MIFIRA FrameworkLecture 7

Regional availability and prospective source

markets

Chris Barrett and Erin LentzFebruary 2012

Food Balance Sheet Structure

2WFP (March, 2009) Basics of Market Analysis

Linking availability to MIFIRA: local and regional

procurement

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2a. Where are viable prospective source markets? •Non-surplus markets may be less suitable for procurement than surplus markets, unless traders are active importers and have incentives to import.2b. Will agency purchases drive up food prices excessively in source markets?•Regions with available surplus face less risk of price increases due to agency procurement.

Analyzing Food Balance Sheets

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• Production + imports - exports + changes in stocks (decrease or increase) = supply for domestic utilization.

• Import Dependency Ratio = Imports / (Production+ Imports – Exports)

• Per capita availability = Food for Consumption / Population estimates

• Caloric conversions

Malawi’s Cereal Balances for 2005 from FAOStat

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1996 1998 2000 2002 2004 2006 2008

c.i.f. Lilongwefrom South Africa

Lilongwe retail

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Maize prices vs. import parity – Lilongwe, Malawi

Improving the Performance of Staple Markets to Exploit the Productive Potential of Smallholder Agriculture Improving the Performance of Staple Markets to Exploit the Productive Potential of Smallholder Agriculture T. S. Jayne, A. Chapoto, and B. Shiferaw

AGRA Conference on “Towards Priority Action for Market Development for African Farmers,” Nairobi, Kenya, May 13-15, 2009

Estimated East Africa maize availability balance sheet (July 2008 to June 2009)

for minimum quality maize

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FBS Limitations

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• Any FBS is only as good as the underlying estimates. – FBS may not include informal trading.

• FBS are not linked to prices, are often static and are available only with a significant lag – FBS does not reflect what happens to

the staple food gap when the staple price changes.

– What does this imply?

• FBS may be a political document

Responding to FBS Limitations

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• Understand how each line item was estimated– Use confidence intervals

• Speak with major importers, wholesalers, or other key informants to verify estimates– Understand how governments use FBS

• Use multi-year FBS to look at changes, not levels

• Use the FBS to examine the availability of substitutes

• Adjust FBS to include informal trading

Food Balance Sheet Information Sources

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• FAO regularly assesses 20-25 countries with the intent of providing information on imminent food security problems.

• WFP CFSAM assessments are commonly the most up-to-date and reliable source for food supply information for a location

• Bureaus of Agriculture or Statistics may also make annual FBS available or can provide information on the agricultural sector in the national economy

Informal Cross Border Trade

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• Factors beyond price and production that influence informal trade:– import / export bans– sanitary and phyto-sanitary standards– tariffs– fluidity of borders– trader capacity– seasonality **

• Spectrum of informal trade– Quasi-legal– Illegal

Informal Cross Border Trade

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• Update FBS• Information sources:

– Monitoring projects– Key informants– Rapid appraisal at major crossings

Informal Trade Monitoring Sites

13Source: FEWs 2006 “Informal Cross Border Food Trade in Southern Africa” Vol 26.

Net informal cross border imports into Malawi in

2005 in metric tons

Source: FEWs 2006 “Informal Cross Border Food Trade in Southern Africa” Vol 26.

Jan-Mar Apr-Jun Jul-Sep Oct-Dec TotalImports to MalawiMozambique to Malawi 17,438 29,064 26,866 8981 82,349Tanzania to Malawi 2395 471 1211 33,601 37,678Zambia to Malawi 760 34 36 349 1179Exports from MalawiMalawi to Mozambique 0 0 0 0 0Malawi to Tanzania 96 103 174 358 731Malawi to Zambia 15 8 5 31 59Net imports 120,416

Revisiting Malawi’s 2005 Food Balance Sheet

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• FAO FBS:– Production 1.2 million tons– Consumption: 1.9 million tons– Imports: 125,000 metric tons of maize

imported

• Gap: 525,000 tons• Incorporating Informal Cross Border

Trade– 121,00 metric tons of maize, slightly shrinks

gap to about 400,000 tons– Stock variation is 725,000 … maybe too

many reserves released(?)