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

1. Responding to Rising Food
Prices in ESA
ASARECA
CGIAR
ReSAKSS-ECA

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. 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. 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. 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. 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. 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. 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. 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. Regional Variation in Harvesting Season
ESA harvesting timeline
Source: Data: FEWSNET,2008

11. Maize Production and Market Flows in
the GHA
Source: FEWNET, 2007

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

13. ODA to agriculture: 1975-2005
Source: World Development Report, 2008

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. 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. 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. 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. 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. 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. • Contacts:
• m.waithaka@asareca.org
• J.karugia@cgiar.org