Presentation by Dr. Nicole M. Mason (MSU) at Wheat for Food Security in Africa conference, Oct 8, 2012, Addis Ababa, Ethiopia.

1. Wheat consumption in sub-Saharan Africa:
Trends, drivers, and implications for
food security and policy
Nicole M. Mason, T.S. Jayne, & Bekele Shiferaw
Michigan State University & CIMMYT
Addis Ababa, Ethiopia
8 October 2012

2. Wheat consumption in SSA  rapidly
 2000-09: 650,000 MT/year (4.2%)
45
40
Per capita consumption (kg)
35
30
Per capita consumption, SSA
25
20
15
10
5
0
Wheat Maize Rice (milled equivalent)
Source: FAOSTAT Commodity & Population databases

3. Growing structural deficit - 3 main staples
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
5
Net exports, SSA
0
Net exports (million MT)
-5
-10  dependence on imported staples
+
 world prices
-15
=
 import bills
-20
Wheat Maize Rice (milled equivalent)
Source: FAOSTAT Trade database

4. Rising importance of wheat in SSA
staple food diets  possible dilemma
 A major pathway for broad-based economic
growth is structural transformation; key part
is rural-urban synergies
 BUT, urban consumers’ demand for wheat
met mainly by imports or production from
large-scale commercial farms (excl. Ethiopia)
– Minimal rural/urban synergies

5. OUTLINE
1. Introduction
2. Trends in net imports & food consumption –
key differences across regions
3. Expenditures on wheat vs. other staples
4. What is driving rising demand for wheat?
5. Conclusions & policy implications

6. The “big 5”: 53% of wheat net imports
 5 countries – most of SSA wheat imports (2000-09)
1. Nigeria (23.0%)
 64% of total
2. Sudan (10.7%)
consumption
3. Ethiopia (8.2%)
 44% of population
4. South Africa (6.6%)
5. Kenya (4.9%)
 Source wheat mainly from US (34%), Argentina
(15%), Australia (8%)
– Severe droughts,  wheat prices

7. Trends in wheat consumption
 P.c. consumption  except in South & North Africa
30
Per capita wheat consumption (kg)
Per capita wheat consumption
25 25.6
21.4
20
19.0 East
15 Southern
excl. RSA
10 West
7.8
Central
5
0
Sources: FAOSTAT Commodity Balances & Population databases

8. Trends in wheat consumption
 P.c. consumption  except in South & North Africa
200
Per capita wheat consumption
Per capita wheat consumption (kg)
180
167.9
160
140 North
Africa
120
100 South
80 Africa
60 60.9
40
20
0
Sources: FAOSTAT Commodity Balances & Population databases

9. Supplies of main staple grains  faster than
population since early 1990s
 P.c. wheat & rice consumption 
 Marginal , if any, in p.c. maize consumption
( in West Africa)
 Good news for food security (availability)
– Wheat playing important role

10. Wheat becoming #1 staple in many places
in SSA
 Lusaka, Zambia – 2007/08
70%
% of wheat + maize + rice expenditures
60%
50%
40%
Wheat
30% Maize
20% Rice
10%
0%
1 2 3 4 5 Total
Consumption quintile
Source: Mason & Jayne (2009)

11. Wheat becoming #1 staple in many places
in SSA
 Lusaka, Zambia – 2007/08
70%
% of wheat + maize + rice expenditures
60%
50% Similar patterns:
Kitwe, Zambia
40%
Nairobi, Kenya Wheat
30%
Maputo, Mozambique Maize
20% Rice
10%
0%
1 2 3 4 5 Total
Consumption quintile
Source: Mason & Jayne (2009)

12. Wheat dominates (slightly) among rural
non-poor in Ethiopia
 2004/05
80%
% of wheat + teff + maize + sorghum
70%
60%
expenditures
50%
40% Wheat
Teff
30%
Maize
20%
Sorghum
10%
0%
Urban poor Urban non- Rural poor Rural non-poor
poor
Location/income group
Source: Berhane et al. (2011)

13. Wheat expenditure shares in ESA:
general patterns (excl. Ethiopia)
 Non-poor > poor
 Urban > rural

14. Potential drivers of rising wheat demand
1.  wheat prices relative to other staples
2.  incomes
3. Population growth
4. Urbanization
5.  opportunity cost of time, esp. women
6. Food aid

