Competition in food production supports food security in developed countries

Competition in food production supports food security in developed countries

Í article Erna Bjarnadóttir, an economist and project manager at Mjólkursamsalan, on the website of Fréttablaðið on 19 March, written on the occasion of article The article, published by the undersigned in Fréttablaðið on 17 March, primarily criticises two points.

Firstly, that the reference to a 2016 report by the Food and Agriculture Organization of the United Nations was misleading, as it did not state that it was written by Steve McCorry, a professor at Exeter, in a series published by The United Nations Food and Agriculture Organization since 2016, Competition and food security. It should be noted that the undersigned has already updated the original article so that there is no doubt as to which source is being referred to.

Elsewhere, Erna criticises that the empirical studies referred to in the aforementioned report are based on research in developing countries and therefore „There is no reason to believe that the conclusion [of Steve McCorriston, a professor at Exeter], so far as it goes, applies to the highly industrialised agriculture of the West.” It is true that the professor's discussion largely refers to empirical studies conducted in developing countries, as the report emphasises that problems related to competition are no less prevalent in underdeveloped states than in developed ones, see e.g. : „Despite the recent focus of much research on competition in food markets in developed countries, arguably there is reason to suggest that concerns about competition in the food sector are likely to be more prevalent in developing countries.“

This is also an opportunity to report on two recent academic articles that examine the interplay between competition and food security in the industrialised Western world. One of them is based solely on data from 41 European countries, while the other utilises data from 151 developed and developing nations. In short, the academics' conclusion is that increased competition leads to greater food security.

In the article by Fusco, Coluccia and De Leo (2020), Effect of Trade Openness on Food Security in the EU: A Dynamic Panel Analysis, published in the International Journal of Environmental Research and Public Health, the authors use data from 41 European countries to assess the impact on food security of how open their respective economies are. The authors conclude that market opening has, on average, a statistically significant positive effect on food security. In addition, the findings suggest that the level of economic development, along with the importance of agriculture, can contribute to increased food security. In the article by Dithmer and Abdulai (2017), Does trade openness contribute to food security? A dynamic panel analysis, published in Food Policy, the authors also examine the effect of trade openness on food security by analysing cross-sectional data from 151 countries for the years 1980-2007. The authors' conclusion is that the opening up of economies to trade has a statistically significant positive effect on food security, and that economic growth and increased agricultural productivity also enhance food security.

Furthermore, Erna criticises the undersigned for not having addressed the EU and Norway's agricultural policy and food security, and also proposes an alternative conclusion to the article. The Competition Authority has addressed this in other articles and, among other things, has pointed out that exemptions from competition law in Norway and the EU go much further than the exemptions that apply in the dairy industry here. In these countries, emphasis is placed on the importance of competition in order to protect the interests of farmers and consumers.

Valur Þráinsson, Chief Economist of the Competition Authority

The article was published on the Fréttablaðið website on 24 March 2021.

You can click on the article here