FOOD SECURITY IN A FOOD ABUNDANT WORLD An Individual Country Perspective FRONTIERS OF ECONOMICS AND GLOBALIZATION 16 Series Editors: HAMID BELADI University of Texas at San Antonio, USA E KWAN CHOI Iowa State University, USA FRONTIERS OF ECONOMICS AND GLOBALIZATION VOLUME 16 FOOD SECURITY IN A FOOD ABUNDANT WORLD An Individual Country Perspective Edited by Andrew Schmitz University of Florida, Gainesville, FL, USA P Lynn Kennedy Louisiana State University, Baton Rouge, LA, USA Troy G Schmitz Arizona State University, Mesa, AZ, USA United Kingdom À North America À Japan India À Malaysia À China Emerald Group Publishing Limited Howard House, Wagon Lane, Bingley BD16 1WA, UK First edition 2016 Copyright r 2016 Emerald Group Publishing Limited Reprints and permissions service Contact: permissions@emeraldinsight.com No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center Any opinions expressed in the chapters are those of the authors Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-78560-215-3 ISSN: 1574-8715 (Series) ISOQAR certified Management System, awarded to Emerald for adherence to Environmental standard ISO 14001:2004 Certificate Number 1985 ISO 14001 CONTENTS ACKNOWLEDGEMENTS LIST OF CONTRIBUTORS FOOD SECURITY AND THE ROLE OF FOOD STORAGE Andrew Schmitz and P Lynn Kennedy xi xiii Introduction Model: role of storage Government and private storage 3.1 Government storage 3.2 Producer and middleman storage Food storage: rich and poor countries Food storage: the small country case Poor country exports World and US grain reserves US stock buildup and managing surpluses Export enhancement program 10 Food stocks and food security? 11 Historical famines and diseases 11.1 The Great Famine (1315À1317) and Black Death (1345À1353) in Europe 11.2 The Irish Famine (1845À1849) 11.3 Ukrainian/Holodomor Famine (1930À1934) 11.4 Demise of the Mayan Civilization 12 Conclusions References 4 5 6 8 10 11 12 FOOD SECURITY, SUBSISTENCE AGRICULTURE, AND WORKING’S MODEL Charles B Moss, James F Oehmke and Alexandre Lyambabaje 19 Introduction Engel curves and Working’s formulation 20 20 13 13 14 14 15 16 vi Contents Empirical model Data Results Implications and discussion References 22 24 27 31 32 A PROBABILISTIC APPROACH TO FOOD SECURITY David Zilberman and Yanhong Jin 33 Introduction Background on the methodology and dimensions of the problem analysis Analysis of food-shortage risks to individuals Aggregation and alternative measures of food-shortage risks Optimal selection of aggregate supply Derivation of optimal x 6.1 Expected cost minimization 6.2 Minimizing cost subject to average risk constraint 6.3 Minimizing cost to reduce risk for vulnerable populations Optimal food provision under uncertainty Derivation of optimal food distribution policies Interpretation and future research References 34 34 35 38 40 41 41 43 43 44 47 51 52 THE HIGH VALUE TO SOCIETY OF MODERN AGRICULTURE: GLOBAL FOOD SECURITY, CLIMATE PROTECTION, AND PRESERVATION OF THE ENVIRONMENT À EVIDENCE FROM THE EUROPEAN UNION Harald von Witzke and Steffen Noleppa 55 Introduction The end of the agricultural treadmill The European Union 3.1 Now a major net importer in food and agriculture and of virtual agricultural land 3.2 Diminishing EU yield growth contributes to global warming, loss of natural habitats, and biodiversity 3.3 The benefits of EU productivity growth 3.4 Social rate of return to generating productivity growth: crop breeding in Germany Conclusions References 56 56 58 58 60 60 62 63 63 Contents vii OFF-FARM LABOR ALLOCATION, INCOME, AND FOOD CONSUMPTION AMONG RURAL FARM HOUSEHOLDS IN TRANSITIONAL ALBANIA Ayuba Seidu and Gulcan Onel 67 Introduction Food security and off-farm income in Albania Empirical approach Data Empirical results Conclusions and policy implications References 68 69 72 73 76 80 81 THE STATUS AND CHALLENGES OF FOOD SECURITY IN EUROPE AND CENTRAL ASIA Kateryna G Schroeder and William H Meyers 85 Introduction Malnutrition and poverty indicators in the ECA region Focus on the most food insecure ECA sub-region 3.1 Food availability (much improved, while some concerns still remain) 3.2 Access to food (uneven progress across sub-region) 3.3 Food utilization (nutrient-deficient and unbalanced diets are universal problems) 3.4 Food stability (increased fluctuations in food supply are a rapidly growing concern) 3.5 Diversity of policies to alleviate food insecurity in the CCA sub-region Conclusions References 86 86 90 93 94 95 