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By Charles Dhewa
African agricultural policymakers have for decades preferred basing their decisions on prices of inputs like fertilizer, fuel, and seed as well as processed food products like bread, sugar, cooking oil, margarine, and others that are considered part of a family’s food basket. This tendency has ignored prices of fresh commodities like leafy vegetables, tomatoes, potatoes, and several others on which the majority of households in both rural and urban areas depend on a daily basis.
At least 25% of an urban household’s daily food budget comprises necessities like leafy vegetables, onion, carrots, and others whose prices can change twice or thrice a week depending on seasons. While it takes many months for prices of processed commodities to be reviewed, such a practice excludes frequent changes in prices of fresh commodities that are consumed daily and constitute more than 25% of the household’s daily meal budget. For instance, if tomatoes constitute 10% of a household’s daily meal budget of USD5, a 300% increase in the price of tomatoes from USD10/crate to USD30/crate, increase the tomato budget for the household by 300%. It means the household will use more of the USD5 to buy the same quantities of tomatoes and forego other necessities. Such changes are very common but these are often not recorded.
The intangible value of prices
In most cases, people have never asked why prices are very important. Prices are attached to many things like property, food, and even knowledge. While price is an intangible commodity, it is one of the best ways of expressing value. Just like commodities, if someone does not eat a certain commodity or product, it has no value. Unless someone sees the importance of a granite stone, it has no value.
Providing price information on a regular basis is searching for consumers interested in the value of particular commodities. If a bundle of vegetables is going for USD1, by calling out prices eMKambo is saying, who is seeking vegetables and prepared to part with USD1 for a bundle? Within a price are resources or a budget for exchanging the commodity and the monetary value. When one parts with a USD1 to buy a bundle of vegetables, there is an opportunity cost in terms of what else could have been bought with the same dollar.
The consumer could buy a drink, ice cream, or anything worth USD1. However, if the consumer’s priority is a bundle of vegetables, it means the buyer sees more benefits in vegetables than in any other commodity. Continuously sharing information about prices assists buyers to make decisions about their budgets. When a consumer takes USD10 to the market for buying different commodities, it means commodities bought with that USD10 are more important than anything else.
Using prices to value national food basket
It is through prices that policymakers can know how much of the national budget is going to food systems in comparison to other alternatives and opportunities. Prices are also very important in valuing the local food basket. For instance, knowing different quantities of commodities traded at different prices per day can reveal the amount of money circulating in the food market. It also becomes possible to know how much money is going to production zones and districts – indicating the contribution of food markets to rural development and other agriculture-related industries like seed producers and fertilizer. If there were no markets, farmers would produce very little for their own consumption.
Is the agriculture sector gaining or losing value?
Continuously tracking prices is also tracking the extent to which the agriculture sector as a whole is gaining or losing value or losing its investment. Assuming the same commodities and quantities are traded in the market and USD50 000 is realized in a day, the following day the same commodities and quantities realize USD40000, which means there has been a loss by USD10000. This is very important for showing policy makers the value of supporting data collection and information management systems in mass markets that are handling and distributing more than 70% of agricultural production in Africa.
