World Food Policy Volume/Issue 2-2/3-1 Fall 2015/Spring 2016 | Page 162

Food Security In an Age of Falling Commodity and Food Prices: The Case of Sub-Saharan Africa

the existence of crop storage facilities, the
percentage of food loss, and the existence
of nutritional standards.

Despite high economic growth
rate, the numbers of poor people did not
decrease in SSA, even if some components
of the Human Development Index
(UNDP 2015) and the index itself have
known a modest improvement (0.518 in
2014 versus 0.499 in 2010).

In this context, the impact of fallen
food prices on food security is equivocal.
The Uncertain Impacts of Fallen Food
Prices on Food Security

In low-income SSA countries,
the urban poor are net food consumers,
while small farmers are, generally, net
sellers. Rising prices hurt consumers by
reducing their purchasing power but
benefit producers by increasing their
profits. Rising food prices for basic staple
food is not beneficial for Africa’s poor
who consume more food than what they
can produce, particularly poor families
living in cities that spend the majority of
their income on basic foodstuffs. Rising
food prices are also having important
macroeconomic impacts on many
African countries since more food is being
imported from the world market leading
to worsening balances of trade (only 5%
of Africa’s imports of cereals come from
other African countries).

Lower food prices relative to
incomes benefit to food security, by
making food acquisition more affordable
especially to poor consumers. Food
purchases typically account for a
significant share of overall household
income of the poor in SSA. Overall
benefits would, however, be depending

on whether households are net buyers
of food. At the same time, lower prices
also diminish producers’ returns. At the
country level, low international food
prices would also benefit those countries
that rely to a large extent on imported
food products, as long as their currencies
do not decrease as to annihilate the gains
from low prices.

Consumers may benefit from the
low prices of imported food in particular
when these prices result from developed
countries farm subsidies. But this
situation is largely hazardous as the recent
price surge demonstrates, while at the
same time small farmers face enormous
difficulties in trying to expand production
in response to higher prices.

Falling prices may impact
on farmers’ profitability, reducing
investments, and increasing unsustainable
agricultural practices. Low returns could
reduce incentives for larger investment
in agriculture (rural infrastructure, credit
availability, input services, research, and
extension). As it was explained earlier,
underinvestment in agriculture has been
considered as one of the main structural
causes for the sharp price increases of
2007–2008.

Finally, lower food prices have
intensively contributed to reduce (or even
partially destroy) domestic agricultural
activities. SSA experimented shrinkage of
some agricultural sectors due to imports
surges generated by low subsidized imports
prices: the case of European products (for
instance European poultry). Founded
on a list of “‘infant industry” argument,
a domestic development process in
agriculture in SSA is extremely difficult
to implement under the competition of
largely subsidized imported products.

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