97 98 100 101 FACTORS AFFECTING ADOLESCENT OBESITY IN URBAN CHINA Carl Anfinson, Thomas I Wahl, James L Seale Jr and Junfei Bai 105 Introduction and background Adolescent BMI Relevant studies Survey data Descriptive analysis Survey results and implications Conclusions References 105 106 107 107 109 111 112 113 viii Contents SUGAR, FAT, OR PROTEIN: ARE ALL FOOD INSECURE HOUSEHOLDS EATING THE SAME? THE CASE OF SMALL RICE PRODUCERS IN PERU Pilar Useche and Jennifer Twyman 115 Introduction Adequate food utilization Determinants of access and utilization Agricultural context in Northern Peru Joint Estimation Methodology Data and regression variables Regression analysis Results Conclusions References 116 117 119 120 121 122 123 126 128 130 FOOD SAFETY AND FOOD SECURITY IN THE CANAMEX TRADE CORRIDOR Eric P Thor and Octavio Valdez Lafarga 133 Introduction: historical development of the CANAMEX Trade Corridor Canadian agricultural exports and food safety in the CANAMEX Trade Corridor Mexico: exports, food safety, and food security Food Safety and Modernization Act: technological advances in response to legislation Food safety and the country-of-origin labeling debate Border management Food safety challenges within the CANAMEX Trade Corridor Potential research and innovation avenues for food safety and food security derived from the development of the CANAMEX Trade Corridor References 134 136 137 138 140 140 141 142 143 10 IMPACT OF REMITTANCE ON FOOD SECURITY IN BANGLADESH Madhav Regmi and Krishna P Paudel 145 146 147 148 150 152 152 153 Introduction Bangladesh and food security Food security indicators and econometric models Description of independent variables Results 5.1 Food consumption score categories 5.2 Household hunger scale categories Contents 5.3 Marginal effects of remittance on food security categories Conclusions References ix 154 155 155 11 INFORMAL “GANYU” LABOR SUPPLY, AND FOOD SECURITY: THE CASE OF MALAWI Isaac Sitienei, Ashok K Mishra and Aditya R Khanal 159 160 161 164 164 167 167 167 170 172 173 Introduction Indicators of food security/insecurity Methodology 3.1 Average treatment effect and matching estimators Data Results and discussion 5.1 Determinants of ganyu labor force participation 5.2 The average treatment effect Summary and conclusions References 12 THE POLITICAL ECONOMY OF EXPORT RESTRICTIONS: THE CASE OF VIETNAM AND INDIA Kathy Baylis, Murray E Fulton and Travis Reynolds 177 178 Introduction Food price increases and the policy environment: the case of Vietnam and India 2.1 Vietnam 2.2 India The motivation for export restrictions 3.1 Food security: keeping prices from rising 3.2 Rent capture Theoretical models 4.1 Vietnam 4.2 India Concluding remarks References 178 180 181 184 184 185 186 188 192 194 194 13 FOOD SECURITY POLICY AT THE EXTREME OF THE WATER-ENERGY-FOOD NEXUS: THE KINGDOM OF SAUDI ARABIA Hannah Pieters and Johan Swinnen 199 200 201 201 Introduction The challenges for future food security in KSA 2.1 Key elements of food security 2.2 The water-energy-food nexus and the transformation of KSA cereals policy 201 224 David R Just and Jeffrey M Swigert Wansink, B., Just, D R., Hanks, A S., & Smith, L E (2013) Pre-sliced fruit in school cafeterias: Children’s selection and intake American Journal of Preventive Medicine, 44(5), 477À480 Wansink, B., & Sobal, J (2007) Mindless eating: The 200 daily food decisions we overlook Environment and Behavior, 39(1), 106À123 Watanabe, T (2011) L.A schools’ healthful lunch menu panned by students Los Angeles Times, December 17 Retrieved from http://articles latimes.com/2011/dec/17/local/la-me-food-lausd-20111218 15 Wastage in Food Value Chains in Developing Countries: Evidence from the Potato Sector in Asia Bart Mintena, Thomas Reardonb, Sunipa Das Guptac, Dinghuan Hud and K A S Murshide a International Food Policy Research Institute, Addis Ababa 5689, Ethiopia, E-mail address: b.minten@cgiar.org b Department of Agriculture, Food and Resource Economics, Michigan State University, East Lansing, MI 48823, USA, E-mail address: reardon@anr.msu.edu c International Food Policy Research Institute, Accra, Ghana, E-mail address: s.dasgupta@cgiar.org d Institute of Agricultural Economics, Chinese Academy of Agricultural Sciences, Beijing, China, E-mail address: dinghuanhu@vip.sohu.com e Bangladesh Institute of Development Students, Dhaka 1207, Bangladesh, E-mail addresses: murshid@bids.org.bd; dg@bids.org.bd Abstract Purpose À Wastage and post-harvest