The Effects of Maize Market and Policy Reforms on Price Discovery and Competitiveness in Zimbabwe, 1991–1997

Abstract

Maize is Zimbabwe's staple food. An adequate supply of maize is essential to food security and domestic stability. A series of droughts and government mismanagement of the economy led to a maize production and food security problem in the 1980s. Zimbabwe's maize marketing system was transformed dramatically from a government monopoly to a competitive market system in which prices are determined by market forces in the 1990s. This paper examines the steps that Zimbabwe took towards maize market reform and the benefits of that reform. The movement to a competitive market led to formation of a commodity exchange to improve price discovery and increase price transparency. De-regulation has increased entry and competitiveness from new private sector hammer millers and traders. Farmers, millers, and traders face new profit opportunities and new price and financial risks that have increased management responsibilities. Consumers enjoy lower cost maize meal products and more convenient service. The benefits of the 1991–1997 reforms indicate what could be achieved in the long run if prices are determined by the market, rather than by the government.     

Measuring the impact of road rehabilitation on spatial market efficiency in maize markets in Mozambique

This article analyzes the impact of road rehabilitation on the spatial market efficiency of maize markets in Mozambique. We estimate a modified version of the Parity Bounds Model (PBM) that allows us to test the impact of road rehabilitation on spatial efficiency. This article seeks to contribute to the existing literature in three ways. First, a unique data set, where road rehabilitation episodes between market pairs are identified, is developed. Second, special care is devoted to estimation of transaction costs due to the sensitivity of the PBM model to the quality of transaction costs estimates. Finally, as opposed to most existing literature that focuses on relatively distant markets, the article focuses on spatially closed markets. We find that maize markets tend to be segmented due to high transport costs. Following road rehabilitation, inefficiency and average absolute price differentials tend to decrease, and market pairs have tended to shift toward autarky regimes. Overall, while the results point broadly toward a positive impact of road rehabilitation on spatial efficiency, they are not as strong or as robust as one would like. Large increases in fuel prices likely offset the positive impacts of road rehabilitation on transaction costs, contributing to the increase in the probability of being in an autarky regime.     

World food markets into the 21st century: commodity risk management policies

Recent concerns about future global food production seem poorly based. The rapid phase of growth in food consumption is over for most of the world's population because of increased incomes and, besides, population growth rates continue to slow. Thus, the rate of growth of food production needed in the future is much lower than it has been for the past 40 years. Production and price instability will continue, perhaps with lessened intensity because of reduced government intervention. With private agricultural interests now facing greater exposure to price and production risks, especially in developing countries, there needs to be greater emphasis on financial market instruments for managing these risks.     

Impacts of Market Reform on Spatial Volatility of Maize Prices in Tanzania

Maize is one of the major staples and cash crops for many Tanzanians. Excessive volatility of maize prices destabilises farm income in maize‐growing regions and is likely to jeopardise nutrition and investment in many poor rural communities. This study investigates whether market reform policies in Tanzania have increased the volatility of maize prices, and identifies regional characteristics that can be attributed to the spatial price volatility. To achieve the objectives, an autoregressive conditional heteroskedasticity in mean (ARCH‐M) model is developed and estimated in this study. Results show that the reforms have increased farm‐gate prices and overall price volatility. Maize prices are lower in surplus and less developed regions than those in deficit and developed regions. Results also show that the developed and maize‐deficit regions, and regions bordering other countries have experienced less volatile prices than less developed, maize‐surplus and non‐bordering regions. Our findings indicate that investments in communication and transportation infrastructures from government and donor countries are likely to increase inter‐regional and international trade, thereby reducing the spatial price volatility in Tanzanian maize prices in the long run.     

The Spatial Integration of Paddy Markets in Vietnam

This paper examines whether there is spatial integration between and within paddy markets in the north and south of Vietnam. The empirical model developed uses estimates of transfer costs to generalise Ravallion's model of spatial market integration to allow for threshold effects. A sequential testing strategy is used to test for market segmentation, the number of thresholds, long‐run integration, informational efficiency and the Law of One Price within an error‐correction framework. We find neither threshold effects nor weak evidence of paddy market integration between northern and southern Vietnam. There is, however, evidence of both threshold effects and stronger market integration within the Red and Mekong River deltas. Whenever price spreads exceed their thresholds, at least 60% of price changes are transmitted between regional markets within a month. Nonetheless, the instantaneous version of the Law of One Price only holds for a few regimes and market pairs. These results suggest that national level policies cannot be relied upon to stabilise or support paddy prices in Vietnam. Instead, policies need to be designed with the specific production, consumption and marketing characteristics of northern and southern Vietnam in mind.     

