Market disconnect blamed for rising food prices

April 25, 2011
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, NAIROBI, Kenya, Apr 25- As food prices continue to soar sparking demonstrations in some parts of Africa, agricultural experts are blaming the situation squarely on the poor market linkages that exists within in the continent.

Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) boss Cris Muyunda said that the disconnect that exists within markets particularly those in the COMESA region have seen some people grapple with skyrocketing prices while farmers in other parts are selling their produce at a throw away price.

“The market issue remains a major problem because farmers are producing; there is a lot of bumper harvest and yet, (food) access continues to be a major issue for majority of COMESA countries,” he said.

The region is estimated to have a 1.2 million tonnes surplus of maize yet countries such as Kenya often report a maize shortage that lead in a spike in maize flour prices.
These structural inefficiencies have meant that farmers in the region are unable to benefit from a global rise in commodity prices.

Crops such as cotton are for instance enjoying rising prices with a pound of cotton lint selling for $2, which is the highest it has ever been.

The Chief Executive Officer of the specialised agency that is mandated with integrating small farmers in COMESA member states into the national, regional and international markets, however said this calls for COMESA countries to develop and link national commodity exchanges which would ensure food availability across the region.

“It is important that we work to expand the commodity exchanges and integrate them so that a farmer sitting in Malawi can be able to sell his produce to for instance the Zambian market,” the CEO said.

Commodity exchanges and warehouse receipts are some of the instruments that have been identified as mechanisms that can help move smallholder farmers in the region from subsistence farming to commercial agriculture.

However, despite the identified benefits of these innovative measures, many COMESA member states are yet to establish them which further exacerbate the food problem in the region.
Mr Muyunda however said that governments need to provide the requisite framework that enables the farmers to produce for the integrated market comprising of 400 million people.

“Your being able to expand access to your commodities is very crucial. But the problem has in some cases been that our domestic markets are very small. It is therefore that when farmers are producing, they produce for with the 400 million people in mind. They should know what you have produced and they should be able to buy it,” he challenged.

These efforts, he added should be tempered with provision of market information on agricultural products. This is in addition to the building of adequate and efficient infrastructure to ensure a free flow of these products.

On its part, the alliance said it was developing a strategy that will complement all these efforts that were taking place at the national level.

The strategy will guide its operations for the next 10 years but focus and a $125million budgeting have been placed on the first five years.

The development of the guideline was prompted by the realisation that trade levels in agricultural commodities among the members as well as poverty levels in the region are still at unacceptable levels and thus the need to come up with a plan that hopefully will address this situation.

“This strategy will focus on promoting a number of key commodities as well as a number of several policy reforms,” Mr Muyunda explained.

In addition, through the plan, ACTESA will focus on the creation of key market institutions in a bid to increase trade among these crops.

“The last bit will be to work on the capacity building programmes for the players such as farmers, processors and traders,” he added.

Within the five years, they agency targets to increase export trade within the region by about 30 percent.

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