Abstract
This paper estimates the food supply elasticity in SSA. Building up on commodity storage theory, we empirically estimate food supply functions for SSA. Our identifications strategy relies on exogenous weather shocks as instruments. This approach further allows to quantify the exposure of SSA food markets to weather events. We use data from FAO, USDA, WFP and public climate data to model 3 commodities in 173 food markets in 34 countries in SSA. Results suggest that (i) food supply in SSA is more elastic than global food supply, and (ii) prices are much more subject to exogenous weather events than global prices are. Moreover, we find substantial heterogeneity of food market responses to weather shocks and price developments by crops. These results are in line with commodity storage theory as in absence of opportunities to build inventories, producers will not shift supplies across time periods. Promoting storage activity-also through imports-and investing in storage facility can smoothen consumption, stabilize markets and reduce long term production uncertainty in the region.
Bernhard Dalheimer
Assistant Professor
Trade and Macro, Global Value Chains, Environmental Performance and Productivity, Statistical Programming