What Drives Local Food Prices? Evidence from the Tanzanian Maize Market

Abstract

We quantify the relationship between Tanzanian and external maize markets while also accounting for domestic influences. We conclude that external influences on domestic prices originate from regional, rather than global, markets. We also show that, compared to external factors, domestic factors exert a greater influence on Tanzanian maize markets. Further, the mechanisms through which trade policies influence maize markets involve interactions with both external market shocks and domestic weather shocks. Overall, we provide evidence that the intermittent imposition of export bans in Tanzania has had adverse impacts on its maize markets, and consequently, on the development of its agrarian economy.

Regional Price Effects of Extreme Weather Events and Wheat Export Controls in Russia and Ukraine

“…(), Baffes et al . () and Ihle et al . () following a regime‐switching price transmission approach .…”

“…() and Baffes et al . () adopt an approach in which the regime switches are determined exogenously by the knowledge of the time periods when exports were restricted. In contrast, Ihle et al .…”

“…() and Baffes et al . (), choosing a regime‐switching price transmission approach with exogenous regime switch in our multi‐region analysis.…”

“…An exception among the existing studies is Baffes et al . () who explicitly account for the influence of weather anomalies on price changes when investigating price dynamics caused by export bans on 18 maize markets in Tanzania, using an error correction panel model framework. They find that weather shocks have a strong short‐run influence on domestic prices, which is less pronounced in markets engaged in regional or international trade.…”

“…Baffes et al . (, p. 13) conjecture that the disregarding of the influence of weather shocks and harvest cycles in Ihle et al . () explains the difference in results.…”