Department of Agricultural, Food, and Resource Economics Food Security Group

IDWP 98. Nicole Mason, T.S. Jayne, Cynthia Donovan, and Antony Chapoto. Michigan State University. 2009. Are Staple Foods Becoming More Expensive for Urban Consumers in Eastern and Southern Africa? Trends in Food Prices, Marketing Margins, and Wage Rates in Kenya, Malawi, Mozambique, and Zambia

EXECUTIVE SUMMARY

The world food and financial crises threaten to undermine the real incomes of urban
consumers in eastern and southern Africa. This study investigates patterns in staple food
prices, wage rates, and marketing margins for urban consumers in Kenya, Malawi,
Mozambique, and Zambia between 1993 and 2009.

There is high correlation among wage rate series for various government and private sector
categories. We find that average formal sector wages rose at a faster rate than retail maize
meal and bread prices in urban Kenya and Zambia between the mid-1990s and 2007.
Although the 2007/08 food price crisis partially reversed this trend, the quantities of staple
foods affordable per daily wage in urban Kenya and Zambia during the 2008/09 marketing
season were still roughly double their levels of the mid-1990s. The national minimum wage
in Mozambique also grew more rapidly than rice and wheat flour prices in Maputo from the
mid-1990s through the 2004/05 and 2006/07 marketing seasons, respectively. During the
2008/09 marketing season, Maputo minimum wage earners’ rice and wheat flour purchasing
power was still higher than in the mid-1990s and roughly similar to levels at the millennium.
These findings obtain for formal sector wage earners in Kenya and Zambia and minimum
wage earners in Mozambique only. The majority of the urban labor force in these countries is
employed in the informal sector; therefore, the general conclusion of improved food
purchasing power over the past 15 years may not hold for a significant portion of urban
workers. Maize marketing margins trended downward between 1994 and 2004 in urban
Kenya, Malawi, and Zambia, while wheat marketing margins declined only in Kenya and
Zambia.

For the public sector, important strategies for keeping food prices at tolerable levels include
strengthening and improving crop forecasting and the food balance sheet approach for
estimating need for imports, facilitating imports in a timely manner when needed, and
ensuring the continued availability of low-cost staple food options for urban consumers
through small-scale processing and marketing channels.