Trends in Food Prices, Marketing Margins, and Wage Rates in Kenya, Malawi, Mozambique, and Zambia

Type Conference Paper - “Food and Financial Crises and their Impacts on Achievement of the Millennium Development Goals in Africa
Title Trends in Food Prices, Marketing Margins, and Wage Rates in Kenya, Malawi, Mozambique, and Zambia
Publication (Day/Month/Year) 2009
City New York
Country/State USA
URL in Food Prices, Marketing​Margins, and Wage Rates_Apr. 2009.pdf?sequence=1
The world food and financial crises threaten to undermine the real incomes of urban consumers in
eastern and southern Africa. This study investigates patterns in staple food prices, wage rates, and
marketing margins for urban consumers in Kenya, Malawi, Mozambique, and Zambia between 1993 and
2009. There is high correlation among wage rate series for various government and private sector
categories. We find that average formal sector wages rose at a faster rate than retail maize meal and
bread prices in urban Kenya and Zambia between the mid-1990s and 2007. Although the 2007/8 food
price crisis partially reversed this trend, the quantities of staple foods affordable per daily wage in urban
Kenya and Zambia during the 2008/9 marketing season were still roughly double their levels of the mid-
1990s. The national minimum wage in Mozambique also grew more rapidly than rice and wheat flour
prices in Maputo from the mid-1990s through the 2004/5 and 2006/7 marketing seasons, respectively.
During the 2008/9 marketing season, Maputo minimum wage earners’ rice and wheat flour purchasing
power was still higher than in the mid-1990s and roughly similar to levels at the millennium. These
findings obtain for formal sector wage earners in Kenya and Zambia and minimum wage earners in
Mozambique only. The majority of the urban labor force in these countries is employed in the informal
sector; therefore, the general conclusion of improved food purchasing power over the past 15 years may
not hold for a significant portion of urban workers. Maize marketing margins trended downward
between 1994 and 2004 in urban Kenya, Malawi, and Zambia, while wheat marketing margins declined
only in Zambia. For the public sector, important strategies for keeping food prices at tolerable levels
include strengthening and improving crop forecasting and the food balance sheet approach for
estimating need for imports, facilitating imports in a timely manner when needed, and ensuring the
continued availability of low-cost staple food options for urban consumers through small-scale
processing and marketing channels.

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