Comments on: Why has the price of teff trebled? http://www.owen.org/blog/50 Thoughts from Owen in Africa Fri, 12 Mar 2010 06:02:33 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Alex Evans http://www.owen.org/blog/50/comment-page-1#comment-119 Alex Evans Wed, 20 Aug 2008 12:50:29 +0000 http://www.owen.org/blog/50#comment-119 There's also the factor of land availability. Meles was quoted in the FT today inviting Saudi Arabia to lease "hundres of thousands of hectares" of prime agricultural land for food production: see www.ft.com/cms/s/0/8de8a3e0-6e17-11dd-b5df-0000779fd18c.html?nclick_check=1 Would be interesting to know: - Whether this is already happening, and if so to what degree; - What it's likely to do to prices for teff and/or other local staples; - Who's currently using the land that Meles is talking about leasing to the Saudis (i.e. will this involve people who lack formal tenure being turfed off land that they currently farm?) - Who stands to benefit from this investment - i.e. will the rural poor participate in the growth that it produces, or will benefits be concentrated among landowning elites? I suspect the answer to the latter will depend in part on the degree of mechanisation that the Saudis introduce: Gordon Conway's boon The Doubly Green Revolution is interesting on the point that while most aspects of the Green Revolution were on the whole good for poor people (including both consumers and small farmers), mechanisation was heavily inequitable in impacts, especially because of the number of rural landless poor who found themselves out of work. There’s also the factor of land availability. Meles was quoted in the FT today inviting Saudi Arabia to lease “hundres of thousands of hectares” of prime agricultural land for food production: see http://www.ft.com/cms/s/0/8de8a3e0-6e17-11dd-b5df-0000779fd18c.html?nclick_check=1

Would be interesting to know:
- Whether this is already happening, and if so to what degree;
- What it’s likely to do to prices for teff and/or other local staples;
- Who’s currently using the land that Meles is talking about leasing to the Saudis (i.e. will this involve people who lack formal tenure being turfed off land that they currently farm?)
- Who stands to benefit from this investment – i.e. will the rural poor participate in the growth that it produces, or will benefits be concentrated among landowning elites?

I suspect the answer to the latter will depend in part on the degree of mechanisation that the Saudis introduce: Gordon Conway’s boon The Doubly Green Revolution is interesting on the point that while most aspects of the Green Revolution were on the whole good for poor people (including both consumers and small farmers), mechanisation was heavily inequitable in impacts, especially because of the number of rural landless poor who found themselves out of work.

]]> By: Jonathan http://www.owen.org/blog/50/comment-page-1#comment-117 Jonathan Wed, 20 Aug 2008 11:06:52 +0000 http://www.owen.org/blog/50#comment-117 Perhaps you've discovered a Giffen good! Perhaps you’ve discovered a Giffen good!

]]> By: Tim Worstall http://www.owen.org/blog/50/comment-page-1#comment-116 Tim Worstall Wed, 20 Aug 2008 08:55:58 +0000 http://www.owen.org/blog/50#comment-116 Err, public infrastucture investment rasing teff prices. Well, depends. Start with Amartya Sen. Famines occur because of a lack of purchasing power amongst a (or some) groups. So instead of helicoptering money, we run road etc building programs, deliberately aimed at those groups with the purchasing power shortage. X days a month at Y pay, just enough to be able to buy the basics. I believe that the Ethiopian Govt does indeed run such a programme. We've raised the purchasing power of our target group, as we wanted to. This will increase demand for food basics. Food basics rise in price. I'm not saying that this is actually happening of course, just trying to provide a possible chain of events leading from public infrastructure works to a rise in food prices. Err, public infrastucture investment rasing teff prices. Well, depends. Start with Amartya Sen. Famines occur because of a lack of purchasing power amongst a (or some) groups. So instead of helicoptering money, we run road etc building programs, deliberately aimed at those groups with the purchasing power shortage. X days a month at Y pay, just enough to be able to buy the basics.
I believe that the Ethiopian Govt does indeed run such a programme.
We’ve raised the purchasing power of our target group, as we wanted to. This will increase demand for food basics. Food basics rise in price.
I’m not saying that this is actually happening of course, just trying to provide a possible chain of events leading from public infrastructure works to a rise in food prices.

]]> By: Random African http://www.owen.org/blog/50/comment-page-1#comment-114 Random African Tue, 19 Aug 2008 22:59:53 +0000 http://www.owen.org/blog/50#comment-114 It's possible that it's both. At first, a substitution effect shot the prices up and then expectations built it up higher. Barry, The substitution chain starts with corn, in the US. Simply put other consumers have switched to other grains, which led others to switch. For instance, the price of sorghum in Africa shot up a while ago when European farmers started importing it for livestock after they got outpriced on corn. It’s possible that it’s both. At first, a substitution effect shot the prices up and then expectations built it up higher.

Barry,
The substitution chain starts with corn, in the US. Simply put other consumers have switched to other grains, which led others to switch. For instance, the price of sorghum in Africa shot up a while ago when European farmers started importing it for livestock after they got outpriced on corn.

]]> By: barry http://www.owen.org/blog/50/comment-page-1#comment-113 barry Tue, 19 Aug 2008 17:33:38 +0000 http://www.owen.org/blog/50#comment-113 Is this development perhaps related to increased demand for biofuel-related commodities? It's possible that although teff production has increased, it has still fallen relative to corn, etc., for which farmers receive a greater return. If true, the opportunity cost of producing teff has increased, causing farmers to require a higher price for it. I'd also wonder about the effect of (i) birr inflation and (ii) price controls in other staples. But this is all conjecture. Is this development perhaps related to increased demand for biofuel-related commodities? It’s possible that although teff production has increased, it has still fallen relative to corn, etc., for which farmers receive a greater return. If true, the opportunity cost of producing teff has increased, causing farmers to require a higher price for it.

I’d also wonder about the effect of (i) birr inflation and (ii) price controls in other staples. But this is all conjecture.

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