This paper assesses the impact of local and regional procurement (LRP) of food aid
on local market prices in Africa. In particular we study maize in Uganda and
Mozambique and beans in Ethiopia. Two complementary modelling approaches are
employed: a vector autoregression (VAR) and a computational model (CM). The VAR
is a reduced-form econometric approach while the CM is a structural simulation
approach. Using two different approaches provides a useful consistency check.
Results from the VAR show average price increases brought about by LRP are
statistically significant and range from 2% to 16%. The size of the average estimated
price effects are economically meaningful for maize in Uganda but much smaller
(though still statistically significant) for maize in Mozambique and beans in Ethiopia.
In all three country applications, LRP is estimated to have no effect on price
variability. Results from the CM fall within a 90% confidence bound around results
obtained from the VAR.