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let's take a look at *** markets in malawi is a classic example of failed
policy
malawi usa landlocked country in central africa
and it's one of the very poorest nations in the world with the per-capita income
of only about eight hundred dollars
my user corn is extremely important to the economy of malawi
that accounts for sixty percent of their growing land and more importantly
corn accounts for about seventy percent of the calories consumed
so if there is a bad corn harvest
that means some very serious problems for food supply in malawi
the price of corn in malawi has at its lowest during harvest time
which is basically a pool for june
and here you see the price being quite well and the price of corn is at its
highest
at around february which is
right before the harvest
and that gap is about sixty percent
so the price of corn within a year and malawi is extremely volatile
ideally what one would like used to have more trade of corn so in the price of
corn is high corn supplies comes in from other countries or perhaps from stored
inventories
and that this graph is smoothed out someone but that's not the case unless
there is a risk and especially high risk of corn hardship in malawi
in those months when the corn prices are higher
in malawi only about fifteen percent of the corn supplies traded
for the most part that has grown by farmers and then consumed
but markets and institutions for trade or relatively weak in malawi
in recent times there have been some corn price spikes in malawi
due mostly to restricted supply in bad harvests
the policy response to these corn price bikes for the most part has been
counterproductive
for instance the malawi and government has instituted price controls on corn
but when the government artificially holds down the price of corn there's
then much less of an incentive to bring point to market and in the longer run
there's less of an incentive
to grow corn for the next time around
the malawi government has also at times placed export bans on ***
the rationale here is to prevent corn from leaving the country
maybe in the short run this means more court in the country but again we need
to consider the medium and long-term response
and that is when farmers know they cannot export corn in difficult times
they are less likely to grow corn in the first place
what makes even less and sort import bans on corn the malawi and government
has done those two
and finally the malawi and government at times has gone so far
as to try to shut down trading in corn altogether
began simple economics will tell you this will make a quorum supply crisis
that much worse rather than better
fortunately to some extent there are a black markets and malawi
and trading cornice continued even when governments have tried to shut it down
the overall result of these policies as that plentiful corn in malawi has been
harder to come by
it's a very good paper by allison monday and they outlined what is a common cycle
as events
for foreign markets and corn policy in malawi
it's a pretty depressing story but let's just run through it
starting at the beginning we see that very often
prices fall at harvest time less than average
that means is going to be a less good than average corn crop during the
harvest
that also means that after the hardest prices rise
by an especially large degree because corn is especially scarce
uh... the government doesn't recognize that there's a problem but typically
what they do is they officially declare that there is a fully supplied market so
that the government looks good
later on it turns out the corn prices were higher than the government had
wanted them to be and the government comes along and unique uses traitors of
courting corn and blames the problem on the traders
the government also attacks speculators or maybe institutes legal penalties
against it
of course what speculators are doing
is trying to allocate corn to those points in time when the price of corn is
highest
which means the demand for corn is highest
so speculators even out corn price movements over time but commonly they're
attacked by governments for being a major source of the problem
state marketing bodies then intervene and buy up a lot of the supply of corn
that makes corn even more scarce on the market
and then government and malawi makes a further mistake
by trying to ban private treatment corn
that's just about every economic policy mistake and that you know bob
in that quick sequence
but we're not done
let's continue
the government it it made them to reinstate a monopoly of state marketing
bodies on the grounds that there's some kind of crisis and the corn market
at the state marketing bodies don't do a good job of supplying more corn
it's been the case that the government will have a rationing they will be sales
from dwindling public stocks which are handed out and using coupons and other
legal means rather than letting markets allocate the corn
uh... during all this time there's a demand for greater imports typically
from neighboring african nations
and after a delay of months
some of those imports finally arrived
or they are at least ordered that the imports on average or arrive late
that's because while i was as bad procurement policies
and also because the infrastructure and transportation are very bad
and sometimes by the time the imports have arrived
they arrive at exactly the same point in time when the next harvest this coming
along
which is when the importer need at least and that makes the price of corn for
awhile especially lele but one thing malawi could do to have better corn
policy is simply make it easier for imports to arise more quickly rather
than banning and taxing and trying to limit imports through the force of law
that's all amounts will the basically it is a story of hunger
and it is a story of hunger because with that in this kind of policies
these are not policies which are defended by any serious economists
but they're a good example of how around the world
government policies toward agriculture are often quite irrational
the analysis of this video has drawn on an excellent paper by frank ellis and
elizabeth mom dot
seasonal food crises and policy responses
and narrative account of three food security crises in malawi
available online