Wheat consumption in sub-Saharan Africa: Trends, drivers, and implications for food security and policy

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Presentation by Dr. Nicole M. Mason (MSU) at Wheat for Food Security in Africa conference, Oct 8, 2012, Addis Ababa, Ethiopia.

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Wheat consumption in sub-Saharan Africa: Trends, drivers, and implications for food security and policy

  1. 1. Wheat consumption in sub-Saharan Africa:Trends, drivers, and implications forfood security and policy Nicole M. Mason, T.S. Jayne, & Bekele Shiferaw Michigan State University & CIMMYT Addis Ababa, Ethiopia 8 October 2012
  2. 2. Wheat consumption in SSA  rapidly  2000-09: 650,000 MT/year (4.2%) 45 40 Per capita consumption (kg) 35 30 Per capita consumption, SSA 25 20 15 10 5 0 Wheat Maize Rice (milled equivalent) Source: FAOSTAT Commodity & Population databases
  3. 3. Growing structural deficit - 3 main staples 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 5 Net exports, SSA 0 Net exports (million MT) -5 -10  dependence on imported staples +  world prices -15 =  import bills -20 Wheat Maize Rice (milled equivalent) Source: FAOSTAT Trade database
  4. 4. Rising importance of wheat in SSAstaple food diets  possible dilemma  A major pathway for broad-based economic growth is structural transformation; key part is rural-urban synergies  BUT, urban consumers’ demand for wheat met mainly by imports or production from large-scale commercial farms (excl. Ethiopia) – Minimal rural/urban synergies
  5. 5. OUTLINE1. Introduction2. Trends in net imports & food consumption – key differences across regions3. Expenditures on wheat vs. other staples4. What is driving rising demand for wheat?5. Conclusions & policy implications
  6. 6. The “big 5”: 53% of wheat net imports 5 countries – most of SSA wheat imports (2000-09) 1. Nigeria (23.0%)  64% of total 2. Sudan (10.7%) consumption 3. Ethiopia (8.2%)  44% of population 4. South Africa (6.6%) 5. Kenya (4.9%) Source wheat mainly from US (34%), Argentina (15%), Australia (8%) – Severe droughts,  wheat prices
  7. 7. Trends in wheat consumption P.c. consumption  except in South & North Africa 30 Per capita wheat consumption (kg) Per capita wheat consumption 25 25.6 21.4 20 19.0 East 15 Southern excl. RSA 10 West 7.8 Central 5 0 Sources: FAOSTAT Commodity Balances & Population databases
  8. 8. Trends in wheat consumption P.c. consumption  except in South & North Africa 200 Per capita wheat consumption Per capita wheat consumption (kg) 180 167.9 160 140 North Africa 120 100 South 80 Africa 60 60.9 40 20 0 Sources: FAOSTAT Commodity Balances & Population databases
  9. 9. Supplies of main staple grains  faster thanpopulation since early 1990s P.c. wheat & rice consumption  Marginal , if any, in p.c. maize consumption ( in West Africa) Good news for food security (availability) – Wheat playing important role
  10. 10. Wheat becoming #1 staple in many placesin SSA Lusaka, Zambia – 2007/08 70% % of wheat + maize + rice expenditures 60% 50% 40% Wheat 30% Maize 20% Rice 10% 0% 1 2 3 4 5 Total Consumption quintile Source: Mason & Jayne (2009)
  11. 11. Wheat becoming #1 staple in many placesin SSA Lusaka, Zambia – 2007/08 70% % of wheat + maize + rice expenditures 60% 50% Similar patterns: Kitwe, Zambia 40% Nairobi, Kenya Wheat 30% Maputo, Mozambique Maize 20% Rice 10% 0% 1 2 3 4 5 Total Consumption quintile Source: Mason & Jayne (2009)
  12. 12. Wheat dominates (slightly) among ruralnon-poor in Ethiopia 2004/05 80% % of wheat + teff + maize + sorghum 70% 60% expenditures 50% 40% Wheat Teff 30% Maize 20% Sorghum 10% 0% Urban poor Urban non- Rural poor Rural non-poor poor Location/income group Source: Berhane et al. (2011)
  13. 13. Wheat expenditure shares in ESA:general patterns (excl. Ethiopia) Non-poor > poor Urban > rural
  14. 14. Potential drivers of rising wheat demand1.  wheat prices relative to other staples2.  incomes3. Population growth4. Urbanization5.  opportunity cost of time, esp. women6. Food aid