Peasant household modelling: Farming systems evolution and sustainability in northern Zambia

Chitemene slash-and-burn cultivation continues to be a dominating cropping system in northern Zambia even after the introduction of modern technologies such as hybrid maize and fertilizer. The rationale of farming systems evolution in northern Zambia where labour markets have been absent or highly imperfect, has been analyzed by goal programming based on the theories of Chayanov (1966) and Nakajima (1986). Carrying capacity estimation is incorporated in the models and discussed in relation to the sustainability of land use systems in the area. The major changes in agricultural technologies in northern Zambia during this century has been the introduction of cassava, maize and fertilizer technologies. Cassava has had the most significant impact since the land could support much higher population densities and since the dependence on the chitemene system no longer was critical for the survival of peasants. By switching from finger-millet to cassava as the main staple the peasants could reduce their total labour recquirement to meet their basic food needs by as much as 40%. The results also show that the maize-fertilizer technology has been unable to replace the chitemene system because economic incentives to continue the system exist as long as there is suitable woodland available. Nevertheless, the introduction of the maize-fertilizer technology may have resulted in reduced chitemene cultivation. The rapid expansion of maize production in northern Zambia from the late 70s to the late 80s depended critically on the government policy of equity pricing and input subsidisation. The models predicted that the removal of fertilizer subsidies would result in a dramatic reduction in maize production.     

World food prices and poverty incidence in a food exporting country: a multihousehold general equilibrium analysis for Thailand

A multisectoral, multihousehold general equilibrium model of the Thai economy is used to analyze the implications of recent increases in international food prices. Higher food prices, especially staple grains, worsen poverty incidence in Thailand despite the presence of large numbers of poor farmers, many of whom benefit from higher prices. The positive effect on the welfare of poor farmers is dominated by the negative effect on poor consumers. Of the recent price increases for rice, sugar, cassava, maize, soybeans, urea, and petroleum, the increases in rice prices raise poverty incidence the most, despite Thailand being the world's largest rice exporter.     

The Malawi agricultural input subsidy programme: 2005/06 to 2008/09

Malawi's implementation of a large-scale agricultural input subsidy programme has attracted significant international interest. This paper reviews the programme from 2005/06 to 2008/09. Nationwide disbursement of heavily subsidized fertilizers and seed to large numbers of beneficiaries represents a significant logistical achievement and substantially increased national maize production and productivity, contributing to increased food availability, higher real wages, wider economic growth and poverty reduction. However, the latter years of the programme have been accompanied by high international fertilizer prices and costs and high maize prices, the latter undermining the programme's food security, poverty reduction and growth benefits for many poor Malawian farmers relying on purchased maize for substantial amounts of their staple food requirements. Estimated economic returns to the programme have been satisfactory, given other programme benefits not captured in cost—benefit analysis. With substantial reductions in both prices and subsidized volumes of fertilizers in subsequent years, there is considerable scope for building on achievements to raise programme effectiveness, efficiency and benefits. Any application of Malawi's subsidy experience to other countries should take into account the special characteristics of the Malawian maize economy and measures needed to raise programmes' effectiveness and efficiency and their contribution to sustainable development policies.     

The effects of the Food Reserve Agency on maize market prices in Zambia

Over the last decade, governments throughout eastern and southern Africa have increasingly used strategic reserves and/or marketing boards to influence grain market outcomes, yet little is known about how these activities are affecting grain markets. This article estimates the effects of the Food Reserve Agency (FRA) on maize market prices in production and consumption regions in Zambia using a vector autoregression model and monthly data from July 1996 through December 2008. In recent years, FRA has become the dominant buyer of smallholder maize in Zambia. Simulations show that FRA activities stabilized market prices throughout the July 1996–December 2008 study period and raised mean prices between July 2003 and December 2008 by 17–19%. The price raising effects of FRA policies have assisted surplus maize producers but adversely affected net buyers of maize in Zambia, namely urban consumers and the majority of the rural poor. The increase in maize price stability is unlikely to have had substantial welfare effects on poor households. In contrast, relatively wealthy producers are likely to have benefited from the higher average and more stable maize prices resulting from FRA policies.     

