Gestion de l ’ instabilité des prix agricoles en Afrique . Quatre conditions d ’ efficacité des politiques . —-Managing agricultural price volatility in Africa . Context matters for policy effectiveness

Élodie Mâıtre d’Hôtel, Arlène Alpha, Raphaël Beaujeu, Françoise Gérard, Laurent Levard. Gestion de l’instabilité des prix agricoles en Afrique. Quatre conditions d’efficacité des politiques. —Managing agricultural price volatility in Africa. Context matters for policy effectiveness. N12. N12 De nombreux pays en développement mettent en place des politiques de stabilisation des pri.. 2011, 4 p.


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Food security
persp ctive e e persp ctive 12 Soaring agricultural prices in 2007/2008, followed by decreasing prices in 2009/2010 then a new surge in late 2010/ 2011, have placed the management of agricultural price volatility at the heart of policy debates.Many developing countries have implemented policies to limit agricultural price volatility and its adverse effects, without always achieving the expected results.
Analysis of recent experiences in Africa shows that in order to be effective, a policy measure must meet four conditions: it must be based on robust knowledge; it must be predictable; its funding must be secured; and its enforcement must be monitored.n°12September2011

Protecting the domestic market
For several years, often in response to the 2007/2008 crisis, many developing countries have been stepping up their intervention to stabilise agricultural prices on their domestic markets.The policies implemented are particularly aimed at protecting domestic markets from price fluctuations on the international market, by combining border measures with domestic market measures.They reflect both the will to restore the role of the State in the regulation of agrifood markets and a loss of faith in the functioning of international trade.
These policies diverge from the recommendations of international donors.Donors argue that trade liberalisation stabilises prices, as a price shock on a national market is absorbed by a globalised market through dilution or compensation effects.To avoid the adverse effects of price hikes or slumps, they advocate, in the short term, private risk management mechanisms and safety nets and, in the medium and long term, programmes to increase agricultural productivity.
A broad range of policy measures are available to countries.Border measures are aimed at adjusting supply to demand in the territory, by controlling imports and exports:

Context matters for policy effectiveness
Élodie Maître d'Hôtel, Arlène Alpha, Raphaël Beaujeu, Françoise Gérard, Laurent Levard tariffs, import and export licences; state imports; or export restrictions.Domestic market measures are aimed more at adjusting supply to demand over time, especially through the management of buffer stocks, which may be combined with subsidies or taxes on the price of products or agricultural inputs.
To limit agricultural price volatility on their markets, African countries have combined border measures with domestic market measures.But how effective has this been?Despite the lack of hindsight, several lessons emerge from recent experiences.
Five African countries were studied: Madagascar and Mali for rice, and Kenya, Malawi and Zambia for maize.These five countries share certain characteristics.Their revenue is low: gross domestic product per capita is less than 1 000 US dollars.Their cereal consumption is high: cereals account for over half of total calorie intake (from 50% in Kenya to 66% in Mali).Finally, these countries import less than a quarter of their cereal consumption (from 10% in Malawi to 25% in Kenya).
For each country, price volatility management policies have been described and classified by periods according to the measures undertaken.The periods laid out reveal a tradition of intervention in agricultural markets that has persisted in East African countries, including during the period of liberalisation.However, price instability management policies were abandoned in Mali and Madagascar, before being restored recently.Country by country and period by period, local price series have been examined.The coefficients of variation (the ratio of the standard deviation to the mean) have been calculated and compared to those on international markets.State intervention is Beyond seeking miracle remedies, governments must ensure that the measures adopted will be effective in the context of their countries, failing which they may exacerbate the crisis considered effective if the coefficient of variation for agricultural prices on the domestic market is lower than the coefficient on the international market.
Three situations can be distinguished: - What were the factors of success or failure?Beyond the measure chosen, the conditions for implementing this measure appear to be decisive.

Choosing measures according to national specificities
In order to be effective, each type of measure must meet four conditions, with varying degrees of importance depending on the measure: the intervention must be based on robust knowledge; it must be predictable; its funding must be secured; and its enforcement must be monitored.

