Successes and Challenges of Food Market Reform: Experiences from Kenya, Mozambique, Zambia, and Zimbabwe

Successes and Challenges of Food Market Reform: Experiences from Kenya, Mozambique, Zambia, and Zimbabwe

Describes the different food policy courses pursued in recent years by four countries in Eastern and Southern Africa, and documents their differential effects on farmer and consumer behavior. Highlights lessons learned from the different policy paths pursued in each country, and thus provides insights into the costs and benefits of alternative strategies for promoting national food security and enhancing producer and consumer options.

Presents historical overview and country studies. Synthesis section reaches four main conclusions:

  • market liberalization has generated more successes than generally recognized. Examples of these are in grain retailing and milling, where consumers in all countries now have expanded options and have benefitted from the lower milling margins of small-scale hammer mills; greater availability of maize grain in rural grain deficit areas due to strengthened inter-rural private grain trade; and the rise of regional trade patterns, which is playing a critical role in promoting cost effective food systems in cases where this is allowed
  • it is increasingly clear that the private sector’s response to liberalization is sensitive to a broader range of government actions than commonly understood. For example, statements of key politicians in local newspapers critical of a market-oriented system are likely to be incorporated into the private sector’s expectations of the payoffs and risks to future investment in the system. There is a need for a better understanding of the kinds of incentives that the private sector responds to in order to avoid actions that make “lack of private sector response” a self-fulfilling prophesy.
  • consumer vulnerability to price instability under liberalization has not been as severe as often portrayed. Private investment in grain distribution, processing, and cross-border trade as a result of the reforms have expanded consumers’ options and ability to stabilize expenditures on maize meal. These market-oriented means of stabilizing consumer food expenditures weakens the rationale for expensive government price stabilization schemes.
  • positive government actions to reduce market instability are needed and are beginning to work in selected cases. These actions include (a) improving the transport infrastructure; (b) promotion of regional trade; (c) market information systems that are expanded to include information on prices across borders, exchange rates, and trade flows; (d) improved communication infrastructure; (e) nurturing the development of market-oriented mechanisms (e.g., commodity exchanges) for handling price risk; and (f) alleviating the constraints on private access to foreign exchange. The potential benefits that these investments can bring underscore that there is no need to accept prevailing levels of food price instability as “given.” Importantly, these types of investments may also reduce political risks associated with liberalized food markets, and thereby promote policy stability and consistency – key factors in promoting desirable private investment in the system.

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