Chapter 4


 specifically to perishables and often also to livestock products (where such products are
 not a major export or import item).

3.3.3 Impact on food production and supply

The impact of an exchange rate devaluation on the volume of food production and supply is
determined by the following factors:

1) changes in relative food prices;
2) changing prices for agricultural inputs;
3) the price elasticity of food production and supply;

The role of these factors will be discussed in the following sections.

1) Change of relative food prices

 Of specific relevance here is the change in the level of food prices relative to the prices of
 other agricultural products competing for the same production resources (land, labour.
 irrigation water, fertilizer etc.).

 The previous discussion suggests that a currency devaluation will induce the greatest
 price increase in cash crops for export, as these are closest to pure tradables. Assuming
 similar supply responsiveness in export crop and (market oriented) food crop production
 (see below), this implies a shift from food crop to export crop production. As a result,
 total food production will go down, even if food prices rise more than the prices of non-
 agricultural goods. In countries where food crops are fully commercialised, and therefore
 tradable, these effects are more muted.

 A shift away from food to export crop production may be accompanied and further
 compounded by changing land tenure patterns towards large-scale cash-crop farming. A
 recent study on the introduction of sugar production for export in a formerly semi-
 subsistence corn-producing area in the Philippines found:

 "a serious deterioration in land tenancy patterns as a result of the introduction of
 sugar...Several former corn tenant households had lost access to land when landlords who had
 decided to grow sugarcane chose to hire labour for the new crop, rather than rent out land on a
 share-of-harvest basis, as had been the custom with corn." (Bouis and Haddad, 1990, cited by
 Woodward 1992,11)

 The Philippine case points to further possible critical effects on the food economy of a
 policy promoting cash crops for export. Food security of tenant households is adversely
 affected in two ways: by the loss of access to land as source of food production and by a
 reduction of household income as source of food demand.

 2) Change of input costs

 A devaluation will not only affect the prices of consumer goods but also the prices of
 production inputs. This refers specifically to imported production components such as


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