Families with undiversified livelihoods must survive all year long mainly on the crops that they consume as food and sell for income, and a single failed harvest can destitute a poor family with limited savings or assets. Where markets are fragmented, food supplies are highest and prices are lowest just after the harvest, but this pattern reverses in the ‘hungry season’ before the next harvest comes in. In the 1980s, Robert Chambers and others wrote about the lethal combination of depleted granaries, rising food prices and high prevalence of diseases like malaria and diarrhoea, that characterises the rainy season months before the main annual harvest.
What did governments do about seasonality?
African governments knew all about seasonality, and had institutional mechanisms and policies to deal with it. Many governments maintained a ‘strategic grain reserve’, which allowed them to respond not only to critical food shortages but also to seasonal fluctuations in food availability and prices.
Across Africa – from Malawi and Zimbabwe in the south to Ethiopia and Kenya in the east, to Ghana and Senegal in the west – agricultural marketing parastatals purchased staple cereals cheaply after the harvest, stored it for 6-8 months then sold it back on local markets at cost price.
These ‘open market operations’ aimed at smoothing food supplies and dampening price rises between the harvest and hungry seasons. Many governments also introduced pan-territorial and pan-seasonal food prices. All farmers were paid the same ‘floor’ price for their harvest, no matter how far they lived from transport routes and markets, while consumers were protected against high food prices by subsidies on staple goods that set a ‘ceiling’ on seasonal price rises.
Unfortunately for poor rural Africans, these policies contradicted the basic principles of neo-liberal ‘Washington consensus’ thinking, which declared institutions like parastatals and grain reserves to be inefficient and corrupt, and policies like producer and consumer price subsidies to be fiscally unaffordable in poor countries. More generally, the Bretton Woods agencies decreed that public interventions in markets undermine incentives for private traders. Accordingly, the activities of parastatals were scaled down, grain reserves were abolished or run on a semi-commercial basis, and subsidies were phased out. The intention was to provide incentives for traders to step in and provide ‘market-oriented food security’. In most cases, they didn’t.
Why is seasonality back on the policy agenda?
Seasonality never went away, of course, but when the institutional and policy pillars that had been deployed to deal with it were removed, it was apparently forgotten about by policy-makers. Only when recent food crises in Africa exposed the inability of public actors to protect the rural poor against production and market failures did it become clear once again that many Africans face a food crisis every year, when their granaries are emptied and food prices soar. In 2001/02, southern Africa suffered its worst food crisis in living memory. Experts concurred that the problem was not the size of the food gap, which was not unusually large, but the problems that market-dependent families faced in accessing food during the hungry season, due to unprecedented maize price rises. A massive humanitarian food aid operation was mobilised too late to prevent loss of life, which peaked when maize prices peaked in early 2002. Giving evidence to the UK Parliament’s ‘Inquiry into the Humanitarian Crisis in Southern Africa’, one expert witness remarked: “If you had stabilized the price of maize in 2001 in Malawi no crisis would have occurred.”
What are governments doing this time?
Governments and international donors and NGOs are responding differently to seasonality now. Instead of mandated agencies implementing food security policies, they are relying increasingly on targeted cash transfer projects. In Ethiopia, the Productive Safety Net Programme is delivering cash (or food), usually with a work requirement, to 8 million beneficiaries for up to 5 years. These transfers are supposed to be regular and predictable for the 4-5 months of food shortage leading up to the annual harvest. Kenya is also piloting seasonal cash transfer projects in rural areas. In Malawi, Oxfam GB and Concern Worldwide delivered ‘emergency cash transfers’ to 11,000 households between December 2005 and the harvest of April 2006, following poor harvests in 2005.
Why are cash transfers a ‘fourth best’ solution?
There is enormous enthusiasm for cash transfers among donors, NGOs and some governments in Africa, and early impact assessments confirm that they bring multiple benefits to beneficiaries, in terms of protecting food consumption and facilitating household investment in farming and small enterprises. It is less clear that these relatively small injections of cash into a minority of households in selected rural communities are having any discernible impact on local markets and economies, in terms of attracting traders and smoothing food prices over space and time.
More fundamentally, we would question whether cash transfers are adequate and appropriate for addressing the ‘seasonal food crisis’ that millions of Africans face each year. In fact, we would suggest that cash transfers are only a ‘fourth best’ solution. A ‘first best’ solution is to prevent subsistence crises from occurring at all, through strengthening production systems (e.g. introducing irrigation to reduce dependence on unreliable rainfall), strengthening markets (to minimise supply failures), and reducing chronic poverty (to minimise demand failures).
A ‘second best’ option would be to strengthen insurance mechanisms against the impacts of weather shocks. India’s Rural Employment Guarantee Programme is one example. Another is weather-based insurance – currently being piloted in Ethiopia, Kenya and Malawi – whereby payouts to countries or farmers are triggered by rainfall below a specified volume.
‘Third best’ is to intervene in input and output markets to correct for market failures. Although market interventionism remains unfashionable with most donors, many African governments are insisting on subsidising fertiliser, maintaining buffer stocks and retaining parastatal agencies for the ‘social function’ of protecting household food security. Innovative approaches are also being tested, such as using futures markets to ensure access to food imports and reduce price uncertainty. (Malawi bought a call option on the South African commodity exchange in 2005, saving up to US$90 on each ton of maize imported, at a cost of US$25 per ton.)
Cash handouts to some people affected by seasonality and food crises is a ‘fourth best’ solution. Apart from the inevitable targeting errors (exclusion of many individuals who need assistance, inclusion of others who don’t), compensating selected individuals for structural problems – i.e., underperforming agriculture compounded by market failures – does little to address the underlying causes. Cash transfers certainly have potential (though still largely unproven) advantages over food aid, not least by facilitating investment in agriculture and stimulating local economies, rather than undermining production and trade. Nonetheless, cash transfers should not be promoted as a projectised alternative to systematic efforts to tackle agricultural seasonality, specifically, policies that strengthen agricultural production, build input and output markets and rural infrastructure, and provide effective and comprehensive insurance against livelihood shocks.
by Stephen Devereux
Future Agricultures briefing: Promoting Agriculture for Social Protection or Social Protection for Agriculture?
Emergency cash transfers – key lessons from Malawi and Zambia
Powerpoint: Productive Safety Net Programme (PSNP)