新一轮国际粮食价格上涨：原因及对中国市场的影响

[目的]随着中国粮食进口不断增加,国内外市场联系越来越紧密。2020年下半年以来,国际市场粮食价格快速上涨,对国内粮食市场产生一定影响,分析国际市场价格上涨的原因和影响对确保国内粮食供应稳定、保障国家粮食安全具有重要意义。[方法]文章分析了2019年以来小麦、大米、玉米、大豆4种粮食产品的国内外价格走势,从供需状况、贸易政策、气候变化等因素分析国际市场价格波动的原因,并探讨了国际价格对国内价格的影响。[结果]当前全球主要粮食品种供应充足,库存仍处于较高水平,此轮国际粮食价格上涨主要是受到美国等发达国家宽松的货币政策以及疫情后全球消费逐步回暖的影响;但国际市场价格上涨对中国市场的影响总体有限,国内小麦、大米、玉米价格上涨的主因是国内消费回暖和生猪产能恢复带动的饲用需求快速增长,油用大豆受国际市场的影响较大。[结论]为稳定国内粮食市场,避免国际市场的冲击,中国要进一步提升粮食综合生产能力,强化科技支撑,加强粮食储备管理,健全政策支持体系,并引导居民建立科学的消费观念。     

The effects of NCPB marketing policies on maize market prices in Kenya

The Government of Kenya pursues maize marketing policy objectives through the National Cereals and Produce Board (NCPB), which procures and sells maize at administratively determined prices, and stores maize as a contingency against future shortages. A private sector marketing channel competes with the NCPB. This article estimates the effects of NCPB activities on the historical path of private sector prices in Kenyan maize markets between 1989 and 2004. The analysis is carried out using a reduced form vector autoregression model (VAR) estimated with sparse data and imposing only minimal identification restrictions. Results show that NCPB activities have stabilized maize market prices in Kenya, reduced price levels in the early 1990s, and raised average price levels by roughly 20% between 1995 and 2004. Over the past decade, the price-raising activities of the NCPB have transferred income from urban consumers and a majority of small-scale farm households that are net buyers of maize to a relatively small number of large- and small-scale farmers who are sellers of maize.     

基于Nerlove模型的玉米供给反应研究*——以吉林省为例

［目的］吉林省是以玉米为主要粮食作物的产量大省，吉林省玉米生产在保障国家粮食安全方面发挥着重要的作用。2016年国家取消玉米临时收储政策，实行“价补分离”政策（既市场化收购+补贴）。在玉米价格逐步市场化的形势下，为探究吉林省玉米种植面积对价格变动的反应程度，［方法］文章利用1985—2015年吉林省玉米种植面积、玉米平均出售价格、玉米的物质成本投入、玉米与大豆的每667m2收益比值、玉米与水稻的每667m2收益比值的时间序列数据，通过运用Nerlove模型，测算吉林省玉米播种面积对价格、物质成本、与大豆和水稻的每667m2收益比值的供给反应。［结果］吉林省玉米的短期供给弹性为049，长期供给弹性为063，短期供给弹性和长期供给弹性均小于1，缺乏弹性，吉林省玉米种植面积对价格变动的反应较为迟钝。［结论］提出完善农业耕作制度，推进玉米目标价格制度改革，优化玉米收购市场结构政策建议。     

Enhancing food security in South Sudan: the role of markets and regional trade

South Sudan faces serious problems of food insecurity due to low levels of domestic food production, periodic droughts, widespread poverty, and since late 2013, renewed armed conflict. This article explores market price behavior using cointegration analysis and estimates the effects of production and trade shocks through multimarket model simulations. We show that market prices in the capital city, Juba, of both maize and sorghum are cointegrated with import parity prices of these cereals sourced from Uganda, consistent with observed trade flows. Model simulations, using econometrically estimated demand parameters, suggest that private sector imports of maize and wheat would greatly mitigate the potential fall in consumption in the case of a decline in domestic cereal production. Other simulations indicate that if total imports of cereals are reduced by one‐third (still more than two times the levels of food aid in 2013) because of disruptions to private market flows, domestic prices of cereals could rise by 45% or more. The article concludes that whatever measures are taken involving national food security reserves, it is crucial that government policy serves to maintain incentives for private sector imports to avoid destabilizing market supplies, domestic prices, and ultimately, food consumption of the poor.     

Agrarian Winners of Neoliberal Reform: The ‘Maize Boom’ of Sinaloa,Mexico

While the detrimental impact of neoliberal policy on Mexico's maize smallholders is well researched, little attention has been paid to the rise of maize in the northern state of Sinaloa. Sinaloa's entry into maize has restructured the geography of national supply, and generated a new national confidence in white maize self‐sufficiency. Using semi‐structured interviews and secondary data, we document the primary social and political drivers of Sinaloa's maize boom. Local actors trumpet Sinaloa's response as a success story of entrepreneurship and technological innovation, while simultaneously appropriating the language of food sovereignty to justify preferential entitlements in public investment. Our analysis confirms interpretations of neoliberalism as a political project, illustrating how existing natural, social and political capital held by specific interest groups can be leveraged and reinforced through private–public partnerships to mould national policy and investment, and the potential vulnerabilities that may emerge from this process.     

