Alert at Maradi: preventing food crises in West Africa by using price signals
Countries located in the Sahel region of Africa are repeatedly confronted by episodes of rapid increase in grain prices resulting in food crises. This paper aims at exploiting grain price data to detect the warning signs of looming food crises in Mali, Burkina Faso and Niger. The authors identify which markets play a leading role at the national and regional level. They then identify crises periods and characterise price movements during the period preceding a crisis.
The study concludes that monitoring price movements on “leading markets” during crucial periods of the year can help in forecasting future crisis. In addition, it concludes the following:
- the warning indicators defined in this paper should usefully complement the early warning systems currently focused on crop monitoring
- they have the advantage of being based on objective information, easy to collect, and rapid to collect
- these indicators could be calculated in each country and integrated into the national warning system
- however, the high correlation of crises should encourage the construction of a regional warning system, incorporating indicators from all the three countries
Moreover, to improve the accuracy of the estimates, the document introduces the following recommendations:
- using the deviation of prices from their trend value could make the adequacy of the warning indicators satisfactory
- a constructive approach that consists in updating price trend estimates only if the predicted trend values are lower than previous forecasts would lead to better detection of coming crises
