MODELING THE IMPACT OF CLIMATE VARIABILITY ON LOCAL FOOD PRICES - Food Security, Food Prices and Climate Variability - page 149

TABLE 7.2 A typology of local cereal markets: market structure and price behavior

Local weather shocks have no effect Local weather shocks influence prices

Global price shocks have
no effect

•Lowcerealstock-useratio
•Fooddeicitareas/connectedto
food deficit areas
•Weathershocksinotherfood
surplus areas affect local prices
•Low-incomecountries
•IncludesmarketsinGhana,South
Africa, Sri Lanka, Sudan,
Tanzania

•Isolated/landlockedcountry
•Poor,rural,inadequate
infrastructure
•Foodsurplusareathattradeswith
larger food surplus area
•Low-incomecountries
•IncludesmarketsinBangladesh,
Burundi, Chad, India, Kenya,
Mali, Mozambique, Nepal,
Niger, Pakistan, Panama,
Senegal, Somalia, Thailand,
Togo, Uganda, Zambia

Global price shocks
influence prices

•Fooddeicitareaorfood
importing country
•Connectedlocation/non-
landlocked
•Fooddeicitregioninmore
advanced developing country
•Urban/capitallocation
•IncludesmarketsinAfghanistan,
Benin, Burkina Faso, Burundi,
Guatemala, India, Kenya,
Malawi, Mali, Mozambique,
Pakistan, Rwanda, Senegal,
Somalia, Togo

•Foodsurplusareainfood
exporting country
•Urbanareainexportingcountry
that has weather similar to surplus
agricultural area
•IncludesmarketsinAfghanistan,
Brazil, Guatemala, Kenya,
Mexico, Mozambique, Pakistan,
Peru, Senegal, Somalia, Thailand,
Uganda, Zambia

Note
Markets and commodities are treated independently, so countries will appear multiple times according to the behav-
ior of different markets within their borders.

countries, where the governments maintain marketing reserve boards and attempt to stabilize
food prices (Minot, 2012). These countries have larger stocks-to-use ratios than others, and thus
we do not expect to find statistically significant impacts of world or local weather shocks (Ihle
et al ., 2011; Minot, 2011). Minot (2012) found in his analysis on food price variability that these
four countries had relatively high food price variability compared to countries with low inter-
vention policies. He states that the uncertainty created by government intervention in maize
markets can cause private traders to withdraw from the market, reducing the effect of temporary
arbitrage in smoothing prices over time. Other researchers have also suggested that active inter-
vention by the government in food markets, particularly when it involves price controls or
unpredictable purchases and sales, discourages private traders from storage, domestic transport or
international trade in staple food grains (Chapoto and Jayne, 2009; Byerlee et al ., 2006). There
are markets within each of these countries, however, that are affected by both weather and
international prices, so the impact of these programs varies across markets and time periods.
There is a larger set of locations that are in countries that did not actively control food
prices, but that are not affected by either international prices or local environmental dynamics.