MIFIRA Framework Lecture 7 Regional availability and prospective source markets Chris Barrett and Erin Lentz February 2012

Food Balance Sheet Structure 2 WFP (March, 2009) Basics of Market Analysis

Linking availability to MIFIRA: local and regional procurement 3 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 4 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 5

Maize prices vs. import parity – Lilongwe, Malawi 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 7

FBS Limitations 8 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 9 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 10 FAO regularly assesses 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 11 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 12 Update FBS Information sources: –Monitoring projects –Key informants –Rapid appraisal at major crossings

Informal Trade Monitoring Sites 13 Source: 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-MarApr-JunJul-SepOct-DecTotal Imports to Malawi Mozambique to Malawi17,43829,06426, ,349 Tanzania to Malawi ,60137,678 Zambia to Malawi Exports from Malawi Malawi to Mozambique00000 Malawi to Tanzania Malawi to Zambia Net imports 120,416

Revisiting Malawi’s 2005 Food Balance Sheet 15 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(?)