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Responding to Rising Food
     Prices in ESA

         ASARECA
          CGIAR
       ReSAKSS-ECA
Outline

• Introduction

• Price trends
  – Consumer Price Indices (Total, food and fuel)
  – Agricultural product prices
...
Introduction

• Global food prices increasing at
  unprecedented rates

• FAO food price index has increased by 57%
  betw...
Introduction…
         What is driving global price increases?

Demand side factors Supply side factors

Rising incomes   ...
Trends in Maize Prices in Capital Cities in
                          East Africa

                        400
           ...
Trends in Prices of Beans in Capital
                             Cities in East Africa

                     1000
       ...
ESA: Country Level Change in
              Commodity Prices (%)

Country Maize            Beans        Rice        Wheat  ...
Regional Dimensions of food
             commodities in ESA…
•Most action happens at regional and domestic markets
•Signif...
What are the dominant factors
associated with increasing food prices in
                  ESA?

•       Demand side factor...
Regional Variation in Harvesting Season


ESA harvesting timeline




                          Source: Data: FEWSNET,2008
Maize Production and Market Flows in
              the GHA




                          Source: FEWNET, 2007
Greater Horn of Africa (GHA) main Livestock
              Trading Routes




                               Source: FEWNET...
ODA to agriculture: 1975-2005




Source: World Development Report, 2008
Declining investments in African
             agriculture….
• Low public sector investment in agriculture
  – Spending on ...
Yields are decreasing in most of the
            COMESA countries
     Maize (MT/Ha)            Average 1997-1999         ...
Change in Food Price Index (FPI) and Price
              of Main Staple
                                      % Change in ...
What are countries doing?
Policy responses to rising food prices in COMESA and ASARECA Countries

                        ...
Main messages
1. Protect food consumption of the poor
  – Priority actions:
     • Targeted food subsidies; cash transfers...
Main messages
3. Exploit regional diversity in production and
  facilitate regional trade
      • Priority Action: avoid e...
• Contacts:
• m.waithaka@asareca.org
• J.karugia@cgiar.org
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Responding to Rising Food Prices in Eastern and Southern Africa

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Responding to Rising Food Prices in Eastern and Southern Africa, June 2008, by ILRI Director General Carlos Seré

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Transcript of "Responding to Rising Food Prices in Eastern and Southern Africa"

