsidies through the CAP Transfers from EU Taxpayers to EU consumers (million Euros) 1986-881994-962001-03 million Euros Total438741463762 Cereals310286249 Oilseeds3200 Sugar-361-138248 Sugar storage levies (net)-65-2499 Sugar chemical industry levies (net)167157 Milk and butter216915491035 Olive oil38836526 Cotton7231100874 Fruits and vegetables11269861330 Source: own calculations (JS) based on OECD The key drivers

45. CAP Consumer subsidies for milk 1986-881994-962001-03 (million Euros) Milk and butter, total2,1691,5491,035 Other measures relating to butterfat232645454 School milk16513077 Aid for SMP for use as feed for calves901438246 Aid for liquid skimmed milk for use as feed for calves112240 Aid for SMP for use as feed for animal other than calves000 Aid for liquid skimmed milk for use as feed for animals other than calves 17900 Aid for skimmed milk processed into casein580311258 Aid for powdered milk with 10% fat for use as feed for calves 000 Other Aid (milk)000 Source: own calculations (JS) based on OECD The key drivers

46. Food taxes? The key drivers Through agricultural policies Through direct food taxes

47. Vertical price transmission: The impact of the CAP with high margins T T P border P market P market +T P consumer P incentive P consumer +T PSE-M PSE-R 100 150 200 250 300 350 400 450 PSE-M/CSE-M PSE-R/CSE-R P border P market P incentive P market-2 P consumer P consumer-2 T T M1M1 = M 2 +34$=20% +34$=10% Source: Schmidhuber and Britz, 2002 US$/t The key drivers

48. Food value chain in the EU EU-15, 1996, 1.25 €/$ x-rate (Data based on OECD and World Bank, own calculations) 0 200 400 600 800 1000 1200 1400 Year=1996 billion US$ 1996 Value of consumption at world prices, primary products = US$ 139 billion CAP - CSE tax on consumption = US$ 48 billion Margin/value added for marketing, processing, etc = US$ 780 billion Value of final food expenditure = US$ 1014 billion Food taxes: efficiency and effectiveness Vertical price transmission – the empirical evidence

49. How elastic is food demand? Food taxes: efficiency and effectiveness

50. Impacts of an (ad valorem) tax on food with elastic and inelastic demand T T PoPo PoPo P1P1 P1P1 (Rich consumer)(Poor consumer) q1q1 q0q0 q1q1 q0q0 DiDi DdDd Si Sd Inelastic demandElastic demand D’ d D’ i Food taxes: efficiency and effectiveness

51. Policy instruments: Effectiveness of food taxes Food taxes: efficiency and effectiveness

52. Impacts of a tax on “food” on “overweight/obesity” T PoPo BMI 0 P1P1 Rich consumer (IC) Q 1 =DES 1 DiDi Si Food (input) D’ i body weight (output) BMI 1 DES 0 DES 1 DES Q o =DES 0 Food taxes: efficiency and effectiveness

53. Food taxes: some pros and cons –Higher farm prices ineffective means to change final consumer prices (high margins in vertical price transmission). –Low price elasticities for food demand make food taxes in general ineffective in reducing consumption. –Regressive on consumers with high calorie needs. –Untargeted, unfair: all consumers bear the price of higher food prices while only the obese/overweight cause the external costs (violates the “polluter pays principle”). +But low elasticities mean high tax revenues which could be used for nutrition education, prevention, and other measures. +Food taxes can be effective, where there are healthy substitutes (e.g. low-sugar soft drinks); high elasticity of substitution would require only a small tax on unhealthy food of a small subsidy on the healthy food.  No general food tax, but specific taxes on unhealthy foods possible.  Part of a policy mix but not a stand-alone measure. Food taxes: efficiency and effectiveness

54. Conclusions Emerging epidemic of obesity (and its co-morbidities) not confined to the developed world Determinants of the emerging epidemic of global obesity are complex and include macro and micro level drivers and individual and environmental factors Strategies that are developed to reduce the global burden of obesity will need to address a complex range of individual and environmental determinants.

55. Thank you

56. Conclusions and outlook 1.EU diets have become increasingly unhealthy, the quality of the Mediterranean Diet is gradually deteriorating. The EU diets are too rich in calories, fat, sugar, cholesterol and saturated fats. Dietary fibre as well as fruit and vegetable consumption have increased over time, but some countries still show deficits. Consumption of polyunsaturated fats has increased, but largely through a widening of the ω-6/ω-3 ratio. The total glycemic load of the EU diets has increased with carbohydrate consumption, but remained low compared to NENA countries. There has been a growing convergence in diets, new member countries move towards EU-15 diet, albeit some country specific features remain. 2.Overall, CAP provides a net tax on food consumption, albeit some subsidy elements are important. 3.As a tax on primary consumption, the demand curbing effects of the CAP remain limited; CAP effects are to be seen against: (i) low vertical price transmission; (ii) high margins for processing and marketing; and (iii) low demand elasticities. 4.Taxes on final consumption can be more effective, but only where healthy substitutes exist. 5.Food taxes on inelastic demand can be used as a revenue source for more effective measures (education, etc.) 6.No single policy measure likely to be sufficient, need for an appropriate policy mix. Conclusions and Outlook

57. Fast food, soda and obesity

58. Are diets converging and how to measure convergence? The Consumption Similarity Index (CSI) where i=1 to 95 food items of FAO’s SUA data base; Cal ij and Cal ik are the calories from individual products i in country k and j; Cal j and Cal k is the total calorie availability per person in country j and k. The Nutrition Transition

59. Towards an increasingly homogenous diet? The Nutrition Transition

61. Domestic-to-international distortions EU prices to international prices (ratios) Internal distortions of relative prices (relative to EU wheat prices) 1986-881994-962001-031986-881994-962001-03 Wheat2.141.140.981.0 Rice2.431.841.321.11.61.3 Coarse grains2.331.411.051.11.21.1 Oilseeds1.00 0.50.91.0 Potatoes1.171.151.100.51.01.1 Milk2.762.141.841.31.9 Beef2.251.632.541.11.42.6 Pig meat1.381.171.250.61.01.3 Poultry1.792.071.550.81.81.6 Sheep2.861.591.361.31.4 Eggs1.401.221.040.71.1 Sugar3.322.132.751.61.92.8 The CAP distorts relative prices – both vis-à-vis world markets and within the bundle of consumption goods The key drivers

62. Global prevalence of Vitamin A Deficiency The Nutrition Transition