ACTESA cautions govts over unstable food prices

ACTESA cautions govts over unstable food prices
By Kabanda Chulu in Maputo, Mozambique
Tue 26 Jan. 2010, 04:00 CAT

THE impact of food prices on the welfare of all citizens and their instability can bring down any powerful government, ACTESA chief executive officer Cris Muyunda has said.

And Mozambican agriculture minister Soares Nhaca has said there is need to devise priority actions for managing food price policies and implementation of instruments aimed at attaining household food security.

During the Agriculture Commodity Trade in Eastern and Southern Africa (ACTESA) policy seminar on food price variability, Dr Muyunda yesterday said food prices had been an issue of economic importance and political sensitivity for a long time.

He said decision makers had the enormous task of managing price stability.

“Food prices should remain attractive to both farmers and consumers and the political survival of those in power should be ensured through stable prices which also play an important precondition for development,” Dr Muyunda said. “Food prices impact on the welfare of all citizens and their instability can bring down powerful governments and the sharp prices in 2008 brought enormous and long-lasting instability in our regional markets hence the need to find effective solutions that will depend on the particular causes of price instability.”

He said there was need to examine comprehensively the various instruments for stabilising food prices and managing the price risk.

“In terms of governance, these instruments can either be marke- based or public. Fundamentally, decision makers should consider instruments such as modernising production and trade structures to take advantage of price differential between food types, locations and times of purchase and sale and controlling of food supply through production of input subsidies,” Dr Muyunda said.

“But which instruments should our governments adopt? Policy makers have the best chance of achieving their objectives if their choice of instruments is based on solid understanding of the functioning of food markets and the effectiveness of different policies and these solutions should attack the problem at its root.”

Officially opening the seminar, Nhaca said there was need to address cereal trade policy options, food prices controls and public stocks for food price stabilisation.

“We should urgently put in place priority actions for managing food price policies and we should prepare ourselves on how to deal with situations as the one that we had with the recent food crises, fuel prices and shocks to the economy as a whole,” said Nhaca. “In Mozambique, the agriculture sector contributes 23 per cent to GDP but it is livelihood base for more than three quarters of the population and for this reason, agriculture remains the focus of our government’s efforts to reduce poverty.”

The seminar is being held under the ACTESA programme on African Agricultural Markets Programme (AAMP) that aims at enhancing the capacity to respond to the challenge of food security in the Common Market for Eastern and Southern Africa (COMESA) region.