Food Security Crop Price Transmission and Formation in Nigeria

The three studies in this dissertation explore the current conditions and operations of markets for seven key food security crops (cassava, cowpeas, maize, millet, rice, sorghum, and yams) in Nigeria. Chapter 2 is an empirical analysis of the current agricultural statistics system in Nigeria. A number of sources gather and report agricultural statistics for the country. Since there has not been an agricultural census implemented there for multiple decades, however, there is no objective source for data verification. Therefore, this study uses two additional types of “on the ground information” to assess if agricultural production estimates reflect growing conditions: prices and remote sensing data in the form of the normalized difference vegetation index (NDVI). The results show that existing production estimates are poorly correlated with both prices and the NDVI. Prices and the NDVI data are highly correlated, however. These findings imply that existing production estimates do not reflect growing conditions, and, therefore, are of poor quality. Chapter 3 is a comprehensive analysis of crop price transmission from global and neighbor country prices to Nigerian commercial hub and urban markets, and from commercial hubs to other urban and rural markets within the country. The results show that tradability matters for price transmission, but that tradability varies across crops and scopes of markets. Nigerian urban rice prices are highly correlated with prices on global markets and those in neighboring countries. Coarse grain prices appear disconnected from global markets, however, but move closely with those in neighboring countries. Large margins were estimated for prices of rice imported from global markets (in all regions), and for coarse grains to Southern Nigerian markets only. The existence of large margins implies that there are transactions costs and/or quality premiums that vary systematically with the world price, and/or mark-ups by traders with market power in these markets. While domestic market prices are almost always cointegrated, perfect price transmission is generally found only between commercial hubs and other urban markets. Moreover, long lags were found for price transmission across all scopes of markets, but especially between urban and rural prices in some regions. These results imply that local conditions (e.g., weather) are relatively more important than external market prices for explaining price variation in rural markets, especially in the short-run. Chapter 4 incorporates NDVI data into price formation models to estimate whether observable growing conditions explain price variation in Nigerian food security crop markets. Four issues related to use of NDVI data that exist within the literature are investigated: whether NDVI is a valid proxy for expected production, how NDVI is a proxy for seasonality, the relationship between market size and the area scope used to average NDVI values across space, and if anomalous harvest expectations can change long-run price variation and price relationships between markets. The results show that information on growing conditions is more informative for isolated than interconnected markets. Even for those local prices, however, other non-weather and non-external market price factors are relatively more important for explanation of price variation. An implication of these results is that Nigeria cannot plausibly rely solely on direct imports from global markets to meet short-run demand during future weather shock periods. Thus, storage is required to ensure stability of food security, either for imports or domestically produced surpluses acquired in non-crisis periods. Given the isolation of rural markets, local and on-farm stocks are at least as important as large facilities in commercial hubs. Improvement of village level and on-farm storage systems and elimination of other market distortions that inhibit trade between urban and rural markets would make public storage less needed. The findings on poor quality of agricultural statistics indicate a clear priority to improve agricultural data, to facilitate better planning of any food security strategies. A combination of surveys with remote sensed and crowd sourced data may improve feasibility in the funding constrained environment

Do the Poor Pay More for Healthy Food? An Empirical Economic Analysis

Food Consumption/Nutrition/Food Safety,

Spatial market integration of food markets during a shock: Evidence from food markets in Nigeria

This paper uses comprehensive and long time series monthly food price data and a panel dyadic regression framework to evaluate the impact of the COVID-19 pandemic and associated policy responses on spatial market integration across a diverse set of food items in Nigeria. The empirical results reveal several important insights. First, we show that a significant slowdown in the speed of adjustment and price transmission occurred during the pandemic. For some food items, the speed of adjustment and, by implication, spatial market integration weakened by two- to-threefold after the pandemic outbreak. The effect was especially pronounced for perishable food items. Second, lockdown measures and the spread of the pandemic triggered additional dispersion in market prices across markets. For example, lockdown measures were associated with a 5–10 percent reduction in the speed of readjustment toward long-term equilibrium. Third, additional underlying attributes of markets, including lack of access to digital infrastructure and distance between markets, exacerbated impacts associated with the pandemic. For instance, access to Internet service reduced the slowdown in the speed of adjustment caused by the pandemic, but longer distances between market pairs induced greater slowdown in the speed of price transmission. Our findings offer important insights for revitalizing the efficiency of food markets affected by the pandemic. The heterogenous impacts of the pandemic across value chains and markets reinforce the need to properly target post-pandemic recovery interventions and investments. Finally, we offer some insights to reduce the vulnerability of food and market systems to disruptions in future pandemics or similar phenomena that inhibit food marketing and trade

