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13 Apr 2010
Unit:
LEI
 Greater fluctuations in food prices are expected in the future as markets worldwide become more connected with each other. Eventually, climate change will also make its mark in this respect; the climate will become more extreme and very poor harvests or surpluses can be expected.
In Africa, food prices generally fluctuate even more than on the global market as a whole, and this particularly impacts upon vulnerable and poor groups of people. This is seen both in price increases – which make food more expensive – and in price reductions, when farmers’ incomes come under pressure. In order to combat poverty, it is therefore very important that vulnerable groups are better able to control risks. LEI has provided an overview of instruments for this and looked at which of these measures could be used in Africa, south of the Sahara. Such instruments include commodity exchanges with storage sites, different contracts, weather insurance schemes, microfinancing, trade levies or exemptions and regional trade agreements.
LEI argues that the necessary infrastructure and market institutions must be put in place before an instrument is implemented. Attempts must also be made to further build upon traditional instruments that control risks and stabilise consumption.
International donors generally only focus on emergency aid. However, investment in economic infrastructure and services is required for a more systematic approach to reducing risks.
Report 2010-028 Reducing food price variability in Sub-Saharan Africa
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