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Monday, March 26, 2012

Regional Early warning system for food prices

By Esther Nakkazi

A regional early warning system built on a forecast model for food prices is being tried out to alleviate food insecurity in the eastern Africa region. Food shortages are projected to affect up to 20 million people in this region, a three million increase since 2011.

The $600,000 project is funded by the World Bank through the regional Association for Strengthening Agricultural Research in East and Central Africa (ASARECA) working with the Economic Social Research Foundation and the Eastern Africa Grain Council (EAGC).

Researchers will collect primary data generated by national Bureaus of Standards and databases in the region, standardize the data to generate monthly and quarterly analytical reports on food and input prices in the region and strengthen capacity for policy formulation and analysis.

“We do not have to use historical data and depend on post-mortems all the time. We need current data to effectively predict future prices,” said Prof. Jumanne Maghembe, the Tanzania Minister for Agriculture, Food Security and Cooperatives in Dar es Salaam last week.

“If you want to give subsidies to farmers, the first subsidy is a good price,” continued Maghembe at the launch of the ‘Food Price Trends Analysis and Policy Options for Enhancing Food Security in Eastern Africa” project meeting.

National implementing agencies include the Economic and Social Research Foundation (ESRF), Tanzania; the Economic Policy Research Centre (EPRC), Uganda; the National University of Rwanda (NUR), the University of Nairobi (UoN); Ethiopia Development Research Institute (EDRI); Eastern Africa Grain Council (EAGC) and the International Livestock Research Institute (ILRI), Kenya.

Although it is anticipated to enhance regional trade gains, it is also expected to improve policy mechanism responses and interventions by governments.

For instance it is anticipated that the ad hoc policy responses like export bans and input subsidies that were repeated for three years in 2009 to 2010 to address the hunger crisis could have been avoided if recurrent data were available.

A brief by ASARECA says the repetition of these policy responses by governments and policy makers implies that there is a disconnect in policy responses and the food price crisis.

It exposed the lack of a regional mechanism for generating evidence efficiently and informing policy action in emergency situations such as the food crisis quickly.

According to Dr. Francis Mwaijande, the Principal Investigator of the project the negative effects of high food prices could have been ameliorated if policy makers had been better informed about the agricultural situation at the time.

Dr. Michael Waithaka, the Manager for Policy Analysis and Advocacy programme, ASARECA, said it was important to keep food prices, markets and barriers on commodity trade high on the policy agenda of the regional governments to mitigate the adverse effects of the high food prices.

Ultimately, the meeting heard that policy actions formulated would have to protect the consumption and welfare of those vulnerable to high prices. But currently the largest proportion of escalating prices goes to middlemen.

“You should check and see who benefits from good prices in the food chain. If good prices reach the farmers they will take on fertilizers and borrow if they need to and invest in their farms, which will increase their productivity,” Dr. Maghembe.

“We can only manage the market side of agriculture, to be able to manage the production side.”

The project was initiated by ASARECA. It and is being implemented in five Eastern Africa countries of Ethiopia, Kenya, Rwanda, Uganda and Tanzania for 20 months.

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