Roger Thurow - Outrage and Inspire - "African Paradox"

AFRICAN PARADOX

Nairobi, Kenya

Once again, the great paradox of Africa emerges: hunger in one part of a country, food surplus in another.

A persistent drought is biting hard in the northern and eastern reaches of Kenya, threatening herders and their livestock.  Already, the World Food Program is feeding about 1.6 million people.  This week the government said the number of Kenyans requiring food relief would increase to five million in the next three months.

At the same time, farmers in the Rift Valley are sitting on surplus maize following good harvests last August.  “Can the government tell us what food shortage they are talking about?  Most farmers have maize but there is no market,” a North Rift parliamentarian was quoted as saying in the Kenyan newspaper, Daily Nation.

Although prices normally rise this time of year as stockpiles from the last harvest dwindle, farmers are expecting them to be even higher to reflect the severe shortages in other parts of the country.  They have been pressing the government to buy their maize to feed their fellow Kenyans rather than relying on food aid from abroad.  After a few weeks of clamor, the government this week directed immediate purchase of food from the surplus regions to distribute in the drought regions and to build the country’s strategic grain reserves.

It shouldn’t take a government directive.  The international neglect of agriculture development over the past three decades also meant a neglect of developing agriculture markets.  Communications networks are inadequate, transport is insufficient, the private sector is weak.  The hungry are on the fringes of the economy; they lack the buying power to attract the surpluses.  So the laws of supply and demand that would usually move food from surplus to shortage rarely apply in Africa.

These disconnects prompt a second paradox: during times of high prices, Africa’s farmers often lose rather than gain.  This reality baffled many during the global food crisis in 2007-08, when grain shortages and soaring prices triggered riots in dozens of countries.  Surely, it was assumed, one silver lining of the crisis would be that the higher prices would benefit the world’s poor smallholder farmers if they had surplus harvests that they could sell.  Rather, they were hit harder than most.

The reason is that smallholder farmers, especially in Africa, are usually net buyers of the very food they produce.  These dynamics will again come to the fore as the world enters another period of higher food prices.

In Kenya, for instance, many of the smallholder farmers – those with only a couple of acres – face their greatest expenditures shortly after the August maize harvest.  (Maize is Kenya’s staple food.)  Within months of the harvest, the smallholder farmers are selling some of their maize to pay school fees for their children at the beginning of the New Year and then to finance the purchase of seeds and fertilizer for the March planting season.  Also, because of remedial storage facilities, farmers face pressure to sell surplus maize before it is spoiled by the climate or infested by pests.  Many of them choose to exchange their maize for other longer-lasting (they hope) assets like cows and goats.  At the time of these sales – for school fees, planting inputs, or to prevent spoilage – the market price of their maize is still relatively low because there is plenty available.

As their stocks of maize disappear, with several months still to go before the next harvest, the farmers enter the market to buy maize to feed their families.  But by then the prices are on the rise, as nationwide maize stocks dwindle before being replenished by the harvest.  Thus, the smallholder farmers operate in reverse of the guiding principle of stock market investors: buy low, sell high.  They sell low and buy high.  They spend more buying maize than they make selling it.

Even now, when the government enters the market to combat the drought and offers a higher price to attract maize sellers, most smallholders don’t benefit.  Often farmers must wait one or two months after delivery to be paid by the buyers.  If smallholder farmers living on the margins sell their maize surplus, it is because they need the money immediately.  So it is mainly the larger commercial farmers who benefit from the government purchases, or the traders who buy from the smallholders and then resell at the higher price to the government.

The smallholder farmers who haven’t yet sold their maize five months after harvest, who are holding on to their maize, storing it in plastic bags beside their beds in their mud-bricks homes, are hoping to get the higher lean-season prices before their stocks spoil.  If they lose that bet, a third tragic paradox will emerge:

Maize spoiling in some homes, while hunger rages in others.

Comments

[Hadley Baxendale]

It hasn't dawned on them to save a portion of their crops until prices are higher? Every year they "sell low and buy high" seeing the exact same problem over and over and over and over again, year after year after year, and yet they do not hold some maize back? Or dry it? Or cooperate with their neighbors to buy a grain dryer? Something tells me these are extremely low-trust and short-term societies.

On the other hand, rather than trying to extend the mental horizons of the natives, you might consider the Chinese approach: recolonization of Africa (with Chinese businessmen in charge) to introduce some long-term thinking and planning. By "long-term" I mean longer than 3-6 months.

Chinese management has worked for Malaysia, Vietnam, Burma, Thailand and the Philippines, where Chinese managers and owners keep the burgeoning native populations fed.

[ava]

It's unbelievable that people around the world are still living like this, especially when us westerners are still throwing good food away each week.

[katie]

Can't we get the supermarket chains to donate all of the food they are throwing out to causes such as this.

[katie]

I think it is good to take a step back and take note of just how lucky we are to live the way we do in western society. Blogs like this are great.