Agricultural assistance, exchange rate and developing countries’ food security

Food security is a major concern, especially for developing countries where a large percentage of population lives in rural areas and where agricultural sector represents an important weight in their economy. Agricultural and food imports play a particular key role in terms of food security in low income countries. Indeed, dependency on imports for food may raise some food insecurity issues in particular in the case of sudden price increase which raises national food bill. The national state of food availability combining food imports and domestic food production thus constitutes some crucial information. Following Diaz-Bonilla et al. (2000), this contribution aims to shed light on the determinants of food security at national level. We first build a theoretical framework linking explicitly food security measured by the Bonilla index (BI) and national policy intervention on agricultural sector or on exchange rate. Second, we focus on the link between exchange rate effects on food security, using observed data for a panel of 24 developing countries during the period 1995-2010. This empirical work shows that exchange rate may have significant impact on national food security level, especially for vulnerable developing countries; but it also confirms that exchange rate is not the main determinant. Third, the empirical methodology aims at assessing the impact of national policy responses to 2008 price surge in terms of food security using the national rate assistance (NRA) index on importable food products for 42 countries over the period 1995-2010. Our results suggest that most developing countries have largely used their possibility to play with the NRA level in order to moderate BI during the 2008 food price surge