In early 2020, African governments adopted a wide range of containment and confinement measures to limit the spread of COVID-19 in the continent. The measures included border closures, suspension of international flights, closures of markets and schools, state-of-emergency declarations, total and partial lockdowns, restrictions on internal movement, imposition of curfews, and closures of nonessential businesses (UN-Habitat 2020; IMF 2020). To mitigate the adverse economic effects of these health measures, governments implemented various emergency economic supports and regulations. Several institutions have tracked the type and size of policy responses by African countries to ease the adverse impacts on agricultural development, food security, finance, and trade (Laborde and Parent 2020; Bisson and Hambleton 2020). These studies have explored the incidence and impacts of emergency responses with the objective of estimating the costs of COVID-19. Similarly, AKADEMIYA2063 has established analytical workstreams to monitor the impacts of COVID-19 on food production, markets, trade, and households (Badiane and Collins 2020). However, these studies have evaluated the overall impact of COVID-19 without disentangling the impacts of the health measures from those of the economic measures. ; PR ; IFPRI4; 1 Fostering Climate-Resilient and Sustainable Food Supply; 2 Promoting Healthy Diets and Nutrition for all; Feed the Future Initiative; ReSAKSS ; AFR
This chapter aims to assess the performance of and policy responses to Africa's rapidly emerging traditional staples value chains, which are dominated by small and medium-sized enterprises (SMEs) in the processing and trading segments. It addresses questions related to policy process issues such as (1) whether public intervention policies in Africa are in line with the needs and performance of the rapidly transforming value chains, and (2) how African governments should align policy interventions in emerging mid-chain segments to foster effective value chain development. The chapter uses the example of one of the most dynamic and fastest-growing staples value chains in Africa, the millet value chain in Senegal, thus contributing specifically to Senegal's agro-industrial policy discourse. We begin with a review of value chain development evolution as a concept and in practice in Africa as a whole and outline a comprehensive list of critical policy concerns and priorities that must be addressed to respond to the needs of midstream value chain segments. ; PR ; IFPRI4; ReSAKSS ; AFR
Since the 2007-08 food crisis, many thoughtful analyses have addressed the causes and impacts of high and volatile international food prices and proposed solutions to the crisis. These studies have covered global as well as local food price dynamics and policy reactions. The food price problem is, however, far-reaching, and its impacts are wide and interrelated. The price formation mechanism has become highly complex and dynamic. Policy actions are politically and economically sensitive. This situation calls for continuous and comprehensive assessments of the problem to provide timely and evidence-based knowledge for policy makers. This paper reviews existing evidence and theories and presents new thoughts and insights from analyses to enlighten the course of actions to be taken. Our review implies that the current body of literature concentrates on high food prices. Commodity price analysis should, however, differentiate between three types of price changes: trends, volatility, and spikes. While price trends are important in the long term, volatility and spikes are more important in the short to medium terms. Descriptive statistics indicate that all three price changes are increasing over time and show strong correlations among themselves. A rising medium-term price trend has triggered extreme short-term price spikes and increased volatility. An assessment of the costs of price volatility has shown that the existing literature follows a conventional marginal-cost approach that considers only few cost components. Direct and immediate components have not been adequately analyzed, and long-term effects have been overlooked. The effect on child nutrition and health is one such long-term effect. Under-nutrition in early childhood has negative consequences for lifetime earnings capacity because of the physical and mental impairment it causes. Economy wide distortions and misallocations also threaten the long-term development of commodity-dependent economies. Measuring and estimating the cost of food price volatility should factor in ongoing processes such as economic growth and technological changes. The supply, demand, and market explanations for high and volatile global prices have been differentiated as exogenous and endogenous factors. To help further identify the drivers of food price changes, they are categorized as root causes, intermediate causes, and immediate causes. Both empirical and theoretical evaluations suggest extreme weather events from the supply side, biofuel production from the demand side, and speculation in commodity futures from the market side are the three most important root causes of observed price volatility. The theoretical and empirical effects of speculation in commodity futures are not yet well understood. However, speculative trading in commodity futures should not be viewed as a random bet that can be smoothed out through the price system. It is important to consider the market and nonmarket contexts that guide the behavioral and strategic choices of speculators. Whereas speculation caused by manipulative, disorderly behaviors and financialization are damaging, speculation caused by demand and supply in physical markets can serve as price discovery, liquidity, and risk-hedging mechanisms. Our empirical analysis to quantify the importance of these factors shows that speculation effect is stronger than demand- and supply-side shocks for short term price spikes. Overall policy interventions at global, regional, and local levels should concentrate on reducing price spikes and protecting poor people from short- and long-term crises. The viii formulation and implementation of such policies must be supported with timely information and research-based evidence. A comprehensive portfolio of policy actions is proposed here, rather than over-extended individual measures to address the root causes or over-regulation of markets to address volatility and spikes. Evaluation of policy instruments should weigh the true costs associated with both, action versus inaction. Research must focus on developing price and food security indicators and models that will guide policy implementation also in the short run. Such models are currently missing.
African agriculture is at an important crossroads. On the one hand, the role of agriculture in the process of economic transformation is widely recognized (Diao, Hazell, and Thurlow 2010; Diao and McMillan 2018), and there have been important achievements in African agricultural performance and productivity growth in recent years. For instance, between 2005 and 2012, agricultural value-added growth and total factor productivity growth were robust and positive for many countries in the region (IFAD 2016). Although more progress is still needed, long-standing structural reforms have contributed to a more conducive environment for private sector participation in African agriculture, particularly in input value chains (AGRA 2019). At the same time, governments are experimenting with a variety of policy interventions to accelerate agricultural transformation, including the creation of agro-industrial parks, agro-corridors, and special economic zones in more than two dozen countries across the continent (Gálvez Nogales and Webber 2017). These initiatives aim to create economies of scale by coordinating investments in transport, communications, power, and storage to foster linkages between farmers and agribusiness enterprises. There is enormous potential for these and other initiatives to enable agriculture to contribute to larger agrifood system transformation; in fact, evidence suggests that African agribusiness, inclusive of all aspects of the agrifood system except on-farm production, could be a US$1 trillion market by 2030 (Byerlee et al. 2013). ; PR ; IFPRI4; ReSAKSS ; AFR; DSGD
Using household level data collected from cereal based farming systems of Senegal, we examined the prospects and challenges of the Senegalese equipment supply subsidy program. Because of the design of the program—being procured and supplied by the government—we argue that the effect of this program on adoption of improved farm equipment depends on the supply and price benefits as well as the relative importance of ownership to access farm equipment. To empirically support this argument, we assessed the benefits of the subsidy in creating markets and reducing prices and its effectiveness in motivating farmers to use modern farm equipment. Our analyses indeed revealed that though the number of farmers benefited from the subsidy is small, the program has significantly improved the adoption of farm equipment drawn by animals mainly due to its market creation benefit. This has been further confirmed by the qualitative response of farmers who appreciated the quality of the equipment being supplied by the program. However, the effect of subsidy on machinery use is insignificant as it doesn't provide support to those farmers who primary depend on rental services. The price advantage created by the subsidy program is not as such significant either. Farm equipment purchased from the program and the open market appear to have closely similar prices. ; IFPRI5; DCA ; AFR ; Non-PR