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Mozambique: the political economy of food price policy

The 2007-09 price shocks affected in particular the prices of food commodities and fuel. As a consequence, Mozambique experienced reduced exports, more expensive imports and increased food and oil prices, contributing to the stagnant poverty rates registered in 2008/9. Our analysis finds, first, that domestic prices for imported food crops followed the international trends only partially and remained high even after international prices declined. And second, the policy responses adopted by the Mozambican government to stabilize the impact of price shocks in the domestic market seem to have been effective, even though they turned out to be costly in terms of lost revenue and increased debt.

This paper attempts to analyse the relation between international and domestic food prices, and the policy responses adopted by the Mozambican government to stabilize the impact of price shocks in the domestic market.

The study proceeds as follows. 

Section 2 presents the motivation, while Section 3 introduces some main facts of the Mozambican economy, with a focus on agriculture and staple crop production.

Section 4 examines the degree of transmission of food price shocks throughout the country, while Section 5 presents the political economy side of the food price crisis; in particular, some of the policies adopted to face price shocks and their outcomes are discussed, together with the rationale for such policy interventions.

Section 6 concludes.

Date: 
6 April 2013
Author: 
Virgulino Nhate, Claudio Massingarela, Vincenzo Salvucci
Source:
UNU-WIDER
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