FOOD PRICES AND SEASONALITY - Food Security, Food Prices and Climate Variability - page 122

Venema and van Eijk, 2004). High staple food prices due to weather shocks affect food access
through the combination of reduced income and reduced production. In a region where
every year less food is produced per capita due to increasing numbers of people who need to
be fed (Funk and Brown, 2009), changes in food prices and food production can result in
reduced consumption and hunger unless adequate imports are obtained (Steffen et al ., 2012;
Von Braun and Tadesse, 2012; Zant, 2013). This is particularly true of vulnerable individuals
such as children, who will suffer long-term consequences if they reduce food consumption
for a few months until prices come down.

Impact of climate variability

The conceptual diagram shown in Figure 6.3 shows the two pathways by which the weather
affects food prices - through variations in production and through annual seasonality. Previous
research has used decomposition techniques to identify and evaluate the interannual variability
due to weather and other shocks and the seasonality of prices (Brown et al ., 2008; Cornia et al .,
2012). The connection between weather shocks and food price anomalies in West Africa
continues to be a significant problem for food security in the region (Christensen, 2000).
The two aspects are linked since markets that have seasonality are particularly vulnerable
to interannual variability of rainfall, since they are unable to cope with short-term declines in
food availability during periods of higher demand, such as the height of the growing season.
These same areas can be profoundly affected by production shocks, with high productivity in
some years (leading to lower prices) and low productivity in other years (leading to higher
prices). West Africa, particularly in the late 1980s and early 1990s when the millet dataset has
the most observations, were not well integrated into the broader regional markets. This
accentuated both the seasonality and the interannual variability of millet prices in the region.
The impact of both weather shocks and changes in supply/demand during the rainy season
are mediated by storage, trade and transportation networks. The functioning of the local trade
networks and the infrastructure available to commodity traders (storage facilities, inexpensive
rail or trucking networks, low transaction costs) make all the difference in a market being
highly affected by weather shocks and those that are not. Unfortunately, there is little or no
information on local storage for grain, its cost and effectiveness in maintaining food preserva-
tion over different periods, for example. This lack of information on factors that mediate the
connection between environmental shocks and food prices will increase the uncertainty of
observed environment-price relationships.

Weather
anomalies

Lower
(higher)
food
production

Interannual
increases
(declines) in
food prices

Impact
on green
biomass

Yield
reductions
(increases)

Storage,
trade,
transport

Monthly
food price
levels

Seasonal
increases in
food prices
over dry
season prices

Inadequate
storage/
market
capacity

Seasonal
production

Last year's
cereal
supply low

Increased
demand in
the market

FIGURE 6.3 Conceptual diagram showing the impact of the interannual and seasonal weather
effects on food prices in small and isolated market systems.