losses in food value chains are becoming increasingly debated and policies are being increasingly designed to reduce food wastages Despite its presumed importance, there is large variation in the importance and type of food losses and wastage We identify the levels of food wastage at various levels of the potato food chain for three Asian countries Methodology/approach À Surveys were fielded to better measure the important variation between value chain agents, to capture wastage at each level, to analyze the structure of the value chain, and to evaluate wastage over the whole value chain (except for consumption) We generate data on an important staple in these countries and analyze the importance of waste in domestic rural-urban food value chains, often the most important value chain in these countries Findings À We find total quantities of potatoes wasted are equal to 5.2% in the harvest period and 6.4% in the off-season of all quantities that enter the value chain for Bangladesh Even lower numbers are obtained in India Frontiers of Economics and Globalization Volume 16 ISSN: 1574-8715 DOI: 10.1108/S1574-871520150000016010 Copyright © 2016 by Emerald Group Publishing Limited All rights reserved 226 Bart Minten et al (3.2% and 3.3%, respectively) These wastage levels are higher in China, possibly because of the significantly longer distances that potatoes are shipped Practical implications À The use of cold storage facilities can minimize the level of wastage in the potato distribution chain Studies of this type of storage for other countries and commodities can identify opportunities in which adoption of cold storage can provide the greatest contributions toward the elimination of food wastage Keywords: Food wastage, food security, potatoes, China, India, Bangladesh JEL classifications: Q12, Q13, L15 Introduction Wastage and post-harvest losses in food value chains are becoming increasingly debated and policies are being increasingly designed to reduce food wastages (Food and Agriculture Organization of the United Nations [FAO], 2011, 2012; World Bank, 2011) This debate is receiving increased attention for two apparent reasons First, it is believed that by reducing food wastages, food security will be improved as decreased wastage and food losses ensure more food becomes available at lower prices Second, the use of resources for the production of wasted food leads to important environmental footprints due to inefficient use of water, land, and fertilizer Reducing food wastages would therefore alleviate these environmental concerns Despite its presumed importance, large variations exist in estimates of food losses and wastages Food waste levels for developing and developed countries occur at different times, with more waste produced before the farmgate in developing countries and after the farmgate in developed countries (Hodges, Buzby, & Bennett, 2011) Recent evidence shows that losses may be lower than commonly thought in developing countries For example, Kaminski and Christiaensen (2014) estimate, based on nationally representative surveys, that on-farm post-harvest loss comprised 1.4%À5.9% of the national maize harvest in the case of three African countries Food waste comprised 2.1% of South-Africa’s annual GDP (Nahman & de Lange, 2013), due in large part to wastage at the consumption level (Oelofse & Nahman, 2013) In comparison, an estimated 10% of food was wasted in the United States (Buzby & Hyman, 2012) Wastages differ by food type and are highest for fresh produce, Kader (2005) estimates one-third of global losses involve fresh produce In SubSaharan Africa, Gustavsson, Cederberg, Sonesson, Van Otterdijk, and Meybeck (2011) estimate cereal losses between 19% and 32%, root/tuber losses between 33% and 60%, and fruit and vegetable losses between 37% and 55%, while the World Bank (2011) puts all grain losses between Wastage in Food Value Chains in Developing Countries 227 10% and 20% At the global level, FAO (2011) evaluates global food losses and waste at 32% for all food produced Lundqvist, de Fraiture, and Molden (2008) posit that about 50% of the all food grown is lost as food waste before and after it reaches the consumer This compares to a 23% estimate by Lipinski et al (2013) and a 25% estimate by Kummu et al (2012) However, empirical estimates on wastages in food value chains are limited and vary widely, especially in developing countries (Parfitt, Barthel, & MacNaughton, 2010) We