GIOVANNI ANDREA CORNIA, LAURA DEOTTI and MARIA SASSI

1. Sources of Domestic Food Price Volatility and Child Malnutrition: evidence from Niger and Malawi GIOVANNI ANDREA CORNIA, LAURA DEOTTI and MARIA SASSI University of Florence, Save the Children and University of Pavia ----------- ICABR Annual Conference, Ravello, 17-21 June 2013

2. Much attention was paid to impact of world food prices of 2007-8/2010-11. This obscured domestic factors’ s impact on child nutrition in SSA, i.e. • the long term food supply impact of agricultural policies; • huge and persistent seasonal variation in food production; • impact of (still recurrent!) famines. After testing impact of changes in world food prices on domestic prices ….. this paper tests influence of 3 above variables on child malnutrition

3. How large the transmission of world food prices on domestic food prices in SSA? • Large literature ….but conclusions vary on basis of specific factors such as • dependence on imported food, • magnitude of transport costs and trade margins, • world tradability of domestic staple food, and integration with global mkt • exchange rate variations, • Thus in parts of SSA • is difficult to argue that the world price is main driver of domestic food prices • while domestic prices often exhibit large rises in parallell with declines of world prices

4. Niger and Malawi • their structural features (small, land short, bordering bigger countries, landlocked, low input subsist. agriculture, single staple) make them representative of several SSA countries affected by major problems of: • Chronic; • Seasonal; and • Acute; food insecurity and child malnutrition.

5. Theoretical framework to asses child malnutrition (based on Sen’s entitlement approach) A household’s ‘control over food’ (and thus child malnutrition) depends on its entitlement, i.e. a set of commodity bundles it commands in society ENTITLEMENTS: • Production-based entitlements (food produced for self-consumption) • Exchange-based entitlements (food acquired through mkt exchange) • wage–based entitlements • Inheritance and transfer-based entitlements These entitlements change (at different speeds) over the l.term, seasons & during famines

6. Food entitlement bundles of a household Food available Food produced for self-consumption Good sold Transfers received Income form assets sold Wage labour

7. Factors affecting food entitlements & child malnutrition • Long-term food price and security (which depends on gains in agricultural productivity – and therefore on agricultural policies); • easonal variations in food prices (depend on storage capacity & credit availability); • Price changes during food acute crises/famine (depend also on food security policies) • Changes in value of the entitlements over these three time dimensions

8. Methodology of empirical analysis • we decompose food price vector into three price sub-vectors reflecting the: • Trend price component (reflecting – inter alia - long term gains in agricultural productivity) • Seasonal price component (reflecting the efficiency of credit mkts and inter-temporal smoothing) • Famine price component (reflecting the gov. capacity to respond to large price shocks ) • A residual price component (which reflects various effects, such as the price of inputs) • We correlate these food price components (sub-vectors) to the number of children admitted to feeding centers

9. Methodology (cont’d) • Nominal food price data were deflated with the CPI • The dynamics of trend and seasonal component suggested that the 4 price components interact according to a multiplicative model: FP = TPC x SPC x FPC x RPC • Monthly Seasonal Adjust. Method allows separating seasonal (SPC) effects from the l.term component (TPC) of the aggregate price trend. • the long term trend (TPC) was calculated by mean of the Hodrick-Prescot Filter and then subtracted from the aggregate price trend so as to obtain the random (RPC) and famine (FPC) price components.

10. Price trend component – monthly data Malawi: Maize (January 2003 – December 2009) Niger: Millet (January 2006 – December 2010) Note: TPC = Trend price component

11. Seasonal and famine food price components and number of children admitted per feeding centre – monthly data Malawi: Maize (January 2003 – December 2009) Niger: Millet (January 2006 – December 2010) Note: CAF/NC = child admissions by feeding centre; SPC = Seasonal price component; FPC = Famine price component

12. Methodology (cont’d) • We regress the 4 price components on the n. of child admissions • We control for ‘hunger season dummy’ and number of feeding centers • Do not include – due to lack of data – the value of entitlements. Yet –during seasonal fluctuations/famines- they correlate(-) with food prices • We ignore world prices as in the 2000s their trend did not significantly affect domestic prices

13. OLS log-log regression of n.child admissions to feeding centres on price components – monthly data (2003-2009 – Malawi 2006-2010 Niger))

14. Results • Despite data & methodological limitations, regressions analysis suggests that: • the moderate l. term food price rise in Malawi (due to rising land yields) helped reducing child malnutrit. Opposite was true in Niger (no support to agriculture) • Seasonal price rises are a major cause of child malnutrition in both countries. Such effect correlates closely with hunger seasons dummy (dominated by price effect) • The 2006-2010 famines in Niger where well responded to, it helped contain child malnutrition. This was not the case in Malawi • In both, the rise in feeding centers contributed to the increase in admissions

15. Implications for policy research • Suitable policies aimed at intensifying agricultural production and rising land yield to contain domestic prices & reduce child malnutrition; • Role of long-term policies, particularly in the agricultural sector; • Role of credit/storage policies for addressing seasonal food price fluctuations; • Rethinking food security policies during famines;