Effects of Stockholding Policy on Maize Prices: Evidence from Zambia

Zhou Yujun () and Baylis Kathy ()
Additional contact information
Zhou Yujun: University of Illinois at Urbana-Champaign, Urbana, IL 61801-3028, USA
Baylis Kathy: University of Illinois at Urbana-Champaign, Urbana, IL 61801-3028, USA

Journal of Agricultural & Food Industrial Organization, 2020, vol. 18, issue 1, 11

Abstract: Many countries in the developing world use public stockholding programs to stabilize prices for both farmers and consumers. Governments directly purchase and store staple grains, and then sell them to processors or consumers, often at heavily subsidized prices. Despite the substantial costs of these stockholding programs, little is known about their effectiveness in mitigating retail price swings. This paper estimates the effects of purchase and sales activities of the Zambian Food Reserve Agency (FRA) on monthly maize market prices across more than thirty markets in Zambia from 2003 to 2008. To deal with the endogeneity in purchases and sales, we use predicted FRA purchase and sales targets as instrumental variables. Controlling for other policies, we find evidence that FRA activities stabilize retail prices in major district markets within the cropping year. Results show that FRA purchases raise local prices for surplus maize producers about 5 % on average at the time of harvest, and that FRA sales help lower the prices to consumers during the lean season up to 7 %. However, we find limited evidence that the FRA is able to reduce price volatility between years.

Keywords: public stockholding; maize marketing board; price shocks; Zambia (search for similar items in EconPapers)
JEL-codes: Q11 Q18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1515/jafio-2019-0057 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bjafio:v:18:y:2020:i:1:p:11:n:6

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/jafio/html

DOI: 10.1515/jafio-2019-0057

Access Statistics for this article

Journal of Agricultural & Food Industrial Organization is currently edited by Azzeddine Azzam

More articles in Journal of Agricultural & Food Industrial Organization from De Gruyter
Bibliographic data for series maintained by Peter Golla ().