15.  wheat prices relative to other staples?
 Trends in price ratios – world & retail 9 countries
1.6 0.80
World price ratios
0.75
1.5
0.70
World wheat/maize price ratio
World wheat/rice price ratio
1.4 0.65
0.60
1.3
0.55
1.2 0.50
0.45
1.1
0.40
1.0 0.35
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
19 9
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
20 8
20 9
20 0
20 1
12
8
8
8
8
8
8
8
8
8
8
9
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
1
1
19
World wheat/maize World wheat/rice (right scale)
Source: IMF Primary Commodity Prices database

16.  wheat prices relative to other staples?
Ratio of wheat price : other staple prices
 Declining: Nigeria, Kenya, Mozambique,
Cameroon
 Rising: South Africa, Ethiopia, DRC, Zambia
 No significant trend: Mauritania

17. Rising incomes?
 p.c. GDP relative to retail wheat prices – 8 countries
2400
2200
Bread purchasing power
Loaves of bread per GDP per capita
2000
1800
1600
1400
1200
No significant trend in other 5 countries
1000
800
600
400
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
20
Nigeria Zambia Kenya

18. Factors driving wheat consumption in SSA
 Regression analysis
 45 countries
 1980-2009
 Dependent variable: Zambia Daily Mail
total wheat consumption

19. Factors driving wheat consumption in SSA:
key findings
 World prices: Not significant
 GDP (income): US$1 million  1.9-4.8 MT
(elasticity 0.09-0.22)
 Total population: 1,000 people  30-50 MT
– 670,000-1.12 million MT increase/year 2010-20
– 770,000-1.28 million MT increase/year 2020-30
 Urbanization: Not significant
 Ratio of female-to-male labor force participation:
1 percentage point  5,000-6,200 MT
 Food aid (1-3 year ago): 1 MT lagged food aid 
0.69 MT consumption

20. Conclusions & policy implications
1. SSA faces deepening staple food deficit
– Much of gap being filled by imported wheat
2. Wheat consumption in SSA  rapidly
–  population, incomes, women’s opp. cost of time
– Imported or large-scale commercial farms (excl.
Ethiopia)
– Unlikely to generate rural-urban synergies or broad-
based economic growth

21. Policy options for meeting domestic grain
demand
A. Neutral – no tariffs, protection, taxes, etc. on
imported staples
– Large imports of wheat/rice continue
– Pros
• Food prices capped at import parity
• Consumer sovereignty
– Cons
• Drain on foreign exchange
• Minimal rural/urban synergies

22. Policy options for meeting domestic grain
demand
B. Trade policy (tariffs, protection) to increase
relative price of imported staples
– Goals
• Shift consumption toward domestically produced staples
•  incentives for domestic staple food production
•  rural/urban synergies
– Pros
• IF  supply AND  demand domestic staples   synergies
•  government revenue (tariffs)
– Cons
• IF ONLY  supply OR ONLY  demand  negative effects on net
sellers or net buyers
•  food bills for consumers of imported staples (non-poor)
•  consumer sovereignty

23. Policy options for meeting domestic grain
demand
C. Promote domestic production through non-
distortionary measures
– Rural infrastructure, irrigation, ag R&D, extension, market
information
– Pros
• IF  supply AND  demand domestic staples   synergies
• Investments promote agricultural growth & poverty reduction
• Consumer sovereignty
– Cons
• IF ONLY  supply  prices  negative effects on net sellers
(non-poor)
• Time lag

24. Policy options for meeting domestic grain
demand
D. Promote value addition/processing of staples
grown by smallholders to improve convenience
– Key driver of wheat demand:  opportunity cost of time
–  prep time,  convenience of coarse grains
– Blending domestic staples w/ wheat flour
– Pros
• Potential for  rural/urban synergies (incl.  urban
employment?)
• Consumer sovereignty
– Cons
• Consumer demand uncertain
• Investors willing to take risk?

25. Policy options for meeting domestic grain
demand
 Not mutually exclusive (or exhaustive)
 Policymakers – identify objectives and weigh
pros/cons for different types of HHs
Reuters/Barry Malone

26. Thank you! Questions?
Nicole Mason (masonn@msu.edu)
Acknowledgements
 Funding support from USAID/Zambia & CIMMYT
 Research assistance from Arthur Shipekesa (IAPRI)
 Price data and information on wheat market conditions in
various countries: Henry Akaeze, Antony Chapoto, Cynthia
Donovan, Francis Karin, Marlene Labuschagne, Mary
Mathenge, Asfaw Negassa, Sonja Perakis, Solomon Tembo, &
Lulama Ndibongo Traub