Food crisis, inflation: the Sahel under siege

lThe countries of the Sahel and West Africa are facing a food and nutrition crisis of exceptional magnitude. “Hunger and malnutrition could affect 38.3 million people by June if appropriate measures are not taken,” warns the Sahel and West Africa Club. The situation in the Sahel countries has been deteriorating for three years now. Bad climatic conditions are combined with conflict and serious insecurity leading to mass displacement of the population, especially in Mali and Burkina Faso.

In Niger, grain production fell by almost 40%, in Mali by 15% and in Burkina Faso by 10%. “The markets are well supplied, but the rise in food prices is continuing and accelerating; it is 50% higher than the five-year average in some countries (Burkina Faso, Liberia, Mali, Mauritania, Niger, Nigeria and Sierra Leone). These price spikes are fueled by economic inflation in some Gulf of Guinea countries, production declines in the 2021-2022 campaign, the security crisis, the rise in world prices for agricultural products, but also the persisting barriers to regional trade (ban on exports of food products taken by certain governments, harassment on the road and illegal taxation, etc.). The conflict in Ukraine is an additional factor accentuating these increases,” explains the Club du Sahel.

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Transfer Mechanisms

According to the Food and Agriculture Organization of the United Nations (FAO), in March the food price index reached its highest level since its inception in 1990, up 12.6% compared to February, this increase is 17% for cereals, 23% for oil and 6.7% for sugar.

As in 2008, energy prices have risen, which has led to an increase in the price of food products,” said Franck Galtier, political economy researcher at the Center for International Cooperation in Agricultural Research for Development (CIRAD). The recovery after Covid has pushed up energy prices in the international market. This increase was then passed on to maize and indirectly to wheat, because of their strong substitutability. “The transfer takes place through two channels, the researcher notes. Those of agricultural inputs and in particular nitrogen fertilizers (produced from natural gas) which have experienced strong price increases as a result of the increase in the gas price. The second channel, more importantly, is through biofuels. A huge amount of corn produced in the United States is turned into agrofuel. If the price of oil rises, so will the price of biofuels, which has consequences for the price of maize and rapeseed. †

Imported inflation

In terms of inflation, West Africa has not been spared. Food prices have also risen. Unlike 2008, inflation has no direct impact on the price of rice, a grain widely consumed in West African cities.

In the sub-region, wheat is mainly consumed in cities and imported maize is intended for poultry feed in the context of industrial agriculture. For this type of breeding, which is usually located near cities, it is easier to obtain supplies from the international market. Locally produced corn is used for household food consumption.

If the price of corn can influence the price of local corn internationally, a second factor of increase in local prices has arisen with the increase in the price of inputs. “African producers have very little access to credit and agricultural services, except in cotton-growing areas. Corn production in these areas benefits from credit granted for inputs at the beginning of the cotton season. Some of the purchased inputs are used for other crops such as maize. It is also possible to grow maize on the same plot after the cotton harvest and thus benefit from the fertilizers that were previously used,” explains Franck Galtier.

Cotton production has been disrupted this year by a shortage of inputs and will likely be so next year, given the rise in input prices and ongoing difficulties in obtaining supplies. “This crisis is likely to resolve in the long run,” Franck Galtier is concerned.

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Fight against inflation

In an effort to contain inflation, states in the subregion are taking action by lowering taxes on sensitive imported products such as wheat and fuel. These policies, which are effective in the short term, are much less effective in the medium term, as they put pressure on fiscal revenues. “In addition, grain importers, often in an oligopoly position, do not always play along and do not completely postpone tax cuts,” emphasizes Franck Galtier, who also notes that there will be no increase at the pump for the time being and therefore not too much effect on the transport costs for the hinterland countries. In the medium and long term, it is difficult for West African states to maintain these tax cuts, as the decline in their revenues threatens to penalize the financing of public services and investment.

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Short-term solutions for the international community

Beyond emergency aid pledges, the international community, especially Europe, may decide to increase wheat and maize production. A good solution? Not at all. Rather a false good solution. “Agribusiness lobbies are preaching in favor of this position, allowing them to alleviate already weak environmental restrictions, and in particular cultivate the 4% set-aside land imposed by the European Union. The Common Agricultural Policy is already very favorable for open-field crops with direct support to major wheat producers,” emphasizes Franck Galtier.

Another option is possible. Wheat and maize exports affected by the war in Ukraine amount to 85 million tons. This represents 1/5 of the trade in the international market. According to the CIRAD researcher, recalling the strong substitutability between wheat and maize, “It is sufficient to take from the quantities of maize produced for biofuels 140 million tons in the United States, ie half, 85 million tons, and to divert to food market, to cover the missing quantities and reduce the pressure on grain prices”. The principle is the same for sunflower oil. War-affected exports amount to 6 million tons, mainly from Ukraine, the largest producer “The European Union produces 15 million tons, mainly rapeseed. If we take half, we erase the lack of oil exported by Ukraine,” he explains.

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Storage Policy

Faced with repeated food crises, West African states have pursued storage policies that have evolved over time since the 1970s. Sahel states have built up public stocks. Whereas in the beginning 15% of purchases – mainly grains – were stored, today barely 1% ends up in national stocks. Liberalism and structural adjustment policies have been there. However, since the crises of 2005 and especially 2008, the Sahel countries have sought to strengthen their public stocks. “In addition to the first reserves, a second stock is built, co-managed by the countries and the new partners (China, India, Japan, etc.), but by adding these two stock levels together, we arrive at a maximum of 1 .5 – 2%”, explains Franck Galtier.

At the same time, a country like Mali has also created more than 700 decentralized public stocks managed by the country’s 700 municipalities. Burkina Faso and Niger have established grain banks in village communities. Even if stocks of millet and sorghum remain very low, their proximity is reassuring to communities.

A third phase has been added: the Community of West African States Regional Reserve Project (ECOWAS), which complements the systems already in place to manage food crises.

The project involves not only the creation of a new reserve at the regional level, but also the raising of the level of national public stocks. If the current regional stock is 30,000 tons, the goal is to reach 240,000 tons. In the event of a crisis, local stocks should be used as a matter of priority and then replenished with national stocks, which are themselves supported by regional stocks. “This regional stock, a very innovative concept, is closely monitored by the Southern African Development Community (SADC)”, says Franck Galtier with a beaming smile.

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