Annex 1


The results of the analysis of food deficits are summarized in the following Table.


Table A-1: Types of food deficits


Type of deficit Definition Examples referring to
 Figure A-l: Figure A-2:
 Closed Open
 economy economy
(Structural) production food production < food R-A R-C
deficit requirements
Total supply deficit total food supplies < food R-A R-B
 requirements
Demand deficit effective demand < food R-A R-B
 requirements
Import deficit market production < effective demand B-C
Market imbalances:* if market prices are set*
- Market (-supply) deficit market supplies < effective demand below Po above Pm
- Market surpluses market supplies > effective demand above Po below Pm

*Price settings different from equilibrium prices lead to an overall change of the deficit structure, see above.


After having discussed the constituting elements and the basic patterns of the structure of
food deficits we will now turn to the question how the actual levels of food production,
supply and demand are determined. Market prices play an important role as determining
factor of the volume of production, supply and demand but are not the whole story. The
position and shape of the production, supply and demand curves are determined by many
other factors which are, furthermore, not fixed but continuously changing. Therefore, the
pattern of food deficits is not given and fixed but continuously changing as well, due to
variations in supply (e.g. through changes in production, stocks, imports), in demand (as
result of e.g. changing incomes and income distribution), in the requirements (population
growth, migration), and/or the market prices (e.g. due to changes in supply and demand, price
policy, international market influences, etc.). Parameter changes occur implicitly during the
process of economic development or as a result of specific policy measures. The relevance of
various parameter changes and their impact on food production, supply and demand hence
on the structure and dimensions of aggregate food deficits and overall food security will be
discussed in the following sections.

The concept of food deficits as presented above provides the basis for our further analysis. If
not otherwise stated (depending on the factors to be analysed and the nature of the effects to
be studied), the analysis refers to the model of a closed economy (production and supply
being identical) but can easily be transferred to the open economy case.


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