contribute in several ways to this existing literature First, value chain and food wastage analysis in developing countries is heavily dominated by case study research (Dawe, Moya, Casiwan, & Cabling, 2008; Hayami, Kikuchi, & Marciano, 1999; World Bank, 2007, 2008), often raising questions on the representativeness of findings In contrast with this line of research, we implement surveys at each level of the value chain to better measure the important variations among value chain agents, capture wastage at each level, analyze the structure of the value chain, and evaluate wastage over the whole value chain (except for consumption) Second, similarly structured surveys and sample methodologies were fielded in three Asian countries The comparable methodologies applied to the countries allow for straightforward and insightful cross-country comparisons Third, we generate data on an important staple in these countries and examine the importance of waste in domestic rural-urban food value chains, often the most important value chain in these countries The results of the surveys challenge the conventional view of waste levels of staple value chains in Asia We estimate the wastage levels between producers and consumers at 3%, 5%, and 10% in rural-urban potato value chains during the harvest season in India, Bangladesh, and China, respectively These rates only increase marginally during the offseason due to modern cold storages in Bangladesh and India (Minten, Reardon, Singh, & Sutradhar, 2014) The estimated wastage levels are much lower than those found in previous estimates These findings contain important implications on the food policy debate The structure of the chapter is as follows We first discuss the data and methodology used We then present the descriptive statistics of the survey and examine the structure of the potato value chain and its role in storage Next, we present major findings for wastage levels, followed by the overall conclusions Data and methodology Studies were undertaken in three major Asian countries: India, Bangladesh, and China In each country, we studied the value chain of potatoes between the consumers in the capital of the country and the major area of production that supplies potatoes to that capital All the 228 Bart Minten et al capitals are megacities with populations in the millions: Delhi (India) at 16 million, Dhaka (Bangladesh) at million, and Beijing (China) at 17 million.1 It was necessary to field primary surveys as there are little to no relevant secondary data on the functioning of the actors in each of the segments The primary surveys were organized at the end of 2009 and the beginning of 2010 for each segment of the value chain: farmers, cold storages, rural and urban wholesalers, and urban retailers In a stratified random setup, we sampled a moderate number of actors per segment in each country Similar survey instruments and sampling methodologies were utilized in the three countries By organizing the survey in this manner, we assured cross-country comparability In the three surveyed countries, approximately 800 farmers, almost 230 wholesalers, 50 cold stores, and almost 240 traditional urban retailers were interviewed Given that our budget for field surveys was limited, the surveys at the farm level are not representative of the whole supply base of potatoes to these cities However, the survey provided a good indication of farmers’ wastage levels in the potato production and commercial zones for these cities The selected potato production zones in India and Bangladesh were approximately 200À400 kilometers (km) from the capitals, while the selected potato production zones in China were located 1,750 km from Beijing.2 Once a major production district was selected (based on secondary data and interviews with urban wholesalers), a sample was set up to reflect the production diversity of each district, with higher producing areas over-sampled to reflect their importance in the value chain.3 Typically, 10 villages were selected per country Half the farmers in the survey were selected from the larger-scale farmers that cultivate roughly half of the studied cropland in the village.4 This selection was conducted based on a census of all potato producers in the villages Interviewed in these selected villages were village traders as well as traders in the local wholesale markets Cold storage facilities were randomly selected in the district based on a census operation For the city