Demand and Price Analysis, Downloads July 2008-July 2009: 12,

Aldridge, Kim

Duncan, John

Ferris, John N.

Howard, Julie A.

Jayne, Thomas S.

Keita, Francis

Lundberg, Mattias K.A.

Mukumbu, Mulinge

Nakaponda, Bethel

Sanankoua, Abdel Kader

Staatz, John M.

English

Research Papers in Economics

Page 1
POLICY SYNTHESIS
for USAID - Bureau for Africa
Office of Sustainable Development
Number 2 October 1995
 TRENDS IN REAL FOOD PRICES IN SIX SUB-SAHARAN AFRICAN
COUNTRIES
By
T.S. Jayne, Mulinge Mukumbu, John Duncan, John Staatz, Julie Howard, Mattias Lundberg, Kim
Aldridge, Bethel Nakaponda, Jake Ferris, Francis Keita and Abdel Kader Sanankoua * 
Food Security II Cooperative Agreement between U.S. Agency for International Development, Global Bureau, Economic Growth Center,
Office of Agriculture and Food Security and Department of Agricultural Economics, Michigan State University 
BACKGROUND:   The effects of structural
adjustment and food market reform on agricultural
productivity and household food security continue
to be strongly contested.  USAID's Development
Fund for Africa Report (DFA)  presents evidence OBJECTIVES:   The objectives of the study 1
of a broad economic turnaround in Africa, and in funded by SD/PSGE are threefold:  (1) to assess
particular, finds support for increased  agricultural the direction and magnitude of changes in real
productivity growth, in contrast to the gloomier staple food prices since the implementation of
picture  commonly  painted about stagnating food  sector  policy reforms in Africa; (2) to
African agriculture.  Macroeconomic and identify  the  major  factors affecting changes in
agricultural sectoral reform are identified as major these food prices; and (3) to assess the resulting
factors explaining the rise in productivity growth. effects of food system reform on household food
The DFA report indicates that "real food prices security.  The report focuses on six countries:  two
have fallen in numerous African countries.  These from East Africa (Kenya and Ethiopia); two from
price changes are only explicable in the face of Southern Africa (Zimbabwe and Zambia); and
substantial increases in production" (p. 48).   two from West Africa (Mali and Ghana). 2
The objectives of USAID/AFR/SD/PSGE in
supporting further research on real food prices are,
inter alia, to reassess the evidence on the impact of
structural adjustment and food market
restructuring on household food security and real
food prices paid by low-income consumers.
FINDINGS:  The report highlights three
conclusions:
1.  Grain and grain meal prices have declined
in five of the six countries examined:  Ghana,
since 1984; Zambia, since 1987; Ethiopia, since
1990; Kenya, since 1988; and Mali, since 1982
(Table 1).  In the sixth country, Zimbabwe,
frequent government subsidies on maize meal
artificially depressed prices during the pre-reform
period. When the subsidies were removed, maize
meal prices to consumers rose, but by a smaller
amount than the former subsidy, because of lower
  “Africa: Growth Renewed, Hope Rekindled: A
1
Report on the Performance of the Development Fund for
Africa, 1988-1992.”  Washington, D.C.: USAID, Office of
Development Planning, Bureau for Africa.
  Analysis in support of this conclusion is drawn
2
from numerous country studies by the Cornell Food and
Nutrition Policy and others (see, for example, Sahn and Sarris
1991). 
FS II Policy Synthesis No. 2 
Page 2
marketing and processing costs achieved through
maize market reform.  In four cases  (Kenya,
Zambia, Mali, and Zimbabwe), the negative effect
of eliminating food subsidies on low-income
consumers has been partially or wholly
compensated by accompanying reforms that have
raised consumers' access to less expensive food
products formerly suppressed by regulation. 
2.    The major factors associated with the others.  The complex distributional effects
decline in real consumer food prices in these
countries have been:  (a) better transmission of
declining real world prices into the domestic
economies by removal of trade barriers (Mali,
Ghana); (b) increased food aid flows in the
reform period (Mali, Ethiopia); and (c)
increased competition and lower costs in food
marketing and processing, which reduces
marketing margins (Zambia, Zimbabwe, Mali, and
Kenya). 
3.  In the countries for which downstream
marketing margin information is available
(Zimbabwe, Zambia, Kenya, and Mali), mill-
to-retail marketing margins appear to have
fallen  since the major aspects of the reforms were
initiated (Table 1).  This has, other factors
constant, passed on tangible benefits to food
consumers and/or producers.  Declining producer-
to-wholesale price spreads were also observed in
the two countries where such data was available
(sorghum and rice in Mali, and maize in Kenya).
The findings from the six countries, in general,
provide support for the DFA Report's
conclusion that real food prices have fallen in
numerous African countries.   The weight of
the evidence indicates that consumers,
especially urban consumers, have in most cases
benefitted from the food marketing and pricing
reforms initiated in the countries examined.
However, the analysis in this paper does not
generally support the DFA's premise that
"these price changes [downward] are only
explicable in the face of substantial increases in
production" (p. 48).  Available data indicates
that per capita food production has declined in
the post-reform period in at least three of the
six countries examined.  
However, this is not necessarily indicative of a
welfare loss, since in several cases production
levels during the pre-reform period were buoyed
by large state transfers to agriculture which had
effectively shifted the costs of maintaining the
pre-reform food systems from one social group to
associated with food market reform (benefitting
farmers and consumers in some regions while
imposing greater costs on farmers and consumers
in other regions) underscore the major difficulty
and controversy associated with normative
assessments of the effects of food marketing and
pricing reform. 
A future challenge for food policy is to refocus the
emphasis from the liberalization of food markets
to the promotion of productivity growth
throughout the entire production and marketing
portions of the food system, through the
development and strategic coordination of markets
-- most notably for commodities, inputs and
finance, in a financially sustainable way. 
FS II Policy Synthesis No. 2 
Page 3
Table 1.  Index of Real Food Prices in Pre-reform and Post-reform Periods
 