Small-Ruminant Marketing in Southwest Nigeria

This paper describes the structure of the small-ruminant trade in southwest Nigeria, analyses the factors determining the price of animals, and examines the relationship of prices between markets. Animals imported from the north dominate the sheep and goat trades, and supply and prices are highly seasonal. However, multiple regression shows animal prices to be largely predictable in terms of the characteristics of the animal (breed, sex and live-weight) and the market in which it is sold (location and month of sale). Prices are relatively closely correlated between markets over time, and price relationships between markets reflect the respective structures of the trade in northern and southern animals. Price margins between markets reflect the level of traders' commission and storage costs in addition to the direct costs of transport. The study concludes that there is no evidence for market inefficiency or segregation, and that there is considerable market potential for increased local production of sheep and goats. In policy terms, the market's efficiency implies that government involvement beyond its present, limited facilitative role would not be justified.     

Cropland use,yields, and droughts: spatial data modeling for Burkina Faso and Niger

For countries with recurrent droughts, the design of drought impact mitigation measures could benefit from analyses of determinants of yields and prices of local crops at regional and district level. This study applies dynamic spatial panel data regression models to yields and prices of four major food crops across regions of Burkina Faso and Niger, over sample periods between 1984 and 2006. Results lend support to mainly simultaneous spatial spillovers, particularly for millet and cowpea prices and sorghum yields in Niger, and maize yields in Burkina Faso. After accounting for these effects, most crop yields are found to be weakly price‐responsive, as envisaged by a supply‐side geographical diffusion hypothesis. Seasonal rainfall elasticity estimates suggest that dominant food crops have slight advantage margins in terms of relative resilience to rainfall shortages. However, this result is to be weighed against low millet yields in Niger, and marked drops in sorghum yields during officially declared droughts in Burkina Faso.     

World food prices and poverty in Indonesia

Spikes in international food prices in 2007–2008 worsened poverty incidence in Indonesia, both rural and urban, but only by small amounts. The paper reaches this conclusion using a multisectoral and multihousehold general equilibrium model of the Indonesian economy. The negative effect on poor consumers, operating through their living costs, outweighed the positive effect on poor farmers, operating through their incomes. Indonesia's post‐2004 rice import restrictions shielded its internal rice market from the temporary world price increases, muting the increase in poverty. But it did this only by imposing large and permanent increases in both domestic rice prices and poverty incidence. Poverty incidence increased more among rural than urban people, even though higher agricultural prices mean higher incomes for many of the rural poor. Gains to poor farmers were outweighed by the losses incurred by the large number of rural poor who are net buyers of food, and the fact that food represents a large share of their total budgets, even larger on average than for the urban poor. The main beneficiaries of higher food prices are not the rural poor, but the owners of agricultural land and capital, many of whom are urban based.     

Processing Technology,Market Power and Price Transmission

This paper focuses on the extent to which price changes occurring at the farm-level are transmitted to the retail sector. A price transmission elasticity is derived which is shown to depend on the degree of market power in the food industry and the nature of the food industry's processing technology. The offsetting role of the processing technology and market power in determining the extent of price transmission are highlighted. A case-study reports values for the price transmission elasticity for the US beef and pork sectors.     

The War in Ukraine,Food Security and the Role for Europe

Food-security implications of the war in Ukraine are exacerbated by adverse weather events, spillover effects from the distortion of energy and fertiliser markets, and domestic policies that countries around the world have implemented in pursuit of food security. Estimates suggest that the cumulative effect of these channels in terms of restricting agricultural and food trade is in the order of over 10 times larger, and their cumulative effect on global food supply is on average three times more substantial than the direct agricultural supply disruptions in Ukraine. The latter, however, disproportionally impacts low-income countries that are particularly vulnerable to food supply shortages and price increases. In the case of the EU, although overall food availability is not at stake, food affordability for low-income households is a concern, especially when combined with rising prices of other essential goods, such as energy and transportation. To ensure the resilience of domestic and global food systems, the EU and its Member States should extend a set of already implemented policies, including better-targeted support for the low-income households in the region, implementation of trade facilitation measures via international cooperation, and support for agricultural production in the most vulnerable countries, and should also facilitate the restoration of Ukraine's lost agricultural assets.     

Higher fuel and food prices: impacts and responses for Mozambique

Rising world prices for fuel and food represent a negative terms‐of‐trade shock for Mozambique. The impacts of these price rises are analyzed using various approaches. Detailed price data show that the world price increases are being transmitted to domestic prices. Short‐run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases. Rural households, particularly in the North and Center, often benefit from being in a net seller position. Longer‐term analysis using a computable general equilibrium (CGE) model of Mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives. Again, negative impacts are larger in urban areas. The importance of agricultural production response in general and export response in particular is highlighted. Policy analysis reveals difficult trade‐offs between short‐run mitigation and long‐run growth. Improved agricultural productivity has powerful positive impacts, but remains difficult to achieve and may not address the immediate impacts of higher prices.