surveys, the major potato wholesale markets in each city were identified and The population numbers are indicative and differ depending on the definition of city boundaries The survey was conducted using additional funds from another donor, so we were constrained in the choice of the supply zone This hampered comparability However, given the relatively good infrastructure (railways and roads) as compared to other countries, the distance factor limited the comparability only to a certain extent We highlighted the differences at appropriate places in the text The sampled districts were (1) Bogra/Bangladesh; (2) Agra/India; and (3) Gansu/China In Bangladesh, a different sampling strategy was followed: an ex ante specified cut-off split the sample in two Ex post analysis revealed that the distribution in the sample closely mirrored the overall distribution, thus presenting unweighted averages in the tables Wastage in Food Value Chains in Developing Countries 229 wholesalers were randomly selected based on a census operation To select retailers, each city was divided in different geographic zones, and then local areas were randomly chosen and a census was conducted from which retailers were then randomly chosen About 120 retailers were selected in each of the three countries While they are still relatively small to reflect the value chain of the city as a whole (due to survey budget constraints), the samples should provide a good picture of the overall situation given the random selection process that was followed at each level The implemented surveys included questions on the demographic background of the farmers and the traders, procurement and sales practices, prices received and inputs used, storage behavior, and services delivered in the last year To ascertain costs and wastage levels, detailed information was solicited from traders and retailers regarding their last complete transaction (this method is similar to the one pioneered by Fafchamps, Gabre-Madhin, & Minten, 2005) Background and descriptive statistics We start with background information on potatoes in the three countries The consumption of potatoes is much less important than rice (another staple crop) in these three countries, but it is still a major crop there Consumption is highest in China at 33 kg per capita per year and lowest in India at 18 kg consumption per capita per year (Table 1) International trade of potatoes remains relatively insignificant for these three countries Assumptions regarding different indicators produce an approximation of the value of the urban consumption of potatoes À the end result of the object of our value chain studies À in the three countries.5 Using such assumptions, the combined value of potatoes sold in urban areas in the three countries totaled approximately US$7.3 billion in 2007 (Table 1) Table presents descriptive statistics of the sample of the potato value chain agents in each country.6 Indian farmers in the sample are the largest First, we use the share of the urban population as published by the World Bank (World Development Indicators) Second, given that the FAO does not publish different consumption rates for urban and rural populations, we assume for the sake of simplicity that these consumption levels are identical Third, we use the average retail price of the most common rice type and the average off-season and on-season potato prices from our survey This leads to two potential errors As the capital is larger than most other cities in the country, prices may be different in the capital as compared to other cities Only using the price of the most commonly consumed rice, we underestimate the value of consumption However, we abstract from those errors, as the only purpose is to illustrate orders of magnitude It is important to keep in mind that surveys of value chain actors were set up in a stratified manner and fielded in only one supplying district Caution is thus needed to extrapolate these numbers to the national level 230 Bart Minten et al Table Country statistics on potatoes Unit Country Bangladesh Potato (2007)a Area harvested Crop yield Production Imports Exports Consumption Approximate urban consumption Urban populationb Urban populationb Urban consumption potato Value of urban potato consumptionc China India Million hectares Tons/hectare Million tons Million tons Million tons kg/person/year 0.3 15 5.2 0.01 0.01 27 4.4 14.6 64.8 0.64 0.79 33 1.7 16.4 28.6 0.01 0.10 18 % Millions