Several governments have at-
tempted to insulate maize markets
from the effects of unstable produc-
tion by introducing policies de-
signed to reduce price fluctuations.
Usually these policies set official
producer and consumer prices,
which for ease of administration
remain in place for the entire
season (pan-seasonal) and prevail
over the whole country (pan-
territorial). Given the difficulty of
eliminating unofficial marketing
activities, official prices-if
successfully defended-generally
only establish limits for the
movement of actual market prices
(a floor in the case of the producer
price, and a ceiling in the case of
the consumer price). The ability of
the marketing authority to defend
the limits established by official
prices eventually depends on the
resources at its disposal, such as
credit to finance purchases from
producers, transportation and
storage facilities to engage in
arbitrage, and stocks to sell to
consumers.

Another common strategy that
many countries in eastern and
southern Africa use to control
instability in maize markets is
storage policy. Holding sufficient
stocks to cover periodic shortages,
although costly, allows the govern-
ment to act as a stabilizing influ-
ence in the domestic market; by
buying grain in times of surplus
and selling grain in times of scar-
city, the state theoretically can
dampen price and supply fluctua-
tions. The key policy issue, of
course, is deciding how much grain
to store. The experience of India
and other Asian countries suggests
that the marketing authority must
stockpile enough grain to exert
pressure on domestic prices in
times of real crisis, not just during
periods of "normal" production
variability. While it is difficult to
judge how much grain will be


needed during times of crisis, some
analysts have suggested that a
number of countries in eastern and
southern Africa are maintaining
excessively large-and hence un-
necessarily costly-reserves (see,
for example, Pinckney and Valdes
1988; Buccola and Sukume 1988).

Maize storage policies in eastern
and southern Africa have at times
succeeded in reducing market
instability, but only rarely have
price movements been eliminated
completely. Despite government ef-
forts, considerable variability in
maize prices is the norm in many
countries for both producers and
consumers. Market prices fre-
quently diverge from official levels,
often showing a marked seasonal
pattern (Figure 11).

Although the effectiveness of
marketing and price policy for
maize in eastern and southern
Africa is subject to differing inter-
pretations, one fact is beyond


dispute: government intervention
in maize markets has been expen-
sive. Direct costs-in the form of
subsidized prices and marketing
services-and indirect costs-in
the form of bureaucratic ineffi-
ciency and sometimes corruption-
have placed a considerable strain
on government budgets (for ex-
ample, see Muir and Takavarasha
1989). Widespread dissatisfaction
with the performance of public
marketing authorities and the need
to cut government expenditures
have spurred some governments to
encourage a more active role for the
private sector in maize marketing.
During the 1980s, Ethiopia,
Malawi, Tanzania, and Zambia ini-
tiated policy reforms designed to
free up maize prices and to reduce
direct state participation in market-
ing. So far, these measures are
having a positive effect, increasing
supply while reducing the strain
on government treasuries (Amani
et al. 1989; Sipula et al. 1989;
Christiansen and Stackhouse 1989).


(continued on p. 22)


Price (Tambala/kg)
50


40-


30


20


10


0 Fl4 1 -1 1 1 ; I1
 1984 1985 1986 1987 1988
Source: Kingsbury (1989).

Figure 11. Seasonal movements in official maize retail prices and open
market maize retail prices, Malawi, 1984-88.