Predictable intervention
State intervention should be announced so that private operators can anticipate it and make informed strategy decisions.This is a key condition whatever the measure considered.For import control, private importers must be able to predict the volumes imported by the State, the date of importation and the tariff level.For internal market measures, merchants must be able to anticipate the volumes that will be sold off, the date of sale and the selling price.In the absence of this information, private operators will tend to withdraw from the market: this is known as the crowding out effect, and may increase price volatility

Secured funding
The State must be in a position to free up funds to finance the costs linked to State intervention.Financial capacity is essential to costly measures.For example, in Mali in 2005 and 2008, the budget allocated to the operation of buffer stocks was not enough to provide these stocks with their own working capital and to therefore build up sufficient volumes to curb soaring cereal prices.
On the contrary, in Zambia and Kenya, substantial financial resources were allocated to the operation of buffer stocks and to maize price subsidies.In Zambia, the public budget allocated to internal market measures represented 4% of the total national budget in 2007; this considerable budget was partly financed by mining revenue.
Furthermore, it is important to plan how to limit the additional costs that may arise, especially those linked to production incentives, such as producer price subsidies.In Malawi, for example, producer price and agricultural input subsidies proved particularly costly, calling into question the price instability management policy.A quota system would limit the existence of additional costs.

Monitored enforcement
The State must be able to guarantee that its intervention has been effectively implemented and carried through.This monitoring capacity is essential for border measures (imports and exports).In Mali in 2005, national production was low, leading the government to ban cereal exports.This measure proved ineffective due to difficulties monitoring borders -a condition that is even harder to meet given that the country has extensive land borders, as do many of the Sahel countries.Monitoring capacities are also necessary for intervention on domestic markets, especially for cereal consumption subsidies and the administration of producer prices.For example, in Zambia in 2001, the subsidies paid to merchants were not passed on to consumer prices; they therefore failed to limit price increases.
Measures may be circumvented by public agents (stabilisation agencies not applying floor prices) or by private operators (merchants not passing on prices or choosing to export in an illegal manner).
In any case, this behaviour is motivated by the pursuit of private income, and it undermines the effectiveness of the stabilisation policy.To ensure the policy it has defined is effective, the State must therefore be able to both monitor its enforcement and to penalise non-compliant behaviours.
Alone, the State will be unable to stabilise agricultural prices on domestic markets.Cooperation with private actor is essential.

Associating public and private stakeholders
Beyond seeking miracle remedies, governments must ensure that the measures adopted will be effective in the context of their countries, failing which they may exacerbate the crisis.They must therefore choose measures according to their institutional, geographical, social, political and economic environment.For example, a low-income country with no specific resources, or one that is dependent on donors for its current expenditures, will need to guarantee its financial capacity before building up public buffer stocks.A landlocked country with extensive land borders should not ban exports to halt soaring prices, but instead should favour regional policies to offset the porosity of its borders.On the other hand, an island country may choose to control its borders, as Madagascar did to good effect.
The four conditions identified concern the capacity of States to define and enforce policies, and to ensure operators have faith in State intervention and will comply with it.Some developing countries may struggle to meet these conditions because of their institutional fragility.
Although the State has a key role to play, alone it will be unable to stabilise agricultural prices on domestic markets.Cooperation between public and private actors is vital to the success of price volatility management policies.Consultation platforms have demonstrated their effectiveness in Madagascar.Public-private partnerships may also be envisaged to manage stocks: consultation on the methods for stockholding, joint funding, or contractual arrangements between the State and private actors concerning storage.This cooperation between public and private operators is still in its infancy in developing countries, and requires further research.In particular, the apparent contradiction between the need for transparency regarding stock volumes to anticipate food crises and the pursuit of private interests must be analysed.n

combine several measures to stabilise prices Mali (since 2005) Madagascar (since 2004) Kenya (since 2000) Malawi (since 2000) Zambia (since 2001) Border measures Import control Export control Bu er stocks Price regulation
ment's reaction and that of private importers; however, in 2005 they were correctly anticipated thanks to informal exchanges of information between representatives of far-Countries