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Livestock as an Imperfect Buffer Stock in Poorly Integrated Markets

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  • Lange, Simon
  • Reimers, Malte

Abstract

Livestock holdings in rural areas of the West African Semi-arid Tropics (WASAT) are often substantial yet there is little evidence for precautionary saving in the form of livestock. This paper re-visits farm households' ability to smooth consumption ex post via savings in the form of livestock. Based on data covering Burkina Faso's 2004 drought, we find that livestock sales increase significantly in response to drought with households citing the need to finance food consumption. Some consumption smoothing is achieved via adjustments to grain stocks, but households apparently fail to smooth consumption by adjusting livestock holdings. We argue that this seemingly contradictory finding is largely due to a decrease in relative livestock prices during droughts. This renders selling livestock a costly coping strategy and underlines the need for market integration.

Suggested Citation

  • Lange, Simon & Reimers, Malte, 2015. "Livestock as an Imperfect Buffer Stock in Poorly Integrated Markets," GlobalFood Discussion Papers 200327, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    • Handle: RePEc:ags:gagfdp:200327
    DOI: 10.22004/ag.econ.200327
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    More about this item

    Keywords

    Community/Rural/Urban Development; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety; Food Security and Poverty; Risk and Uncertainty;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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