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MSU International Development Working Papers MSU International Development Working Paper Cereal Market Dynamics: The Malian Experience from the 1990s to Present by Valerie Kelly, Abdoul Murekezi, Nathalie Me-nsope, Sonja Perakis, and David Mather Department of Agricultural, Food, and Resource Economics Department of Economics MICHIGAN STATE UNIVERSITY MSU International Development East Lansing, Michigan 48824 Working Paper 128 December 2012 MSU Agricultural Economics Web Site: http://www.aec.msu.edu MSU Food Security Group Web Site: http://www.aec.msu.edu/fs2/index.htm MSU is an affirmative-action, equal-opportunity employer MSU INTERNATIONAL DEVELOPMENT PAPERS The Michigan State University (MSU) International Development Paper series is designed to further the comparative analysis of international development activities in Africa, Latin America, Asia, and the Near East. The papers report research findings on historical, as well as contemporary, international development problems. The series includes papers on a wide range of topics, such as alternative rural development strategies; nonfarm employment and small scale industry; housing and construction; farming and marketing systems; food and nutrition policy analysis; economics of rice production in West Africa; technological change, employment, and income distribution; computer techniques for farm and marketing surveys; farming systems and food security research. The papers are aimed at teachers, researchers, policy makers, donor agencies, and international development practitioners. Selected papers will be translated into French, Spanish, or other languages. Copies of all MSU International Development Papers, Working Papers, and Policy Syntheses are freely downloadable in pdf format from the following Web sites: MSU International Development Papers http://www.aec.msu.edu/fs2/papers/idp.htm http://ideas.repec.org/s/ags/mididp.html MSU International Development Working Papers http://www.aec.msu.edu/fs2/papers/idwp.htm http://ideas.repec.org/s/ags/midiwp.html MSU International Development Policy Syntheses http://www.aec.msu.edu/fs2/psynindx.htm http://ideas.repec.org/s/ags/midips.html Copies of all MSU International Development publications are also submitted to the USAID Development Experience Clearing House (DEC) at: http://dec.usaid.gov/ CEREAL MARKET DYNAMICS: THE MALIAN EXPERIENCE FROM THE 1990S TO PRESENT by Valerie Kelly, Abdoul Murekezi, Nathalie Me-nsope, Sonja Perakis, and David Mather December 2012 Kelly is associate professor, International Development, Emeritus, Michigan State University; Murekezi is formerly visiting assistant professor, Department of Agricultural, Food, and Resource Economics at Michigan State University, and now consultant for HarvestPlus; Me-nsope and Perakis are Ph.D. students and graduate assistants, Michigan State University; Mather is assistant professor, International Development, Department of Agricultural, Food, and Resource Economics, Michigan State University. ISSN 0731-3483 © All rights reserved by Michigan State University, 2012 Michigan State University agrees to and does hereby grant to the United States Government a royalty-free, non-exclusive and irrevocable license throughout the world to use, duplicate, disclose, or dispose of this publication in any manner and for any purposes and to permit others to do so. Published by the Department of Agricultural, Food, and Resource Economics and the Department of Economics, Michigan State University, East Lansing, Michigan 48824-1039, U.S.A. ii FOREWORD This report was prepared by the Food Security Group (FSG) in the Department of Agricultural, Resource, and Food Economics (AFRE) at Michigan State University with financial support from the Bill and Melinda Gates Foundation for the Guiding Investments in Sustainable Markets in Africa (GISAMA) project and the USAID-funded project Projet de Mobilisation des Initiatives en Matière de Sécurité Alimentaire au Mali (PROMISAM II) Associate Award to the USAID/MSU Food Security III Cooperative Agreement, (GDGA-00- 000021-00) between Michigan State University and the United States Agency for International Development (USAID), Bureau for Food Security, Office of Agriculture, Research, and Technology. The GISAMA study on the dynamics of staple food markets was to be based largely on secondary data at the national level, describing cereal production, demand, supply, and price trends during the past 20 years and changes in market structure, performance, and policies. Based on what we learned about past performance and the drivers of recent changes, we planned to discuss the extent to which improvements in cereal markets and complementary government policies and investments might contribute to future increases in incomes and poverty reduction for rural farmers