Million tons/year US$ Billions/year 27 42 1.13 0.15 42 556 18.07 5.42 29 329 5.86 1.76 a FAO (2012) World Bank (2012) c Average retail prices, average of harvest and off-harvest prices b among the three countries, as measured by land areas cultivated per farm and by farm assets Also, potato yields in India are the highest of the three countries, and are significantly higher than the national average This result reflects the fact that the survey was fielded in one of the most progressive potato producing areas of the country Furthermore, India possesses large potato cultivators that produce ten times as many potatoes as does Bangladesh (Table 2) Greater land productivity and larger farms create this difference in cultivation Expressed in kilograms per man-day, labor productivity is highest in India We see significant variation in capital requirements at different levels of the value chain Usually, retailers are significantly smaller than wholesalers since the latter possess working capital and value of assets that are often ten times as high We also see significant variation among countries where retailers are significantly larger, as is the case of Bangladesh compared to India and China The largest capital requirements in the value chains, however, are for midstream storage agents Structure of the value chain and storage Potato farming in the surveyed countries takes place primarily after the hot/wet season in the cooler/drier season between October and March Storage is necessary for home consumption and for the rest of the year when prices are higher Most Asian countries use two storage Table Descriptive statistics of potato value chain surveys Value chains to consumers Unit Land not included, as land cannot be sold Tons 220 59.5 2.2 12.6 320 1.5a 0.9 5.7 10.0 4.0 Delhi 271 298.9 10.7 109.5 97.9 US$/hh kg/acre kg/man-day 2,209 6,296 25 488 6,340 135 17,021 10,160 300 Number Tons 20 9,240 À À 31 14,200 US$1,000 2,898 À 887 Number Tons/day 90 7.3 57 37.5 92 5.8 US$1,000 US$1,000 24.3 10.8 145.7 820.0 0.4 14.0 Number kg/day US$1,000 US$1,000 120 31 0.2 0.8 100 79 0.1 0.2 124 51 0.1 0.1 231 a Number US$1,000 Acres Tons Beijing Wastage in Food Value Chains in Developing Countries Farmer Observations Value of farm assets Potato land cultivated Potato production, previous year Potato sales, previous year Potato sales income Land productivity Labor productivity Cold storage Observations Capacity of cold storage Value of cold storage Wholesalers Observations Quantity procured daily Value of assets Working capital Traditional retailers Observations Quantity procured daily Value of assets Working capital Dhaka 232 Bart Minten et al Table Potato storage in cold storage Period Unit Production areas in hinterland Dhaka Beijing Delhi Cold storage changes Storage capacity If started before 2000 If started after 2000 People who use cold storage Farmers Traders Type of potatoes in cold storage Seed potatoes Table varieties Processing varieties At start-up At start-up At start-up Now 10 years ago Now 10 years ago Now 10 years ago Now Ownership of potatoes in cold storage Owned by farmers 10 years ago Now Owned by traders 10 years ago now Owned by storage owners 10 years ago Now Farmers % of farmers using external cold storage 6,470 5,825 7,668 9,240 À À À À 8,075 8,200 7,975 14,200 Number Number 451 103 À À 286 29 % % % % % % 60 35 24 45 16 20 À À À À À À À 64 À 100 À % % % % % % 58 37 37 60 À À À À À À À 74 À 17 À % 95 94 Tons Tons Tons Tons methods: (1) traditional/rustic storage7 and (2) modern refrigerated (cold) warehouse storage.8 In our study zones in the different countries, we find that the traditional method has waned over the years to become a very Traditional storage involves storing potatoes in a shaded spot in the field or in a storehouse at ambient temperatures and covered with straw or stalks, or in the farmhouse in a bag or earthen pot This method is only sufficient for two to three months of storage After that period, heat, humidity, and heavy rains create problems for traditional storage (Khatana et al., 1997) Storage conditions and length of time in storage influence the quality of the products and their consequent susceptibility to damage while handling Lowering the temperature during storage of food products allows for longer storage and marketing periods Cold storage of table and seed potatoes is usually undertaken at temperatures of 2°CÀ4°C Wastage in Food Value Chains in Developing Countries 233 