Causes, Magnitude and Consequences of Price Variability in Agricultural Commodity Market: An African Perspective

In the advent of the African food crisis in 2007, much attention has been focused on the food price variability in Africa in order to restrain the negative effects of price fluctuations. This paper assesses the impact of increased agriculture commodity price variability and instability in developing countries. It also attempts to understand the magnitude of the current situation in terms of the consequences brought about by food price variability, with special attention given to Africa where the largest number of the world’s hungry people lives. Using appropriate research methodology, of quantitative macro-scale analysis, which is based on extensive evaluation of secondary data generated from reputable sources, the study found that food prices in Africa has been influenced not by one or two factors but a confluence of events that were previously given less importance in agriculture and rural development planning â€Â' unbridled population growth, oil price fluctuations, importation policies, water availability and political instability. Statistically significant result was found in analyzing the impact of water resources on food prices indicating the importance of investment in irrigation to increase the food yield and thus, address the problem of food shortage for the rapidly increasing population. This suggests the need to improve the dominant farming system in Africa to more sustainable practices. The effects of food price variability have been seen to exacerbate the already alarming undernourishment rate and death rate in certain regions in Africa. Increasing government subsidy on imported food could provide immediate solution to the hunger problems in Africa, however, it is recommended to increase government investment on local agriculture in order to bring about food sustainability in Africa in the long run.