POLICY IMPLICATIONS OF PRICE DYNAMICS AND THE WAY FORWARD - Food Security, Food Prices and Climate Variability - page 179

uncertainty and lack of access to food. Once the prices are high, if they stay at a higher level
it is very damaging to long-term development. High food prices damage socially important
long-term investments by poor households such as education, consumption of diverse and
nutritious food, and spending on individual health care (Barrett and Bellemare, 2011). Trade
policies that increase the price of food through restricting trade are often regressive, transfer-
ring wealth from the poorest to the better off segments of the population (Gouel, 2013).
Unfortunately, is hard to show the impact of a trade policy on food price levels in any one
country, even if it is successful in reducing price spikes. Due to imperfect implementation and
multiple stressors including large external price drivers and changes in supply to the market
that may be outside the control of the government, it is hard to say why food price levels are
high in any particular time or location (Gouel, 2013). Thus countercyclical trade policies are
becoming more, not less, common. These trade policies are not encouraged by economists
and policy experts and can be damaging in the long run to food security globally (Rashid et
al ., 2008; Anderson and Nelgen, 2012; Do et al ., 2013).
Trade policies could be more responsive to local changes in production if they used
updated information on the growing conditions in agricultural production regions that
produce tradable surpluses. Knowing about impending production deficits or surpluses within
a country will help anticipate and plan for dynamic policy response. Intelligence on where
imported food originates and the likely impact of weather-related production anomalies on
areas outside the country will also be important. Although trade policies are effective at coun-
teracting the impact of international price volatility and price spikes on local food prices, the
simultaneous disruption of local supply during times of pressure from international prices can
reduce the effectiveness of these policies (Rashid et al ., 2008).
The high degree of local variability in food prices from one market to the next means that
although trade policies must be applied at the national level, the impact of local weather effects
and accessibility to international price signals is not consistent across a country. As described in
Chapter 7 , markets are highly heterogeneous in their response to changes in local production
and international price signals. Markets that produce surplus food are more likely to have prices
that exhibit seasonal variability and be affected by local weather shocks. African countries in
particular, since they have highly porous borders and weak government institutions, have dif-
ficulty implementing effective policies that reduce the transmission of price spikes across national
borders (Tschirley and Jayne, 2010). More information about the likely impact of weather, the
yields and potentially food prices of their regional trading partners will help these countries
anticipate locally relevant changes in food supply and demand (Gouel, 2013).
To reduce the impact of food price spikes on food security, trade policies must be imple-
mented quickly and with transparency to other actors in the market. Private traders who may
store and move grain in normal years need be involved in the decision making and implementa-
tion of these policies to ensure that they work well (Porteous, 2012). The lack of trust between
government actors and private actors in Southern Africa restrained the action of private traders
during times of significant supply stress, causing Zambia to have three severe food price spikes
between 2000 and 2008 (Tschirley and Jayne, 2010). Poor policy timing can cause increases in
transaction costs and changes in informal trade flows but do not restrict trade, making it even
more important for actors to know the supply situation in regions outside the borders of these
countries where food comes from in times of scarcity (Anderson and Nelgen, 2012). Early and
actionable information on production anomalies and their local food price consequences can
make a difference in improving the timing of trade policy decisions.