Economic Food for Thought: Are we about to see the rise of Giffen goods?

Conventional economic theories suggest that as supply and demand act in negative correlation with one another. The Giffen good defies these market forces, whereby an increase in the price of a good correlates with an increase in its consumption. The only problem is that this sort of economic behavior is rarely, if ever recorded however, University of Pennsylvania Economist, Dr. Robert Jensen, pointed out several conditions that would have to exist in order for Giffen behavior to occur in food. The first assumption is that households must be heavily impoverished, to the degree that they face regular concerns about where and how to acquire food. The second assumption is that households must consumer a very simple diet, that revolves around the consumption of a singular good, such as rice or taro root. The third assumption is that the staple food is the most inexpensive form of calories available and that food must take up a substantial part of the household budget. Thus, it is clear that if Giffen behavior is to be observed, it is best observed in poorer areas with a lack of agricultural surplus or high levels of urbanization.
It does not take long to find a place that matches these conditions for Giffen behavior. Sub-Saharan Africa is a nexus of social, economic, and political issues, resulting from poor climatic conditions, a history of exploitation, and ethnic conflicts. Looking specifically at population, between 1950-2010, the population grew from 186 million to 856 million, while current estimates suggest that by 2060, the population will reach 2.7 billion. This exponential population growth is occurring largely in urban areas where agricultural practices are not readily achievable. Similarly, there is a substantial amount of migration from rural to urban areas, placing greater stress on agricultural projects to increase production.
Increasing agricultural production in Sub-Saharan Africa is easier said than done. Several middle-income nations, such as China, Saudi Arabia, and South Korea, are acquiring large tracts of land to grow crops to be exported back to their home nations, with the past decade alone seeing over 81 million acres of land purchased by foreign investors for purposes of agricultural production. Proponents of this scheme argue that 40% of Africa is arable land and in places where farming occurs, it is highly inefficient however, over 60% of crops grown in these foreign-owned agricultural operations are exported, creating substantial food security issues. This foreign control over African agriculture has become so substantial that the continent has become a net food importer.
The final critical variable in this equation is the decrease in agricultural productivity, resultant from climate change. Climate experts suggest that by 2100, Sub-Saharan Africa is predicted to warm by between 2 and 4 °C, accounting for regional variations. These increases in temperature are expected to place an upward demand on water resources, both for agricultural and non-agricultural purposes. This may be particularly damaging given the decline in ground water recharge rates over the past decade. With this loss of water resources, the IPCC projects that in a worse case scenario, there will be a 27-32% loss off maize and cereal production by 2050.
The decline in food security, in conjunction with an increase in population, is a recipe for an increase in demand while supply begins to dwindle. Prices will simultaneously rise as demand does as well, leaving the world with the big question as of how to feed a continent already faced with a host of social, economic, and political problems. Current estimates by the FAO suggest that food production will have to increase by 70% by 2050 in order to account for this increase in demand but current models suggest that is impossible with loss of arable land and the exponentially increasing level of food exports.

Works Cited:
F. (2009, September 23). 2050: A third more mouths to feed.

Block, S. (2010). The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa since 1961. National Bureau of Economic Research.

Coumou, D., Robinson, A., & B. (2016). Climate change impacts in Sub-Saharan Africa: from physical changes to their social repurcussions. Regional Environmental Change, 2(63).

Jensen, R.T., & Miller, N.H. (2008). GIffen Behavior and Subsistence Consumption. The American Economic Review, 9(4), 1553-1577.

Sy, A. (2015, November 5). What do we know about the Chinese land grab in Africa.

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