Phase 1:
Pre-Reform Phase 2 Phase 3
Mali sorghum, Bamako retail 100 116  79
rice, Bamako retail 100  99  84
Ghana maize, wholesale, average of 3 markets   100  84  71
a
sorghum, wholesale, average of 3 markets 100  82  62
millet, wholesale, average of 3 markets 100 103  79
yams, wholesale, average of 3 markets 100 126 104
cassava, wholesale, average of 3 markets 100 133  93
Ethiopia teff white, Addis Ababa, retail 100  --  83
maize, Addis Ababa, retail 100  --  89
wheat white, Addis Ababa, retail 100  --  97
barley white, Addis Ababa, retail 100  --  94
Kenya Offical ex depot maize grain, Nairobi 100  80  83
Official producer price, Kakamega  58  55  54
Refined meal, official retail, Nairobi 134 127 131
Refined meal (retail plus subsidies), Nairobi 161 138 NA
Maize grain, retail, Nairobi markets 101  89  72
Whole meal, hammer-milled, Nairobi markets  --  --  82
Zambia Official ex-depot maize grain, Lusaka 100  70  NA
Official producer price  97  72  NA
Roller meal, official retail, Lusaka  143  113 137
Roller meal (retail plus consumer subsidy), Lusaka 199 179 137
Maize grain, retail, Lusaka markets  --  --  76
Whole meal, hammer-milled, Lusaka markets  --  --  93
Zimbabwe Official ex depot, maize grain 100  71 121
Official producer price  82  69 102
Roller meal, official retail 129 150 199
Roller meal, official retail plus subsidies 170 210 214
Maize grain, retail, Harare markets  --  -- 130
Whole meal, hammer-milled, Harare markets  --  -- 144
Data for pre-reform, Phase 1, and Phase 2 periods based on the following periods:
Phase 1:  Pre-reform Phase 2 Phase 3
Mali 1970.10-1981.09 1981.10-1985.09 1985.10-1994.12
Ghana 1980.01-1983.09 1983.10-1985.08 1985.09-1990.12
Ethiopia 1980.01-1990.05 -- 1990.06-1994.12
Kenya 1980.01-1988.06 1988.07-1993.12 1994.01-1995.09
Zambia 1980.04-1986.03 1986.04-1993.03 1993.04-1995.08
Zimbabwe 1980.04-1991.05 1991.06-1993.05 1993.06-1995.09
notes: unweighted average of Bolgatanga, Techiman, and Kumasi.
a 
FS II Policy Synthesis No. 2 
Page 4
* Funding for this research was provided by the Food Security and Productivity Unit of the Productive Sector
Growth and Environment Division, Office of Sustainable Development, Bureau for Africa, USAID
(AFR/SD/PSGE/FSP).  The research was conducted under the Food Security II Cooperative Agreement
between AID/Global Bureau, Office of Agriculture and Food Security, and the Department of Agricultural
Economics at Michigan State University.  The views expressed in this document are exclusively those of the
authors.
Jayne, Howard, Ferris, and Staatz are Associate Professor, Assistant Professor, and Professor and Professor,
respectively, Michigan State University.  Mukumbu is Research Scholar KMDP-Policy Analysis Matrix
project, Egerton University; Duncan is Research Associate, Cambridge University; Lundberg and Aldridge
are Graduate Assistants, Michigan State University; Keita and Sanakoua are analysts with the Malian Cereals
Marketing Information System (SIM), currently studying at Michigan State University, and Nakaponda is
Economist, Zambia Cooperative Federation.
This paper is an excerpt of a larger paper entitled:  “Trends in Real Food Prices in Six Sub-Saharan African
Countries,” MSU International Development Paper No. 21.  It can be obtained by writing to:
MSU Bulletin Office
10-B Agriculture Hall
Michigan State University
East Lansing, Michigan 48824-1039
This paper is also forthcoming as an SD Publication Series technical paper.  It can be obtained through
USAID’s development information system (CDIE) (catalogue number forthcoming). 

Trends in Real Food Prices in Six Sub-Saharan African Countries

Trends in Real Food Prices in Six Sub-Saharan African Countries

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