Impacts of the 2016/17 Food Insecurity Response Programme on maize prices

Following dry spells and crop damage from Fall Armyworm, there is great uncertainty about what this year's harvest will look like. In designing the response to this year's needs, lessons can be learned from the impact of last year’s Food Insecurity Response Programme (FIRP). A recent Brown Bag Research Seminar by IFPRI Malawi’s own Bob Baulch (Country Program Leader), Anderson Gondwe and Chiye Chafuwa (Research Analysts) discussed the surprising impacts (or lack thereof) of last year’s humanitarian response on daily maize prices. This work has evolved from a larger evaluation of the FIRP that IFPRI undertook for the Government of Malawi and the United Nations last year.

Photo credit: IFPRI/Malawi

In this evaluation, IFPRI Malawi researchers used daily retail maize price data from IFPRI’s maize price monitoring in 15 large and accessible markets across Malawi, in-kind food and cash distribution data from the World Food Programme (WFP), and cash transfer distribution data from the International NGO Cash Transfer Consortium. This data was used to determine what impact, if any, in-kind food transfers and cash transfers had on daily maize prices during last year’s FIRP, which was of unprecedented scale with about 6.7 million beneficiaries at its peak in January/February 2017. Of these, around 5.0 million people received in-kind food transfers while 1.7 million received cash transfers and/or maize vouchers. Conventional wisdom suggests that in-kind food transfers may flood markets and depress food prices, while cash transfers may increase prices – both of which can be detrimental to households who rely on buying or selling maize in local markets to meet their food needs. However, the results of IFPRI’s pricing analysis showed almost no impact of food distribution and cash transfers on daily maize prices, despite the scale of the response.

One potential explanation for the limited impact is that in-kind beneficiaries had little need to purchase maize, as most of their maize consumption needs were met through direct food transfers or their own maize production. Another possible explanation is that in-kind maize transfers were provided along with other commodities, so beneficiaries did not need to sell some of the food transfers they received to meet their non-maize needs. Meanwhile, sharing of cash transfers may also have diluted their inflationary impact.

A lively discussion session following the presentation began to address knowledge gaps, related to the cross-border maize trade, farm gate maize price data, and the like. Other attendees raised questions about the long-term impacts of food and cash transfers on the chronically poor, as well as the behavior of beneficiaries and traders that have come to expect these types of humanitarian assistance every year. Other questions related to the impacts of social safety net programs on the poor and vulnerable can potentially be answered using data from the newly released fourth Integrated Household Survey (IHS4). Better collaboration and data-sharing between organizations providing humanitarian assistance and researchers is needed for some of these analyses.

Sharing norms, which may have diluted the impact of food and cash distributions on maize prices, will be discussed at an upcoming Brown Bag Research Seminar at IFPRI Malawi on February 5th. For more information about upcoming Brown Bag Research Seminars, see our Save the Date and Upcoming Events pages.

Download the PowerPoint Presentation PDF here (576 KB).