07 September 2010

Business: The Elephant in the Nutrition Room

One of the backdrop questions of my recent India trip was when should the private sector be engaged in the fight against nutrition and when shouldn’t it?

This is a highly explosive topic in development and in nutrition it is at its most combustible. The Britannia Nutrition Foundation is sponsored by Britannia Biscuits, one of the largest food manufacturing companies in India. The position of the Right to Food Campaign in India is not to talk to the private sector. Their position is that food security is a public good and citizens have a right to expect the state to deliver on this right. In the Conference the Foundation, obviously sensitive to criticism, did not push the role of the private sector at all. The issue was the elephant in the room. This non-dialogue is a real shame.

The central question is “are there any overlaps between commercial interests and sustainable and equitable improvements in nutrition?” No-one in India knows the answer to this question because the dialogue is not happening.

It seems to me that 4 things are being unhelpfully conflated.

First, the role of business in making its core activities more supportive of nutrition. This means going beyond CSR and making sure that advertising is responsible, that legal resources are directed in ways that do not only protect shareholders, that labeling is clear and gives consumers real choice, and that transparency is high on the agenda, so that civil society can hold businesses accountable.

Second, business as a substitute for the state. I am not too optimistic here about the role of business, after all nutrition is a public good. But there might be things that the private sector can do better than the state. It is hard to imagine the private sector bungling supply chain management as badly as the state seems to have done.

Third, business as a complementing to the state. For example, while fortification of salt and other widely used low cost foods is only a small part of an effective nutrition strategy, international experience has shown that the private sector is usually the best way of implementing it.

Fourth, working with businesses outside the traditional food areas to make the environment more enabling for nutrition. This may be the most important area, and is certainly the newest. For example, when renewing a contract of mobile telephone operation, the state could build in requirements to set up SMS services to set up a reminder service for childhood vaccinations. Cloud computing companies could be contracted to improve nutrition surveillance. Can the strong expertise of India’s hotel management industry be brought to bear on strengthening customer feedback mechanisms?

I don’t know the answers to these questions—and it seems to me that not many others do either--answers can only come through a dialogue that is sorely missing.


Owen Barder said...


It seems to me that many of the themes of "Nudge" (Thaler and Sunstein) are relevant here. What do you think?

I'm mystified by your suggestion that "nutrition is a public good". In what way?


Ken Houghton said...

Owen Barder - Nutrition is clearly a public good, since it leads to improvements in human capital, educational capacity, and health. (This is why the US's recent folly of funding teacher retention by cutting school lunch programs is so absurd: you can teach overcrowded, fed students a lot easier than you can teach hungry ones. Couldn't design a poorer policy if I tried.)

Enabling nutrition is therefore clearly a public priority--and certainly not a business priority. (Enabling nutrition can be done, e.g., by taxing non-nutritious or hazardous foodstruffs or subsidizing especially nutritious ones--but leading a horse to water doesn't make him eat healthy foods.)

Unlike "roadways," there's no a priori clear indication that nutrition must be supported through public services. But improved nutrition overall is a public good, so a society with a significant variance from nutritious habits may require government intervention to increase the possibility of improved nutrition due to reducing asymmetrical information or "nudging" habits via taxation.

lawrence haddad said...

Owen, you are quite right to pick me up on my sloppy use of "public good". Nutrition is not a public good in the strict sense as it is neither non-excludable or non-rivalrous.

Rather I was referring to the broader issues of nutition status being something that the market does not deal with well. First, there ae major extenalities generated from malnutrition (for the next generation--undernourished mothers give birth to undernourished babies). Second there are major information asymmetries that consumers have to deal with (often parents they don't know their children are undernourished or the claims of food manufacturers are not counterbalanced by public information making informed choice difficult). Third, there is a capital market failure in that parents cannot borrow for their infant's nutrition in the promise of repayment when they earn higher wages in the marketplace 20 years later.

Owen Barder said...

@Ken - I don't dispute that nutrition is good, and I agree that it leads to improvements in human capital, educational capacity, and health. None of that makes it a public good.

Nutrition is clearly a proper concern for public policy, but by labeling it as a "public good" we create a bias towards choosing a particular set of policy tools that may not be appropriate.

By thinking rigorously about what the nature of the market failures are, and being careful with language, we may be able to make better choices about appropriate policy interventions. I think Lawrence's comment above is helpful because it highlights the market failures that might be addressed.

The information asymmetries, in particular, may be amenable to "nudge"-like approaches.


Barbara Harriss-White said...

Dear Lawrence,
You cannot stop the private sector being ' engaged in the fight against nutrition'. The proof of the pudding is that nutritional stratus is so poor. It is not simply a matter of the poverty of the purchasers. Almost all the food trade is in private hands outside Punjab and Haryana and other small pockets from which the state's public distribution system is procured.

If you read the research I have done in central TN (A political Economy of Agricultural Markets in South India - 1996 Sage) West Bengal (Rural Commercial Capital - 2008 OUP Edgar Graham Prize) and will shortly publish on nearly 40 years of development of private grain markets in northern TN (Local capitalism and the foodgrains economy in northern Tamil Nadu, 1973-2010), you will know that the grain market - parametrically responsible for calorie shortages - just as the micro-level food allocation practices inside Households is responsible for allocative biases at the individual level - is by and large in private hands. Throughout India these markets are structured in combinations that can be stylised as oligopoly and crowded petty production, the latter linked to the former. The last time I reviewed studies of price efficiency and conducted them myself, markets were not short term price efficient. Exchange relations vary according to regions and class statuses; and prices at the micro level of the individual transaction can still differ according to debt status and class. The labour force inside the marketing system is paid wages – higher than agricultural wages – that are close to the poverty line. Much improvement has been made over the last decade through mobile phones and - finally after four decades - the implementation of the agricultural markets act. But these structures are still capable of changing during times of scarcity and even inducing scarcity and price spikes. Jayati Ghosh drew attention last year to the fact that much of the increase in grain prices over the last three years has been absorbed by the marketing margins.

Utsa Patnaik’s argument is that it is poverty and lack of effective purchasing power rather than Engel curve food behaviour in the context of mediocre production trends and stagnant or declining per cap availability of calories from grain that results in India being a republic of hunger. Jim Ryan’s work in the early 1070s showed that calories are the limiting nutritional input and that in S Asia (unlike other parts of the world) a diet adequate in calories is generally adequate in protein and micro nutrients.

' No-one in India knows the answer to this question because the dialogue is not happening.' My understanding is that there is a dialogue, but of the deaf .

I think the JUN economists above all Utsa Patnaik know the answer. There are social scientists at - or linked to - the Institute of Human Devt working on this - and also connected with the ICICI Bank's nutrition and public health team and at the Public Health Foundation of India.