Wheat consumption in sub-Saharan Africa: Trends, drivers, and implications for food security and policy

Nicole M. Mason, T.S. Jayne, & Bekele Shiferaw Michigan State University & CIMMYT Addis Ababa, Ethiopia 8 October 2012

0

5

10

15

20

25

30

35

40

45

Per

ca

pit

a co

nsu

mp

tio

n (

kg)

Wheat Maize Rice (milled equivalent)

Wheat consumption in SSA rapidly

2000-09: 650,000 MT/year (4.2%)

Source: FAOSTAT Commodity & Population databases

Per capita consumption, SSA

-20

-15

-10

-5

0

5

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Net

exp

ort

s (m

illio

n M

T)

Wheat Maize Rice (milled equivalent)

Growing structural deficit - 3 main staples

Source: FAOSTAT Trade database

dependence on imported staples +

world prices =

import bills

Net exports, SSA

Rising importance of wheat in SSA staple food diets possible dilemma

A major pathway for broad-based economic growth is structural transformation; key part is rural-urban synergies

BUT, urban consumers’ demand for wheat met mainly by imports or production from large-scale commercial farms (excl. Ethiopia)

– Minimal rural/urban synergies

OUTLINE

1. Introduction

2. Trends in net imports & food consumption – key differences across regions

3. Expenditures on wheat vs. other staples

4. What is driving rising demand for wheat?

5. Conclusions & policy implications

The “big 5”: 53% of wheat net imports

5 countries – most of SSA wheat imports (2000-09)

1. Nigeria (23.0%)

2. Sudan (10.7%)

3. Ethiopia (8.2%)

4. South Africa (6.6%)

5. Kenya (4.9%)

Source wheat mainly from US (34%), Argentina (15%), Australia (8%)

– Severe droughts, wheat prices

64% of total consumption

44% of population

25.6

21.4

19.0

7.8

0

5

10

15

20

25

30

Per

ca

pit

a w

hea

t co

nsu

mp

tio

n (

kg)

East

Southernexcl. RSAWest

Central

Sources: FAOSTAT Commodity Balances & Population databases

Per capita wheat consumption

Trends in wheat consumption

P.c. consumption except in South & North Africa

167.9

60.9

0

20

40

60

80

100

120

140

160

180

200

Per

cap

ita

wh

eat

co

nsu

mp

tio

n (

kg)

NorthAfrica

SouthAfrica

Sources: FAOSTAT Commodity Balances & Population databases

Per capita wheat consumption

Trends in wheat consumption

P.c. consumption except in South & North Africa

Supplies of main staple grains faster than population since early 1990s

P.c. wheat & rice consumption

Marginal , if any, in p.c. maize consumption ( in West Africa)

Good news for food security (availability)

– Wheat playing important role

0%

10%

20%

30%

40%

50%

60%

70%

1 2 3 4 5 Total

% o

f w

he

at +

mai

ze +

ric

e e

xpe

nd

itu

res

Consumption quintile

Wheat

Maize

Rice

Wheat becoming #1 staple in many places in SSA Lusaka, Zambia – 2007/08

Source: Mason & Jayne (2009)

0%

10%

20%

30%

40%

50%

60%

70%

1 2 3 4 5 Total

% o

f w

he

at +

mai

ze +

ric

e e

xpe

nd

itu

res

Consumption quintile

Wheat

Maize

Rice

Wheat becoming #1 staple in many places in SSA Lusaka, Zambia – 2007/08

Source: Mason & Jayne (2009)

Similar patterns: Kitwe, Zambia Nairobi, Kenya

Maputo, Mozambique

0%

10%

20%

30%

40%

50%

60%

70%

80%

Urban poor Urban non-poor

Rural poor Rural non-poor

% o

f w

he

at +

tef

f +

mai

ze +

so

rgh

um

ex

pen

dit

ure

s

Location/income group

Wheat

Teff

Maize

Sorghum

Wheat dominates (slightly) among rural non-poor in Ethiopia 2004/05

Source: Berhane et al. (2011)

Wheat expenditure shares in ESA: general patterns (excl. Ethiopia)

Non-poor > poor

Urban > rural

Potential drivers of rising wheat demand

1. wheat prices relative to other staples

2. incomes

3. Population growth

4. Urbanization

5. opportunity cost of time, esp. women

6. Food aid

0.35

0.40

0.45

0.50

0.55

0.60

0.65

0.70

0.75

0.80

Wo

rld

wh

ea

t/rice

price

ra

tio

1.0

1.1

1.2

1.3

1.4

1.5

1.6

Wo

rld

wh

ea

t/m

aiz

e p

rice

ra

tio

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

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2011

2012

World wheat/maize World wheat/rice (right scale)

wheat prices relative to other staples?