  1. 1. Responding to Rising Food Prices in ESA ASARECA CGIAR ReSAKSS-ECA
  2. 2. Outline • Introduction • Price trends – Consumer Price Indices (Total, food and fuel) – Agricultural product prices • Explaining the trends • Policy measures by countries • Key messages
  3. 3. Introduction • Global food prices increasing at unprecedented rates • FAO food price index has increased by 57% between Mar 07 and Mar 08 • Prices of key cereals, dairy products, meat etc have increased substantially
  4. 4. Introduction… What is driving global price increases? Demand side factors Supply side factors Rising incomes Reduced exports Alternative uses for Low global stocks grain – feed, biofuels Population growth High costs of inputs – oil, fertilizers Urbanization Declining agricultural land, water, climate change impacts
  5. 5. Trends in Maize Prices in Capital Cities in East Africa 400 350 Kenya (Nairobi) Maize price (USD/T) 300 250 Rwanda (Kigali) 200 Tanzania (Dar es 150 Salaam) 100 Uganda (Kampala) 50 0 07 08 07 07 07 07 7 8 0 0 n n v p ay l ar ar Ju No Se Ja Ja M M M Time (month)
  6. 6. Trends in Prices of Beans in Capital Cities in East Africa 1000 900 Kenya (Nairobi) 800 Bean price ($US/T) 700 Rwanda (Kigali) 600 500 400 Tanzania (Dar es 300 Salaam) 200 Uganda (Kampala) 100 0 De 05 M 05 De 06 M 06 De 07 M 07 Se 0 6 Ju 07 Se 0 7 08 Ju 06 c c c p p p n n ar ar ar Se Time (month)
  7. 7. ESA: Country Level Change in Commodity Prices (%) Country Maize Beans Rice Wheat Meat Year1 J-M Year J-M Year J-M Year J-M Year J-M 20082 2008 2008 2008 2008 Kenya 12 19 36 32 71 21 0 Tanzania 81 8 38 2 13 18 Uganda 3 -2 22 7 -2 0 14 7 Rwanda -1 -14 32 -1 5 2 3 -6 -1 4 Ethiopia 39 28 43 22 Zambia 23 14 15 5 11 4 1: % change from Jan-2007 to Jan-2008; For Tanzania, % change is from May-07 to Jan-08; for Rwanda, % change for meat is Nov-06 to Nov-07 2: % change between January and March 2008
  8. 8. Regional Dimensions of food commodities in ESA… •Most action happens at regional and domestic markets •Significant informal cross-border trade, crucial for food security “Bureaucratic import/export procedures inhibit formal trade between. Inappropriate policy interventions in the commodity markets tend to distort relative prices thereby encouraging informal cross-border trade ( Rates, 2003)” Busia-Uganda Busia-Kenya
  9. 9. What are the dominant factors associated with increasing food prices in ESA? • Demand side factors • Supply side factors – Climatic variability – Rising input prices • Declining investments in agriculture – Decline in ODA to African agriculture – Low public sector investments – Underinvestment in public agricultural research
  10. 10. Regional Variation in Harvesting Season ESA harvesting timeline Source: Data: FEWSNET,2008
  11. 11. Maize Production and Market Flows in the GHA Source: FEWNET, 2007
  12. 12. Greater Horn of Africa (GHA) main Livestock Trading Routes Source: FEWNET, 2007
  13. 13. ODA to agriculture: 1975-2005 Source: World Development Report, 2008
  14. 14. Declining investments in African agriculture…. • Low public sector investment in agriculture – Spending on agriculture relative to AgGDP is low: in 2005, of 18 countries in Eastern and Southern Africa • only Ethiopia and Malawi spent 10% or more of total expenditure in agriculture • 7 countries spent between 5-9% of total expenditure in agriculture • The bulk of countries in the region will not meet the Maputo Declaration to allocate 10% of government expenditure to agriculture by 2008
  15. 15. Yields are decreasing in most of the COMESA countries Maize (MT/Ha) Average 1997-1999 Average 2004-2006 % change Burundi 1.18 1.06 -9.74 Comoros 2.20 2.28 3.66 Congo, Dem Republic of 0.82 0.78 -3.83 Djibouti 1.67 1.56 -6.67 Egypt 7.29 7.99 9.53 Eritrea 0.66 0.20 -69.35 Ethiopia 1.69 1.96 15.70 Kenya 1.54 1.76 14.43 Libyan Arab Jamahiriya 1.85 2.29 23.64 Madagascar 0.89 1.37 52.75 Malawi 1.39 1.14 -18.37 Mauritius 5.04 7.27 44.17 Rwanda 0.89 0.82 -8.02 Sudan 0.63 0.76 20.97 Swaziland 1.83 1.04 -43.19 Tanzania, United Rep of 0.80 1.65 106.27 Uganda 1.49 1.49 0.15 Zambia 1.37 1.87 36.98 Zimbabwe 1.18 0.60 -49.47 Source: Authors’ calculation based on data from http://faostat.fao.org/site/567
  16. 16. Change in Food Price Index (FPI) and Price of Main Staple % Change in Commodity % Change FPI Price Country Severity2 Landlocked Jan-05 to Mar-07 to Mar-07 to Staple food Mar-08 Mar-08 Mar-08 Kenya 69.8 20.1 Maize 30.0 +++ No Tanzania 38.8 11.2 Maize 93.7 ++ No Uganda 9.7 8.6 Banana 6.7 + Yes Ethiopia 96.4 40.8 Mixed teff 19.81 ++++ Yes Zambia 28.4 9.1 White maize 33.8 + Yes Rwanda 29.5 1.7 Beans 35.5 + Yes 1: For Ethiopia, Jan 07 to Jan 08
  17. 17. What are countries doing? Policy responses to rising food prices in COMESA and ASARECA Countries Number of countries Reduce taxes on food grains (+ +) 7 Price controls/ consumer subsidies (- +) 4 Fuel subsidies (+ -) 1 Increase supply using food grain stocks (+ -) 4 Increase supply via imports (+ +) 2 Export restrictions (- -) 4 Cash transfer (+ +) 4 Food for work (+ +) 4 Food ration/ stamp (+ -) 4 School feeding (+ +) 5 (+ + ) Consistent with long run policies to improve food security ( + - ) Some concerns for food security; ( - + ) Likely to hinder food security ( - - ) Highly likely to hinder food security Source: Adapted from World Bank
  18. 18. Main messages 1. Protect food consumption of the poor – Priority actions: • Targeted food subsidies; cash transfers where markets are working – By : • countries • Donors/humanitarian assistance organisations 2. Make agricultural inputs affordable – Priority actions: • smart subsidies for fertilizers, seeds; innovative credit schemes, information packages – By : • countries • Donors/humanitarian assistance organisations
  19. 19. Main messages 3. Exploit regional diversity in production and facilitate regional trade • Priority Action: avoid export bans during surplus • By: Countries, RECs: 4. Strengthen market information & intelligence e.g. RATIN,FEWSNET (Actors: REC:COMESA, EAC…..) • By: Donors 5. Investment efforts to scale up agricultural research: Increase investment in R&D (ASARECA, NARs, IARCs) By: Countries, Donors
  20. 20. • Contacts: • m.waithaka@asareca.org • J.karugia@cgiar.org
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