Barriers to trade in Sub-Saharan Africa food markets

This continent-wide review of studies on price transmission implemented for the global, regional cross-border, within-country urban and within-country rural market segments provides a broad overview of current conditions in Sub-Saharan Africa food markets and provides insights into how market development varies across regions and crops. The review focuses on barriers to trade, both those related to policy and those related to general market development. Observations in the reviewed studies show that there are several long-run and short-run factors that have inhibited, and currently inhibit, food trade in the analysed markets. The long-run factors are related to general market development, such as imperfect substitutability between imported and domestic produce and infrastructure deficiencies. Short-run factors include intermittent changes in trade and/or tax policy and changes in self-sufficiency status. In only a few cases were no barriers to trade identified, and these were for highly traded foods between markets within countries. Since tradability is an indicator of market development, greater policymaker and donor partner attention is needed to remove barriers to trade, especially for foods that are efficiently produced domestically but do not yet have a welldeveloped domestic or international market

Combining household and price data to target food marketing interventions in Nigeria

PRIFPRI3; ISI; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; Feed the Future Nigeria Agricultural Policy ProjectDSG

Synopsis: Grain price seasonality in Kebbi state, Nigeria

Recent studies found the extent of food price seasonality in sub-Saharan Africa to be two to three times greater than that observed on global markets. This implies that, despite decades of market liberalization in many countries, there remains much progress to be made to improve general food marketing conditions throughout Africa. This issue deserves research because the movements of prices during a crop year influence the consumption decisions of households, the production decisions of farmers, and the marketing decisions of traders.1Non-PRIFPRI1; CRP2; Feed the Future Nigeria Agricultural Policy Project; DCA; NSSPPIM; DSGDCGIAR Research Program on Policies, Institutions, and Markets (PIM

Grain price seasonality in Kebbi state, Nigeria

Recent studies on food prices in sub-Saharan Africa (SSA) found that food price seasonality in SSA remains an issue. In addition to it causing price risk, and, hence, limiting market participation among farmers and traders, the continued existence of substantial price seasonality implies that interventions that improve food market development are needed. Using a dataset that is unique for Nigeria, we contribute to this literature through measurement of the extent of seasonality in grain prices in a set of markets in Kebbi state. We believe that our focus on seasonality at the state, rather than country or continental, level can provide needed insights that are useful for identification of areas deserving stakeholder focus for rural development related initiatives. A main contribution is that we find that there are large enough differences in price behavior across the assessed markets to justify this more localized analysis.Non-PRIFPRI1; NSSP; CRP2; Feed the Future Nigeria Agricultural Policy Project; DCADSGD; PIMCGIAR Research Program on Policies, Institutions, and Markets (PIM

Synopsis: Grain storage and marketplace characteristics in Kebbi state, Nigeria

The focus of this study is on the physical infrastructure of marketplaces in Kebbi state, Nigeria, an agriculture-based state in the northwest. Kebbi state has distinct variation in climate within a crop year, and, hence, there is need for farmers and traders to store produced crops for use during the year. Increased investments in storage facilities in the state could accelerate agricultural development.Non-PRNSSP; DCA; Feed the Future Nigeria Agricultural Policy Project; IFPRI1; CRP2; 4 Transforming Agricultural and Rural EconomiesPIM; DSGDCGIAR Research Program on Policies, Institutions, and Markets (PIM

Growing condition variations and grain prices in Niger and Nigeria

PRIFPRI3; ISI; Feed the Future Nigeria Agricultural Policy Project; 3 Building Inclusive and Efficient Markets, Trade Systems, and Food Industry; CRP2DSGD; PIMCGIAR Research Program on Policies, Institutions, and Markets (PIM