2nd market information symposium “marketing information as a leverage in national food security...

2nd Market Information Symposium

“Marketing Information as a Leverage in National Food Security Planning and Regional Sustainable Trade”

September 15th – 16th, 2011 at Silver Springs Hotel, Kampala

MARKET INFORMATION FOR FOOD SECURITY PLANNING

Two examples

Bjorn Van Campenhout, IFPRI-Kampala

Introduction

• Importance of market information for policy/planning purpose: two examples– Assessing market integration (Tz)– Impact of price changes on welfare of

households (Ug)

-> tools for policy maker that hinge on the availability of good price data= disaggregated over time, space and commodities

Price data example

What are integrated markets?• Markets are integrated if they are connected by

arbitrage

1EQ

1EP

2EQ

2EP

'2EQ

'2EP

'1EQ

'1EP

TPP EE '2'1

Why care in theory?

• In general: production decisions are based on price information

• For escaping poverty: Linkages to market centers seem to be very important (Krishna, 2004, Krishna et al., 2004)

• In a famine (early warning) context: “How long can an initially localised scarcity be expected to persist?” (Ravallion, 1986)

• Increase price elasticity of products typically produced by the poor: reduce “technology threadmill” (Barrett, 2008)

Why care in practice?

Source: Jensen, 2007

Price data to assess market integration

Transaction cost

Transaction cost

Highest/lowest TC estimates

Regional integration

Roads and regional integration

Impact of price changes on welfare:

FAO

The long-term downward trend in agricultural commodity prices threatens the food security of hundreds of millions of people in some of the world's poorest developing countries (2005)

<>

The number of hungry people increased by about 50 million in 2007 as a result of high food prices (2008)

World Bank

The combination of depressed world prices …have discouraged farm output and hence lowered rural incomes. Because the majority of the world‟s poorest households depend on agriculture and related activities for their livelihood, this … is especially alarming. (1990)

<>

The increase in food prices represents a major crisis for the worlds poor. (2008)

IFPRI

The combination of agricultural protectionism and subsidies in industrialized countries [leading to low prices] has limited agricultural growth in the developing world, increasing poverty and weakening food security in vulnerable countries. (2002)

<>

…rapidly rising food prices began to further threaten the food security of poor people around the world. … The current food-price crisis can have long-term, detrimental effects on peoples’ health and livelihoods, and can contribute to the further impoverishment of many of the worlds poorest people. (2007)

So are high prices good or bad

• Depends…– If you sell it is good– If you buy, it is bad

Most households in Uganda both produce and consume the same agricultural commodities

An index

Needed: •Survey data (UNHS 2005/2006)•Price data: FoodNet

Components of the index

disaggregation

Effect on poverty

Conclusions and dreaming on

• Good price data allows the contruction of simple tools that are invaluable for policy makers

• Make websites that automatically update:– Key statistics of market integration (TC and

adj speed)– Welfare impact of price changes index

-> www.marketinegrationtracker.com

Thank you