27
Figure 12 - Malawi: Trends in the Under-five Children Malnutrition (1992 – 2009)
Source: authors’ calculation on DHS, HIS, NSO data
5. Seasonal price fluctuations, food security and malnutrition
In both Niger and Malawi, food security and nutritional status are severely affected by
considerable intra-annual fluctuations in the prices of the main staples. It is in fact well known
that food security, body weight, and child and adult malnutrition and mortality rise
systematically during the ‘hunger season’ which in normal years spans May/June-October in
Niger (Loutan et al. 1984, USAID 2007) and November to March in Malawi (WFP et al. 2010).
Three main factors explain the deterioration in nutritional-health conditions during such
period: (i) first, just before the onset of the rains (the beginning of the hunger season), the
households exhaust their stocks of grains and have to buy staple food on the market at very
high prices. Such an increase in market demand pushes upwards staple prices to their
highest intra-annual level; (ii) second, the hunger season coincides with the onset of the rainy
season. As a result, water quality deteriorates as rains cause surface contamination of
customary water sources raising the risk of waterborne diseases, while stagnant water
increase the risk of malaria transmission. Rates of morbidity may rise as well for due to poor
hygiene and a rise in respiratory diseases which are particularly dangerous for the
biologically weak, children ahead of all; (iii) third, the hunger season is also characterized by
the onset of the labor intense planting season. Caregivers often leave their infants with
grandparents or older children during the working day exposing children to poor feeding
and caring practices. In brief, conditions of limited food availability, increased morbidity and
reduced time for child care provoke every year a dramatic increase in acute malnutrition in
young children.
Of particular interest is the nutritional impact of the seasonal food price fluctuations
observed in low-income agricultural countries. The main reason of the price fluctuations are
the high storage costs faced by wholesalers and government agencies, the lack of
appropriate storage facilities at the household or community level, lack of consumer credit to
households and the limited coverage of public- sponsored consumption-smoothing
mechanisms
such as cereal banks (where households can deliver for instance a bag of millet
after the harvest and get one back with only a small charge during the lean season), public
works schemes, and subsidized and – in case of acute crises - free food distribution programs.
28
Economic theory (Sahn 1989) suggests that the increase in food prices (between harvest time
and the hunger season) charged by wholesalers reflects purchase costs, warehousing,
bagging, labor/handling, transport and management costs, as well as physical losses due to
pests, rotting, theft, etc., and the opportunity cost of tying up one’s money in the stored
crops. As demand increases and stocks decline, the increase in food prices reflects also
speculative profits by the wholesalers who engage in inter-seasonal arbitrage. However, in
years of abundant harvests, the wholesalers may run losses as they over-stock in anticipation
of future demand. All in all, it appears that storage and transaction costs cannot explain fully
the high variation of prices during the lean season across years (ibid).
Staple prices fluctuate widely also because of lack of consumer credit for the smallholders
faced with the need to pay for school fees, ceremonial costs for marriages, funerals and
return prior loans. Lack of credit at reasonable rates thus forces smallholders to sell much of
their crops right after the harvest at very low prices and, six month later, to borrow money to
buy food at a very high price (between 50-100 percent more than at harvest time) a situation
that entails implicit borrowing interest rates of between 100-200 percent.
Public policy has dealt with this problem in a variety of ways (Devereux 2008):
- By improving ‘production-based entitlements’
h
Qfsc
by means of input subsidies aiming at
increasing the amount of food produced and used for self-consumption by rural households;
- By improving ‘trade based entitlements’ of household by ensuring pan-seasonal (and
often pan-territorial) pricing of the main food staples, by near-stabilizing food price
Pf
through the operations of state marketing boards or food emergency stocks and state
subsidized sales. Additional measures to stabilize
Pf
have concerned investment in efficient
public/private storage, investment in infrastructure to improve market integration and the
promotion of cereal banks through an initial injection of funds or food;
- By improving ‘labor based entitlements’
h
Qw
through the launch of public work schemes
aiming at supporting the household incomes during the lean season;
- By rising the ‘transfer based entitlements’
h
T
by means of a variety of food aid programs in
cash or kind;
though during the last two decades the international community has – rightly or wrongly –
encouraged the abolition of the first two interventions (which deal with the underlying
causes of the problem), strengthening the last two, and emphasizing the role of food imports
to stabilize domestic prices during periods of rapid food price escalation. Overall, strong faith
in the efficiency of market forces (which remain however underdeveloped in many SSA
countries) and in the poverty alleviating effect of social assistance have somehow led to
neglecting the seasonality problems discussed above. To control if this perception is correct,
hereafter we analyze how food price seasonality has evolved in Niger and Malawi during the
last decade. As a measure of price seasonality we use the coefficient of variation of millet and
maize prices respectively. A high coefficient of variation suggests a high degree of intra-
annual price instability which increases the uncertainty of price anticipations from the local
households (as well as by traders and government agencies) and therefore creates difficulties
in selecting, planning and managing the allocation of their resource. The evolution over time
of this index thus provides some initial clue on whether such problems has improved,
remained the same, or deteriorated.