Spatial and Temporal Maize Price Analysis in East Africa
Maize is the major food crop and an important cash crop in East Africa, but yields have not increased in the last years. Maize prices fluctuate heavily both over time, causing price insecurity which hampers investment decisions, and over space which, combined with limited knowledge of that fluctuation, reduces opportunities to market surplus. In this paper, temporal and spatial price volatility is analyzed, based on monthly maize prices from various markets in East Africa, including 28 markets in Kenya. The hypothesis that the market liberalization of the 1990s increased efficiency and decreased volatility in Kenya is also tested. Preliminary results for Kenyan markets show a clear negative trend, indicating that real maize prices have decreased over time, on average 4% per year. Major factors in price variation are the differences between years, although a distinct one-season effect is demonstrated. Prices are clearly higher in the surplus zone during the high season, but lower otherwise. The coast has higher prices in the lower season. Generally, it can be concluded that price volatility has been decreasing over the years. The liberalization, most likely, has played a positive effect on this trend.
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