minor practice.9 It seems that the growth of the potato sector in both Bangladesh and India has been made possible by the availability of modern cold storage technologies which allow for higher potato consumption in the off-season Cold storage facilities annually store between 10,000 and 15,000 tons of potatoes produced by roughly 450 Bangladeshi and 286 Indian farmers (Table 3) Over time, cold storage capacity has increased by 50% in Bangladesh and 76% in India Cold storage facilities in Bangladesh are larger than those in India Most of the facility upscaling is driven by expansion of existing capacity This upscaling is associated with increasing commercialization as the relative importance of seed potato storage is on the decrease while seed potato marketing is on the increase (Table 3) Accordingly, the relative importance of traders in total storage is increasing over time Almost all potato farmers in India (80%) and Bangladesh (60%) use cold storage facilities (Table 3) Table illustrates the importance of procurement sources for the different agents in the chain (as they themselves report) Differently structured value chains exist simultaneously In the case of potatoes, significant differences are expected according to the season The share of direct purchases from farmers is highest in the harvest season and lowest in the off-season (Table 4) Procurement involving cold storage increases in the off-season, In the harvest season, an important number of urban wholesalers (18% in Bangladesh, 45% in India, and 63% in China) buy directly from farmers in the villages, indicating the existence of extremely short value chains in which only one intermediary exists between retailer and farmer Wastage estimates We estimate wastage levels using the most prevalent structure of the value chain (i.e., from farmer, to rural wholesaler, to urban wholesaler, to urban retailer) To arrive at the level of wastages in potato value chains, we inquired at each level in the chain how much produce was wasted in storage and during the last complete transaction (between acquisition and sales, including transportation) We then added up the stated wastage at each level This method should provide a reasonable approximation of For example, by the mid-1990s, cold storage had spread in India to the point where million tons of storage capacity existed The majority of this storage capacity was private sector storage which grew rapidly due to government subsidies and improved electricity access (Fuglie et al., 1997) 234 Bart Minten et al Table Source of procurement (% of total supply) Supply chain potato Unit Supply chain to consumers Dhaka Harvest Trader off-market rural areas Directly from farmers in villages From traders in villages From farmers, picked up from cold storage From other trader, picked up from cold storage From cold storage owner From traders in wholesale market From other sources Total Trader on-market rural areasa Directly from farmers in villages From traders in villages From farmers, picked up from cold storage From other trader, picked up from cold storage From cold storage owner From traders in wholesale market From other sources Total Urban wholesaler Directly from farmers in villages From traders in villages From farmers, picked up from cold storage From other trader, picked up from cold storage From cold storage owner From traders in rural wholesale market From other sources Total Urban retailer From traders in wholesale market a Beijing Delhi Off- Harvest Off- Harvest Offseason season season % 75 11 82 72 96 20 % % 17 21 41 15 23 0 56 % 12 0 10 % % 12 0 % % 100 100 100 100 100 10 100 % 39 − − 40 17 % % 31 14 37 − − − − 50 30 % 13 34 − − 23 % % 7 − − − − 0 % % 100 100 − − − − 100 25 100 % 18 63 61 45 21 % % 12 10 11 18 26 % 18 0 0 % % 64 74 22 22 36 % % 100 100 100 100 26 100 15 100 % 100 100 100 100 100 100 Given that the survey was conducted off-season, no traders were found on-market in the production zone in China 235 Wastage in Food Value Chains in Developing Countries Table Wastage in potato value chain Unit Value chain to consumers Dhaka Farmer Cold storage Rural wholesaler Urban wholesaler Urban retailer Total wastage harvest Total wastage off-season Wastage at retail level Size of last transaction Total wastage in last transaction Wastage that retailer had to throw away: Immediately after purchase Because unable to sell in time Quantity sold at lower price due to bad quality % of retailers who reduced