Central America: the Challenge of Food Security, Human Development, and Economic Growth

Authors: Eugenio Diaz-Bonilla and Maximo Torero

An abridged version of this article was originally published in the Spanish-language press in Guatemala.

Continued access to adequate food for a healthy life-- particularly during the first 1000 days of life, but also throughout the entire life cycle-- is crucial to the development of the intellectual, productive and creative capabilities of human beings. This, in turn, is central to growth and economic development. While economists identify "factors of production” as labor and capital, and technological change and productivity as the basic causes of economic growth, behind all these factors is always the human being. And it all starts with a healthy diet.

Sustained and broad-based growth allows for the reduction of poverty, which is a major cause of food and nutrition insecurity. On the other hand, it is also necessary to consider the effects of growth on unwanted developments such as obesity, which is linked to excessive consumption of sugar, fat and salt, which in turn leads to increased incidence of diseases such as diabetes and cardiovascular problems.

Many developing countries and emerging economies, particularly in Latin America and the Caribbean, have the dual problem of malnutrition in some individuals and the increasing presence of diseases related to the excess of calories in others. In fact, some speak of the triple burden of malnutrition, including under nutrition, over-nutrition, and a third problem linked to the lack of essential vitamins and minerals, all of which may occur not only within a country but sometimes within the same family. This example illustrates the complexity of addressing the problem of food and nutrition security, issues that require sector-specific and cross-sectoral policies.

For the countries of Central America and the Caribbean, the revitalization of the agro-food production is important. Each point of agricultural growth in countries such as El Salvador, Guatemala, Honduras and Nicaragua contributes several times more than the national growth rate of the sector's share of GDP would suggest, indicating the significant multiplier effects on the rest of the economy. The agricultural growth also contributes directly to poverty reduction and food availability.

In contrast, public sector spending as a percentage of agricultural GDP is below the average for Latin America and the Caribbean (LAC), especially in those aspects that are the real sources of productivity in the medium term, such as investment in research and development (R & D) in agriculture and productive infrastructure. Countries in the region should set spending targets for the sector as a percentage of agricultural GDP, especially in R&D and rural infrastructure, that put them at least at the level of the most competitive countries in LAC.

It is not only a problem of supply; also important to consider is the demand side. Structural reforms that act on the supply side will not be enough without policies working on the expansion of the demand. An important element is external competitiveness, which in several countries in the region seems to be affected by the appreciation of the real exchange rate. It is true that remittances lead to an appreciation of national currencies, and countries such as El Salvador and Panama have adopted the US dollar as their domestic currency. Notwithstanding those factors, however, countries need to devote attention to the problem of external competitiveness as measured by the real exchange rate and inflation differentials with the US, in order to improve the conditions of production and employment in the expansion of exports and efficient import substitution.

At least as important is to support the development of the domestic market, boosting the purchasing power of the poor. The share of the poorest 20% in total income in the countries of Central America is well below the world average. The targeted safety nets and transfer programs (conditional or not) for the poorer 20-30% should be expanded in several countries in the region in at least 1-2% of GDP for the purpose of alleviating poverty and food insecurity, all the while expanding domestic demand in a virtuous cycle that can sustain growth and employment. Institutional food purchases by governments (for schools, prisons, hospitals, supplemental food programs and similar uses) is another source of domestic demand that can be redirected towards small producers, increasing incomes and employments among the rural poor.

Obviously, a number of other interventions are also needed. For example, nutritional and health programs, serving vulnerable populations such as pregnant women, children and nursing mothers, and children of school age are crucially important. Enhancing investments in water and sanitation, housing, and health care in general, especially in rural areas and poorer urban neighborhoods is also needed. Finally, harkening back to the example at the start of this conversation, consumers need adequate nutrition information through comprehensive nutrition education programs and stricter regulations on labeling and commercial advertising to help understand the health problems linked to poor nutrition.

The task is complex and requires a sustained effort over the medium and long term that is maintained across the necessary democratic changes of government in the countries of the region. We must not lose sight of the goal, perfectly achievable if we all work together, which is the integral development of the human being, starting with the basic need of adequate food and nutrition security for all.

Both authors are members of the Markets, Trade and Institutions Division at the International Food Policy Research Institute (IFPRI); Diaz-Bonilla is a visiting Senior Research Fellow and Torero is Division Director. This article reflects IFPRI’s work in the region and presentation at the September 2014 conference on food security in El Salvador.