Chapter 3


1 The Role of the Food Chain

1.1 Overview of agricultural commodity chains

As was discussed in Chapter 1, there are three aspects to food security at both national, and.
more particularly, household level. These are availability of food, access to food and
stability of food supply. In this chapter, these elements will be examined in detail, both as to
what determines them and what particular aspects are likely to make groups of the
population vulnerable to food insecurity.

Initially, this will be approached through examining the characteristics of the food chain in
most developing countries. The food chain is a term to describe the various transformations
a food commodity goes through from the point at which seed is planted by the farmer to the
last stage when it is acquired by the final consumer. This can be a very simple chain, where
grain is grown by the farmer, threshed and milled within the farm household and then
cooked and eaten by the family. It can also be very complicated, as when wheat is imported
from a major grain exporter such as the USA, milled into flour domestically, sold to a
commercial bakery company and then distributed through a supermarket chain. In all cases,
the nature of the food chain, the number of stages of processing and transportation through
which the commodity passes, the level of efficiency and technical sophistication and capital
intensity of the processing, and the degree of competition at different stages of the food
chain, all are important in determining the availability of the commodity, in physical terms
of amount and geographical distribution, and in economic terms of the price level.

Figure 1.1 shows the commodity chain for rice in Thailand. Here rice, which is the major
staple grown in Thailand, can be grown under different technical conditions by small or large
farmers. After harvesting, it is sold on to traders, who transport it to the mills. From the
mills, some part goes to the noodle industry, the rice bran goes to the animal feed industry
and the rest is sold either as white rice or broken rice. Then some is exported and the rest
remains for human consumption. The availability for human consumption is the outcome of
a number of different factors: the profitability of rice production as opposed to other crops,
which may not be food crops; the price realized on the export market as compared to on the
domestic market; any taxes and subsidies imposed by central and/or regional government;
and the ability of the food chain to produce a reasonable return on labour and capital
involved in the different stages of the process.

We all consume food in order to live. For this food we are dependent on a number of
different commodity chains of varying lengths, according to the complexity of our diet and
the extent to which we consume food which is locally grown or sourced from other regions
and countries. This determines food availability. For access to the food we need, we also
require income or resources which can be used to exchange for the food, in other words, we
need a food entitlement. For many households, their food entitlement results directly from
the food chain. Thus they are doubly dependent on the food chain, for both access and
availability.