Trends in price ratios – world & retail 9 countries

World price ratios

Source: IMF Primary Commodity Prices database

wheat prices relative to other staples?

Ratio of wheat price : other staple prices

Declining: Nigeria, Kenya, Mozambique, Cameroon

Rising: South Africa, Ethiopia, DRC, Zambia

No significant trend: Mauritania

Rising incomes?

p.c. GDP relative to retail wheat prices – 8 countries

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

Lo

ave

s o

f b

rea

d p

er

GD

P p

er

cap

ita

1994

1995

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1997

1998

1999

2000

2001

2002

2003

2004

2005

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2007

2008

2009

2010

2011

Nigeria Zambia Kenya

Bread purchasing power

No significant trend in other 5 countries

Factors driving wheat consumption in SSA

Regression analysis

45 countries

1980-2009

Dependent variable: total wheat consumption

Zambia Daily Mail

Factors driving wheat consumption in SSA: key findings World prices: Not significant

GDP (income): US$1 million 1.9-4.8 MT (elasticity 0.09-0.22)

Total population: 1,000 people 30-50 MT – 670,000-1.12 million MT increase/year 2010-20

– 770,000-1.28 million MT increase/year 2020-30

Urbanization: Not significant

Ratio of female-to-male labor force participation: 1 percentage point 5,000-6,200 MT

Food aid (1-3 year ago): 1 MT lagged food aid 0.69 MT consumption

Conclusions & policy implications

1. SSA faces deepening staple food deficit

– Much of gap being filled by imported wheat

2. Wheat consumption in SSA rapidly

– population, incomes, women’s opp. cost of time

– Imported or large-scale commercial farms (excl. Ethiopia)

– Unlikely to generate rural-urban synergies or broad-based economic growth

Policy options for meeting domestic grain demand

A. Neutral – no tariffs, protection, taxes, etc. on imported staples

– Large imports of wheat/rice continue

– Pros

• Food prices capped at import parity

• Consumer sovereignty

– Cons

• Drain on foreign exchange

• Minimal rural/urban synergies

Policy options for meeting domestic grain demand B. Trade policy (tariffs, protection) to increase

relative price of imported staples – Goals

• Shift consumption toward domestically produced staples • incentives for domestic staple food production • rural/urban synergies

– Pros • IF supply AND demand domestic staples synergies • government revenue (tariffs)

– Cons • IF ONLY supply OR ONLY demand negative effects on net

sellers or net buyers • food bills for consumers of imported staples (non-poor) • consumer sovereignty

Policy options for meeting domestic grain demand C. Promote domestic production through non-

distortionary measures

– Rural infrastructure, irrigation, ag R&D, extension, market information

– Pros

• IF supply AND demand domestic staples synergies

• Investments promote agricultural growth & poverty reduction

• Consumer sovereignty

– Cons

• IF ONLY supply prices negative effects on net sellers (non-poor)

• Time lag

Policy options for meeting domestic grain demand D. Promote value addition/processing of staples

grown by smallholders to improve convenience – Key driver of wheat demand: opportunity cost of time

– prep time, convenience of coarse grains

– Blending domestic staples w/ wheat flour

– Pros • Potential for rural/urban synergies (incl. urban

employment?)

• Consumer sovereignty

– Cons • Consumer demand uncertain

• Investors willing to take risk?

Policy options for meeting domestic grain demand

Not mutually exclusive (or exhaustive)

Policymakers – identify objectives and weigh pros/cons for different types of HHs

Reuters/Barry Malone

Thank you! Questions?

Nicole Mason (masonn@msu.edu)

Acknowledgements Funding support from USAID/Zambia & CIMMYT

Research assistance from Arthur Shipekesa (IAPRI)

Price data and information on wheat market conditions in various countries: Henry Akaeze, Antony Chapoto, Cynthia Donovan, Francis Karin, Marlene Labuschagne, Mary Mathenge, Asfaw Negassa, Sonja Perakis, Solomon Tembo, & Lulama Ndibongo Traub