Food again

November 13, 2007

I guess the current food situation in Africa will become a recurring topic on this blog. It would be wise from me to tell you right away that my knowledge of agronomy, agriculture and economics is limited (even if it’s improving) and I’m more than willing to be corrected if I’m wrong.

As mentionned before, there are worries about food prices in Africa. The prices are going up because of a combinasion of bad harvests and higher international demand.

Now, IRIN reports suspicions about speculative activities in Northern Nigeria.

Kano’s agriculture commissioner, Musa Suleiman Shanono, has accused traders of manipulating a lack of precise information about the harvests to increase their profits.

“It is still too early to conclude that there is going to be food shortages despite the twin problems of short rainy season and the locusts,” he said. “Some grains merchants have turned into speculators, spreading fears of possible food shortages as a ploy to control pricing of commodities. This is why they hoard grains which makes them scarce. It is just a demand and supply strategy.”

What strikes me is that he acknowledges that a short rainy season and locusts did happen and are a problem but says it’s too early to conclude that there will be shortages. It’s true to an extend that the harvest could still be good and the demand could still be satisfied. But how likely is a good harvest despite not one but two calamities ?
The second part in which he accuses grain traders of price gouging is even more problematic. While I don’t believe those traders would shy away from such a practise, the accusation is unrealistic from a couple of reasons. First , there is a price increase at the global level and that alone makes local prices go up. Then the risk of a bad harvest does make prices go up. And if a short rain season and grasshoppers invasions are not good reasons to think there could be a bad harvest, I don’t know what is.

Now why would a government official resolve to accusations of price-gouging when there are at least two logical explanations behind the price hike ?
It could be because he has proof, real proof that he could use in court, of speculative activities but then why not take legal actions or simply publish said proof ? It could be that the agricultural commissioner does know the harvest will in fact be good but then why not just declare (and prove) that ? Or it could be that he hopes (but doesnt know yet) the harvest could still be good but the fact that he doesn’t know would justify the price hike, even if it eventually corrects itself. My prefered explanation is that he’s already looking for a scapegoat to protect himself from the coming anger.
While some are (understandably) appealing to the nigerian government to use the strategic food reserves (and it’s good that Nigeria has such reserves) it has created for such cases, the discussion should be about how to provide information in the future. Nigeria has a satelite in space partially for that purpose and it has federal, state, local administrations supposed to do that too. Yet, with the harvest almost over, neither the traders association, nor the state and federal governments and nor the FAO can say for sure what’s going on.
Now I understand bad news are hard to give. And I also know that saying more analysis is needed is way better than pure deception since it buys time without undermining one’s credibility.

It’s very clear to me that early, widespread and reliable information would reduce the risk of speculation and may even allow the supply and demand to adjust more smoothly. The real responsibility in this mess should go to the people and agencies who are paid to that. But they’re busy trying to assign it to other people.


2 Responses to “Food again”

  1. […] Meanwhile in Northern Nigeria, as subsistence farmers face hunger and commercial farmers face creditors as the bad harvest seems to be confirmed. […]

  2. […] An Irin report from Kano makes it seem like only the North is affected, with local officials as always blaming speculation: “the real problem is that IPMAN, which provides fuel to about 90 percent of […]

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