PRICE INSTABILITY IN THE MAIZE MARKET IN MALAWI

Author: Elizabeth Luhanga Manda

Year: 2010

Category: Dissertations

Abstract

The thesis examines seasonal price instability in the Malawi maize market over the 21-year period from 1989 to 2009, covering five interlocking dimensions. The first establishes the reasons that maize price instability in Malawi is critical for vulnerability to food insecurity. The second sets out the causes and effects of price instability, and its relationship to the history of the maize market in Malawi. The third analyses the average magnitude of seasonal price changes, and contextualizes this in relation to different district maize markets and different food crops. The fourth examines the competitiveness and efficiency of the Malawi maize market. The fifth provides an analytic narrative account of three episodes of extreme maize price volatility experienced in Malawi between 2000 and 2009. The thesis produces a number of findings. The gross seasonal margin for maize in Malawi averaged 60 per cent in the period 1989-2009. Seasonality varies by location, with the highest seasonal margins occurring in remote rural areas, and places close to border crossing points for informal maize imports. Other food crops exhibit less price seasonality than maize, and two of them, rice and beans, display evidence of declining price seasonality. The structure and conduct of the maize market is competitive at local and more aggregate levels of market participation. Cointegration analysis shows that the maize market is spatially efficient. Extreme price spikes follow similar patterns, characterized by the dominance of political over economic considerations. The private-public coordination problem takes central position in the policy interpretation of these findings. The thesis would concur with the prognosis of other researchers that until the government adopts a rule- rather than discretion-based approach to maize market management, episodes of excessive instability in the maize market are unfortunately likely to recur in the future.

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