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Spatial price efficiency in Mozambique's post-reform maize markets

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  • Emílio Tostão
  • B. Wade Brorsen

Abstract

Maize ("Zea mays") shortages and maize price instability continue to occur in Mozambique in spite of policy reforms and great capacity for increased production in northern Mozambique. This study measured the efficiency of spatial maize price arbitrage in Mozambique's post-reform period. Spatial price inefficiency does not seem to explain why food shortages continue to occur in Mozambique, suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations. Baulch's spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern Mozambique. Records of interregional maize shipments show that indeed grain is not being shipped from the north to the south. Market liberalization may have improved spatial price efficiency, but high transfer costs still limit trade and potential benefits from freeing markets. Under these circumstances, food shortages and price instability are likely to continue. Copyright 2005 International Association of Agricultural Economics.

Suggested Citation

  • Emílio Tostão & B. Wade Brorsen, 2005. "Spatial price efficiency in Mozambique's post-reform maize markets," Agricultural Economics, International Association of Agricultural Economists, vol. 33(2), pages 205-214, September.
  • Handle: RePEc:bla:agecon:v:33:y:2005:i:2:p:205-214
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    References listed on IDEAS

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    1. Tschirley, David L., 1998. "Planning for Drought in Mozambique: Balancing the Roles of Food Aid and Food Markets," Food Security Collaborative Working Papers 56026, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Tschirley, David L. & Santos, Ana Paula, 1999. "The Effects of Maize Trade with Malawi on Price Levels in Mozambique: Implications for Trade and Development Policy," Food Security Collaborative Working Papers 56032, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    3. Obstfeld, Maurice & Taylor, Alan M., 1997. "Nonlinear Aspects of Goods-Market Arbitrage and Adjustment: Heckscher's Commodity Points Revisited," Journal of the Japanese and International Economies, Elsevier, vol. 11(4), pages 441-479, December.
    4. Santos, Ana Paula & Tschirley, David L., 1999. "The Effects of Maize Trade with Malawi on Price Levels in Mozambique: Implications for Trade and Development Policy," Food Security Collaborative Policy Briefs 55213, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    5. Jeje, Jose Jaime & Machungo, Clementina & Howard, Julie A. & Strasberg, Paul J. & Tschirley, David L. & Crawford, Eric W. & Weber, Michael T., 1998. "What Makes Agricultural Intensification Profitable for Mozambican Smallholders? An Appraisal of the Inputs Subsector and the 1996/97 DNER/SG2000 Program, Volume II: Main Report," Food Security Collaborative Working Papers 56030, Michigan State University, Department of Agricultural, Food, and Resource Economics.
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    Cited by:

    1. Sitko, Nicholas & Jayne, T.S., 2014. "Demystifying the Role of Grain Assemblers in the Rural Maize Markets of Eastern and Southern Africa," Food Security Collaborative Working Papers 176628, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Van Campenhout, Bjorn, 2012. "Market Integration in Mozambique:: A Non-Parametric Extension to the Threshold Model," MSSP working papers 4, International Food Policy Research Institute (IFPRI).
    3. repec:eee:jfpoli:v:69:y:2017:i:c:p:243-255 is not listed on IDEAS
    4. Tschirley, David L. & Jayne, T.S., 2010. "Exploring the Logic Behind Southern Africa's Food Crises," World Development, Elsevier, vol. 38(1), pages 76-87, January.
    5. Brenton, Paul & Portugal-Perez, Alberto & Regolo, Julie, 2014. "Food prices, road infrastructure, and market integration in Central and Eastern Africa," Policy Research Working Paper Series 7003, The World Bank.
    6. Burke, William J. & Myers, Robert J., 2014. "Spatial equilibrium and price transmission between Southern African maize markets connected by informal trade," Food Policy, Elsevier, vol. 49(P1), pages 59-70.
    7. Wouter Zant, 2013. "How Is the Liberalization of Food Markets Progressing? Market Integration and Transaction Costs in Subsistence Economies," World Bank Economic Review, World Bank Group, vol. 27(1), pages 28-54.
    8. Zant, Wouter, 2010. "Market Integration with Transaction Costs in Developing Country Staple Food Markets: the Case of the Malawi Maize market," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95777, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
    9. Channing Arndt & Sam Jones & Vincenzo Salvucci, 2015. "When do relative prices matter for measuring income inequality? The case of food prices in Mozambique," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 449-464, September.
    10. César Salazar & Sam Jones, 2017. "The impact of infrastructure shocks on agricultural markets: Evidence from the Zambezi river in Mozambique," WIDER Working Paper Series 191, World Institute for Development Economic Research (UNU-WIDER).
    11. Han, Shengfei & Durham, Catherine A., 2010. "Spatial Price Analysis Incorporating Rate of Trade: Methods and Application to United States–China Soybean Trade," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(02), May.
    12. Ricker-Gilbert, Jacob & Mason, Nicole M. & Jayne, Thomas S. & Darko, Francis Addeah & Tembo, Solomon, 2013. "What are the effects of input subsidy programs on equilibrium maize prices? Evidence from Malawi and Zambia," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 161264, African Association of Agricultural Economists (AAAE).
    13. David, T. & Gitau, R. & Meyer, F.H. & Chisanga, B. & Jayne, T.S., 2016. "Evaluating price volatility and the role of trade in Eastern and Southern African maize markets," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 249291, African Association of Agricultural Economists (AAAE).
    14. Wouter Zant, 2017. "Impact of Mobile Phones on Staple Food Markets in Mozambique: Improved Arbitrage or Increased Rent Extraction?," Tinbergen Institute Discussion Papers 17-021/V, Tinbergen Institute, revised 26 Jan 2018.
    15. Tschirley, David L. & Jayne, Thomas S., 2008. "Food Crises and Food Markets: Implications for Emergency Response in Southern Africa," Food Security International Development Working Papers 54559, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    16. Tschirley, David & Myers, Robert & Zavale, Helder, 2014. "MSU/FSG Study of the Impact of WFP Local and Regional Food Aid Procurement on Markets, Households, and Food Value Chains," Food Security International Development Working Papers 184835, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    17. Acosta, Alejandro, 2012. "Measuring spatial transmission of white maize prices between South Africa and Mozambique: An asymmetric error correction model approach," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 7(1), October.
    18. repec:oup:ajagec:v:99:y:2017:i:5:p:1344-1361. is not listed on IDEAS
    19. Davids, Tracy & Schroeder, Kateryna G. & Meyer, Ferdinand & Chisanga, Brian, 2015. "Regional Price Transmission in Southern African Maize Markets," Proceedings Issues, 2014: Trade and Societal Well-Being, December 13-15, 2015, Clearwater Beach, Florida 229602, International Agricultural Trade Research Consortium.
    20. Ankamah-Yeboah, Isaac, 2012. "Spatial Price Transmission in the Regional Maize Markets in Ghana," MPRA Paper 49720, University Library of Munich, Germany.
    21. Sitko, Nicholas J. & Jayne, T.S., 2014. "Exploitative Briefcase Businessmen, Parasites, and Other Myths and Legends: Assembly Traders and the Performance of Maize Markets in Eastern and Southern Africa," World Development, Elsevier, vol. 54(C), pages 56-67.

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