Update (8th January 2009) : The government's view is characteristically hostile at present.
Opening up international borders to regional trade in food staples offers many advantages to the region’s consumers and farmers. Open borders offer a financially inexpensive means of reducing the domestic price volatility of staple foods. The import parity price sets an upper bound, while export parity sets a floor below which prices will not fall, assuming private traders enjoy the freedom to import and export maize when market conditions permit. The alternative policy of closing borders in small markets such as Zambia invites the prospect of significant price volatility. Under normal production fluctuations, a closed border can easily lead to price volatility in the range of 100% from one year to the next.
Consumers clearly benefit from reduced maize price volatility, particularly during drought years when price spikes can become particularly acute, particularly in thinly markets closed to opportunities for trade. Because poor households spend over half of their income on foods, price spikes in staple food markets risk forcing them into unsustainable short-term coping strategies, forced asset sales or migration, both of which may impair their prospects for building up the human and physical assets required to grow out of poverty over time. By capping price spikes, cross-border trade offers a means of moderating these pressures. Among smallholder farmers, many of whom are net buyers of food, reliable food supplies and reduced price volatility permit them to diversify into higher-value production, thus opening new pathways out of poverty.
Producers of staple foods likewise benefit from open borders. To maintain and sustain producer incentives, surplus farmers in surplus producing zones need access to growing markets, both internal and across national borders. Failure to allow regional trade in food staples risks stalling production growth and private investment in agriculture. In thin national markets, without export outlets, production surges lead easily to price collapses. In turn, these disincentives dampen long-term agricultural income growth. This suggests that both consumers and farmers stand to benefit from the reduced price volatility that results from opening borders to regional trade in food staples.
Wednesday, 7 January 2009
Food security and trade restrictions..
THEMES : agriculture