throughout Mali. The joint funding permitted us to add a farm-level component to the cereal market dynamics topic so that we are able to describe in detail how different types of farms in different zones interact with cereal markets. This puts us in a better position to assess the extent to which improvements in cereal markets are likely to improve incomes and reduce rural poverty across the three principal cereal cropping systems in Mali, rather than only in the cotton zone. Most of the research and analyses for the paper was completed prior to the March 22, 2012 military takeover of the Malian Government and the subsequent declaration of independence by the northern half of the country. While the political situation in Mali remains uncertain, we do know that it has had a negative impact on the ability of cereal markets to function in the northern half of the country.1 Although the zones most directly concerned are north of our main study zones, the ongoing war, pillaging, and destruction of infrastructure has reduced the capacity of private sector actors, government services, and humanitarian organizations to supply the north with cereals. The disruption of trade patterns and the economic disruption in Mali due to all the political events will likely have a strong impact on the organization of the cereals value chains for the next few years. Donor support in the future will need to be mindful of the previous progress made in cereal market development via private sector actors and focus on rebuilding that capital and capacity rather than replacing it with an externally managed donor approach. 1 For example, an October 18, 2012 report by IRIN described measures taken to fix cereal and bread prices by the new government in the North to lure back to the region Malians who fled when violence broke out. A sack of rice at 20,000 FCFA rather than the previous price of 40,000 was cited as an example by one interviewee— not a price that can be sustained by the government for very long but one that will force traditional rice traders out of the market. iii ACKNOWLEDGMENTS This paper is the result of work by a large number of international collaborators and MSU colleagues who researched and wrote many of the project working papers that are referenced and contributed to the collection and management of the farm survey data and market studies that are analyzed and reported in the paper. Special thanks go to the farm survey team at Programme d'économie de filières (ECOFIL) in the Institut d’Economie Rurale (Bamako). The team was led by Amadou Samaké, with supervisory assistance from Moumouni Sidibé and Fassory Sangaré. MSU’s Bamako-based team (Niama Nango Dembélé, Boubacar Diallo, Abdramane Traoré, and Sidibé Thiam) played a major role in managing the farm survey data base, providing reference documents on the evolution of cereal markets in West Africa, fact-checking information on the recent evolution of cereal markets in Mali, and reviewing several draft versions of this paper. Duncan Boughton and Niama Nango Dembélé were also responsible for the design and conduct of the recent cereal market studies that provided critical information on the evolution of production and marketing basins in Mali and West Africa. MSU’s Margaret Beaver and Juha Sohlberg spent many long temporary duty assignments in Bamako helping the team set up the data base and training Bamako staff to manage it. CIRAD’s Jean François Bélières was always available via the Internet to resolve any questions we had about the first year of the panel data that he had cleaned and analyzed so that we could ensure consistency in methods used across the three survey rounds. Farm survey research and analysis support was provided by Brenda Lazarus and Mariam Sako, both MS graduate students based in East Lansing. MSU’s Steve Longabaugh provided assistance with designing maps used in the report. John Staatz and Duncan Boughton provided overall guidance throughout the farm survey, market studies, and literature review as well as reading through earlier drafts of this paper with a critical eye that substantially improved both the substance and the readability of the paper. Patricia Johannes provided much needed assistance with final editing and formatting. iv EXECUTIVE SUMMARY This paper assesses the role that cereal markets have played in stimulating farm-level productivity growth and marketing of staple foods, in responding to changing demand patterns, in satisfying minimum food security needs, and in contributing to poverty reduction in both urban areas (through reductions in food prices) and rural areas (through increases in farm incomes). The paper uses a case study approach based on the Malian experience. Mali presents a particularly good case study of cereal market development because of
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