West and Central Africa: WFP Regional Markets Update: January 2018
• Coarse grain prices will be above their five-year average in most countries in 2018
• Below average forage and water availability in the major livestock producing countries
• Mauritania is currently facing an impending drought crisis and its Central Bank brought into circulation the new Ougiya currency unit
• Nigeria returns to growth, but economy remains fragile
MARKET TRENDS IN THE SAHEL
In parts of the Sahel, the 2017 agro-pastoral season was characterized by poor rainfall distribution in time and space. In January 2018, two opposing market trends can be observed. Agricultural production estimates suggest an increase of 6%, while biomass deficits are growing and coarse grain price levels continue to be above their 5-year average.
Preliminary estimates show aggregate cereal production (including milled rice, maize, and millet/sorghum) at 68.3 million MT for 2017/18, 6% above 2016/17, and 14% above average (PREGEC, November 2017). Figures 3 to 6 also show that production estimates vary by country and by commodity. Final production figures could be lower than the current projections due to the reported rain deficits and current price levels. Rice and maize production is well above average, while millet and sorghum production is stagnant at average levels in the region, except in the northern part of the western basin. This trend is mainly driven by the decrease in the share of area devoted to millet production, as farmers have switched to higher yielding and more profitable crops (WFP; FEWSNET 2017, Regional Market and Supply Outlook). Finally, despite political efforts, West and Central Africa remains highly deficient in rice production.
Even though markets in the region are generally well supplied through current crops and cross-border flows, price decreases usually observed during the harvest period were lower or have not taken place.
Commodity prices have remained higher than the average of the last five years in almost all countries except in Chad and Cape Verde for both cereals and tubers. This is very unusual and should be considered as an anomaly.
This price increase is explained by the inflation in Nigeria, Ghana, Sierra Leone and Liberia, but also due to localized cereal deficits, traders’ speculation and early depletion of stocks. An atypically high demand from Niger, which is normally covered by Nigeria, has also been registered. Throughout marketing year 2017/18 it is expected that staple food prices will remain above average in most countries (WFP; FEWSNET 2017, Regional Market and Supply Outlook).
High food prices are putting pressure on vulnerable households and pastoralists and signal an earlier (MarchApril) onset and extended 2018 lean season. Particularly Mauritania, Chad and Niger are affected. This is compounded by economic crisis, such as in Chad and Niger, and intensifying and expanding conflict in northern/ central Mali, northern Burkina Faso and around Lake Chad.
In Mali, for example, compared to December 2016, terms of trade goats to cereals are strongly deteriorating by - 15% and unfavorable to breeders. Sharp declines in terms of trade goat to cereals are observed in most circles of the northern regions including Goundam and Timbuktu (-40%), Youwarou (-34%), Kidal (-32%) and Gao (-30%) (WFP, Mali 2018).