  15. 15.  wheat prices relative to other staples?  Trends in price ratios – world & retail 9 countries 1.6 0.80 World price ratios 0.75 1.5 0.70World wheat/maize price ratio World wheat/rice price ratio 1.4 0.65 0.60 1.3 0.55 1.2 0.50 0.45 1.1 0.40 1.0 0.35 19 0 19 1 19 2 19 3 19 4 19 5 19 6 19 7 19 8 19 9 19 0 19 1 19 2 19 3 19 4 19 5 19 6 19 7 19 8 20 9 20 0 20 1 20 2 20 3 20 4 20 5 20 6 20 7 20 8 20 9 20 0 20 1 12 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 19 World wheat/maize World wheat/rice (right scale) Source: IMF Primary Commodity Prices database
  16. 16.  wheat prices relative to other staples?Ratio of wheat price : other staple prices Declining: Nigeria, Kenya, Mozambique, Cameroon Rising: South Africa, Ethiopia, DRC, Zambia No significant trend: Mauritania
  17. 17. Rising incomes? p.c. GDP relative to retail wheat prices – 8 countries 2400 2200 Bread purchasing power Loaves of bread per GDP per capita 2000 1800 1600 1400 1200 No significant trend in other 5 countries 1000 800 600 400 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 Nigeria Zambia Kenya
  18. 18. Factors driving wheat consumption in SSA Regression analysis 45 countries 1980-2009 Dependent variable: Zambia Daily Mail total wheat consumption
  19. 19. Factors driving wheat consumption in SSA:key findings World prices: Not significant GDP (income): US$1 million  1.9-4.8 MT (elasticity 0.09-0.22) Total population: 1,000 people  30-50 MT – 670,000-1.12 million MT increase/year 2010-20 – 770,000-1.28 million MT increase/year 2020-30 Urbanization: Not significant Ratio of female-to-male labor force participation: 1 percentage point  5,000-6,200 MT Food aid (1-3 year ago): 1 MT lagged food aid  0.69 MT consumption
  20. 20. Conclusions & policy implications1. SSA faces deepening staple food deficit – Much of gap being filled by imported wheat2. Wheat consumption in SSA  rapidly –  population, incomes, women’s opp. cost of time – Imported or large-scale commercial farms (excl. Ethiopia) – Unlikely to generate rural-urban synergies or broad- based economic growth
  21. 21. Policy options for meeting domestic graindemandA. Neutral – no tariffs, protection, taxes, etc. on imported staples – Large imports of wheat/rice continue – Pros • Food prices capped at import parity • Consumer sovereignty – Cons • Drain on foreign exchange • Minimal rural/urban synergies
  22. 22. Policy options for meeting domestic graindemandB. Trade policy (tariffs, protection) to increase relative price of imported staples – Goals • Shift consumption toward domestically produced staples •  incentives for domestic staple food production •  rural/urban synergies – Pros • IF  supply AND  demand domestic staples   synergies •  government revenue (tariffs) – Cons • IF ONLY  supply OR ONLY  demand  negative effects on net sellers or net buyers •  food bills for consumers of imported staples (non-poor) •  consumer sovereignty
  23. 23. Policy options for meeting domestic graindemandC. Promote domestic production through non- distortionary measures – Rural infrastructure, irrigation, ag R&D, extension, market information – Pros • IF  supply AND  demand domestic staples   synergies • Investments promote agricultural growth & poverty reduction • Consumer sovereignty – Cons • IF ONLY  supply  prices  negative effects on net sellers (non-poor) • Time lag
  24. 24. Policy options for meeting domestic graindemandD. Promote value addition/processing of staples grown by smallholders to improve convenience – Key driver of wheat demand:  opportunity cost of time –  prep time,  convenience of coarse grains – Blending domestic staples w/ wheat flour – Pros • Potential for  rural/urban synergies (incl.  urban employment?) • Consumer sovereignty – Cons • Consumer demand uncertain • Investors willing to take risk?
  25. 25. Policy options for meeting domestic graindemand Not mutually exclusive (or exhaustive) Policymakers – identify objectives and weigh pros/cons for different types of HHs Reuters/Barry Malone
  26. 26. Thank you! Questions?Nicole Mason (masonn@msu.edu)Acknowledgements Funding support from USAID/Zambia & CIMMYT Research assistance from Arthur Shipekesa (IAPRI) Price data and information on wheat market conditions in various countries: Henry Akaeze, Antony Chapoto, Cynthia Donovan, Francis Karin, Marlene Labuschagne, Mary Mathenge, Asfaw Negassa, Sonja Perakis, Solomon Tembo, & Lulama Ndibongo Traub

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