A presentation by Dr. Greenwell Matchaya, Senior Researcher, ReSAKSS Coordinator for Southern Africa, International Water Management Institute (IWMI)

1. Greenwell Matchaya, PhD
Senior Researcher/ReSAKSS Coordinator
Southern Africa, IWMI

2. The Impact of COVID-19 on Agricultural Commodity
Prices: Location Matters
Mbaye Yade, Greenwell Matchaya*, Joseph Karugia
Anatole Goundan, Paul Guthiga, Maurice Taondyandé, Sunday
Odjo, and Sibusiso Nhlengethwa
*Email: g.Matchaya@cigar.org

3. Outline of the Presentation
• Introduction
• Methodology
• Deficit vs Surplus Areas
• Urban vs Rural Areas
• Coastal Vs Landlocked countries
• Perishable vs Non-Perishable commodities
• Key messages

4. Introduction (I)
• COVID-19 introduced in Africa- early 2020
• Then control measures to curb the spread of the pandemic followed :
restrictions of the movement of people, Market bans, border crossing
restrictions, curfews, etc.
• Inadvertently led to market disruptions and revenue losses for vulnerable
groups by disrupting supply and demand of agricultural staples,
• We focus on staples markets across the continent to understand impact

5. Introduction (II):
Expected food Price Behaviour due to Covid-19
• In surplus areas, one would expect that prices fall below expected levels and recover once
the confinement is lifted.
• In deficit areas, prices are expected to rise above predicted level during confinement.
• However, the extent to which prices can increase in deficit urban areas will depend, among
others, on their access to surplus areas and on changes in demand of particular groups like
schools, universities, restaurants and hotels
• In urban, and coastal areas and perishable commodities, low prices are expected as demand
declines-
• Therefore, market connection and typology, and policy options may affect the price behavior.

6. Methodology (I)
• Monthly data from the national Market Information Systems are used in
this analysis
Country Commodity Number of markets
considered
Period considered
Benin Maize 12 2010–2020
Burkina Faso Maize 27 2010–2020
Kenya Maize 10 2011–2020
Lesotho Maize flour 10 2015–2020
Malawi Maize 23 2016–2020
Mali Maize 22 2010–2020
Mali Rice 15 2014–2020
Mozambique Maize 11 2016–2020
Nigeria Gari 8 2012–2020
Rwanda Maize 5 2013–2020
Senegal Millet 28 2010–2020
Zambia Maize 10 2017–2020
Uganda Matooke 4 2010–2020

7. Methodology (II)
• Seasonal ARIMA (SARIMA) models to calculate the price trend in the
absence of a shock for forecast purpose.
• Data available up to December 2019 used to select and identify the
models with the best power for forecast.
• Forecasting prices for the year 2020 (lockdown period).
• Analysis of the gap between the predicted and observed prices
• possible effect of market disruption due mainly to the COVID-19 pandemic and the
various related restrictive policies taken by governments.
• Results are grouped and discussed by market location: Rural vs Urban;
Deficit vs Surplus; Coastal vs Landlocked; Perishable vs Non-perishable
commodities.

8. Deficit vs Surplus areas (I)
Proportion of markets in deficit areas according to the
level of deviation from price predictions
Proportion of markets in surplus areas according to the
level of deviation from price predictions

9. Deficit vs Surplus areas (II)
• Two different patterns appear when comparing price trends in deficit and surplus
areas
• In western Africa, prices increased in both the deficit and surplus areas but
increased more in deficit areas
• Prices fell with the lifting of restrictions in Burkina Faso and Mali, while the
pressure on prices remained significant in Senegal and Nigeria.
• In contrast, in eastern and southern Africa, a general downward trend was
observed for deficit as well as for surplus areas.
• Exceptions in Southern Africa included some markets in Lesotho and Kenya,
where prices trends were similar to that of western Africa markets.
• Cross-border sales to neighboring countries in southern and eastern Africa may
have played a significant role in determining pre-COVID-19 price behavior across
those countries.
• The potential negative impact from the observed decline in prices shows the
critical importance of transborder trade for smallholder farmers and small
businesses.

10. Rural vs Urban areas: Rural Areas (I)
Mali (Niono)
Rwanda (Kibungo)
Malawi (Nsundwe)
• Covid-19 measures can impact rural and urban incomes,
movements differently
• Prices went up in rural markets of (western Africa- see
Mali) but declined in rural markets of eastern and
southern Africa (see Rwanda and Malawi)
• There were a few exceptions in southern Africa in Lesotho
where prices increased.
• Note that prices also increased in urban areas of Mali, and
declined in urban areas of Rwanda and Malawi.

11. Rural vs Urban areas: Urban Areas (II)
Senegal (St. Louis)
Kenya (Kipkaren)
Lesotho (Maseru)
• Prices went up in urban markets of (western Africa- see
Senegal) but declined in rural markets of eastern (Kenya,
Rwanda, Uganda) and southern Africa (Malawi,
Mozambique, Zambia) with the exception of Lesotho
• The decline in prices was more in urban than in rural areas
in East and Southern Africa,
• Prices were also generally lower in urban markets than in
rural markets of the western Africa- perhaps signifying the
differential impact of restrictions on demand

12. Coastal vs Land-Locked Countries
• In theory costal markets should experience
downward price deviations due to international
trade
• But, no dichotomous price pattern emerged
between coastal and landlocked countries
• Other factors rather than access to the sea
dictated price deviations
• These factors may include, nature of
commodity, whether the country records
surpluses in the commodity etc
• Example, a surplus of matooke in Uganda, led
to low prices as poor access to external
markets limited trade in that perishable
commodity
• This does not imply access to the sea is not
important for trade.
Proportion of markets with downward/upward price
deviations between March and July 2020

13. Perishable vs Non-perishable Commodities
• Unlike non-perishable foods, perishable food
commodities cannot be hoarded because they
will rot
• Demand for perishables determines the price. If
demand is disrupted and shifts downward, the
price will consequently fall.
• Prices in retail markets were observed to range
between 16 and 48 percent below the predicted
prices.
• The closure of main demand centers led to a
decline in demand and a sharp drop in prices.
• The price behavior of nonperishable cereals
varied across countries in southern, eastern, and
western Africa.
• Millet and maize surplus markets in western ,
eastern and southern Africa experienced
decreases in prices, while deficit markets
experienced increased prices
Percentage difference between actual and predicted matooke prices in Uganda (March–July 2020)

14. Key Messages (I)
• We focus on local staples and community-level markets which are often
overlooked in international data collection efforts.
• In most of the countries examined, price effects of the Covid crisis
propagated very quickly across space.
• The magnitude of price deviations also increased very quickly.
• In some countries, the shock caused prices to rise in deficit areas and
decline in surplus areas as transport restrictions took hold.
• But in countries that export staples regionally, trade restrictions
overrode those effects and prices fell both in surplus and deficit areas.

15. Key Messages (II)
• In responses to future shocks, care should be taken to minimize
disruptions in local market operations.
• Effects of local market disruptions on incomes, access to food, etc. can
be devastating.
• Measures should be coordinated across countries to respond to crises
while minimizing interference in cross-border trade.