price at end of day If yes, average reduction of the price Beijing Delhi % % % % % % % 1.2 1.2 1.7 0.3 2.0 5.2 6.4 2.2 À 3.1 1.5 3.2 9.9 À 0.0 0.1 0.0 0.2 3.0 3.2 3.3 kg kg 220.0 4.4 476.6 15.1 50.7 1.5 kg kg kg % % 1.1 3.1 4.5 54.0 11.0 À À À À À 0.7 0.8 5.7 9.7 13.6 the total wastage level in the value chain at harvest time and after storage In Bangladesh, 5.2% of potatoes are wasted in the harvest period and 6.4% are wasted in the off-season (Table 5) Even lower numbers are found in India (3.2% and 3.3%, respectively) Possibly due to significantly longer shipping distances, China possesses higher wastage levels Electricity and diesel generators decrease wastage during storage at 1.2% in Bangladesh and 0.1% in India We also inquired about value losses during the retailing period: 54% of the urban retailers in Dhaka (Bangladesh) and 10% of the urban retailers in Delhi (India) indicated that they reduce prices at the end of the day to decrease wastage To achieve inventory clearance, retailers reduce prices at the end of the day by 11% in Dhaka and 14% in Delhi (Table 5) This lower than expected wastage might be due to inaccurate measurement in previous studies of total wastage.10 However, it is also possible that due to the diffusion of mobile phones, wastage in traditional value chains has been reduced For example, Jensen (2007) shows this to be the case for fish markets in Kerala, India Modern technology and investments have mitigated some of the post-harvest wastage It is likely that the wastage performance in the studied countries might be better than in developed countries, where quality and cosmetic criteria are more severe and where lower quality food is discarded from human consumption (Kader, 2005; Parfitt et al., 2010) 236 Bart Minten et al Discussion and conclusions We rely on a unique dataset to analyze wastage in the potato value chain from local producers to consumers in three megacities in Asia The results from these surveys challenge the conventional wisdom that traditional supply chains for staples are mired in high rates of wastage For example, Mattoo et al (2007) find that the average losses in overall horticulture and specific potato value chains in India are as high as 12% and 11%, respectively In Bangladesh, the World Bank (2008) estimates losses of 25% in the potato value chain and estimates the annual loss due to wastage at about US$70 million In contrast with these studies, which rely mainly on key informant information rather than primary surveys, we find that wastage rates are significantly lower than previously assumed While we believe our research generates novel insight into wastage in food value chains in the surveyed megacities, there are three important caveats to this analysis that should be confronted in future research First, the analysis presented here is based on relatively small surveys since we limited our producer surveys to an important and well-connected production area supplying potatoes to the capital cities Given budget constraints and the large number of suppliers to each capital city, the choices of the supplying districts were reasoned rather than random, and thus unrepresentative of the entire supply zone Future research with larger sample surveys could potentially eliminate this problem Second, we focus on only three major countries in Asia Research in other countries inside and outside the continent would provide useful comparisons to further measure wastage in food value chains Third, no surveys were fielded at the consumer level, and thus our wastage estimates apply only up to the retail sales stage Future surveys should account for wastage by consumers Acknowledgments The surveys that the study relies upon were financed by the Asian Development Bank (through the 13th Reta grant) We would like to acknowledge the support and guidance as well as the stimulating questions from Ashok Gulati and Lourdes Adriano, the overall managers of this research project Bart Minten would also like to acknowledge his association as research fellow with Licos-KULeuven We would further like to thank various people who contributed to the study: we appreciate the help of Data Ltd for the Bangladesh case study; Suneet Singh for the India case study; and Kevin Chen, Kan Zhang, and Xinwang Guo for the China case study We would also like to thank Gopal Naik, Sukhpal Singh, and Grahame Dixie and participants at workshops in 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