The 2004 Niger Food Crisis: What Role Can Price Discovery Play in Famine Early Warning Systems?

The 2005 food crisis centered in Niger received worldwide attention and extensive media coverage. Crops suffered from poor rainfall and were plagued by locusts throughout the growing season. Malnutrition flourished with the sudden disruption in food supplies. One-fifth of Niger's children suffered from moderate to severe forms of malnutrition by the summer of 2005. In an era of increased awareness and the introduction of famine early warning systems, the development community was left wondering why they were for the most part caught off guard by the food crisis. This paper tests whether market prices and price discovery could have played an active role in detecting the food crisis. Directed acyclic graphs are used to test whether price discovery mechanisms within Niger's millet markets were ahead of the early warning systems. Results suggest that as early as October 2005 markets in Arlit and the Dosso province had price anomalies that appeared to begin signaling the upcoming food crisis. This market based discovery came about two months earlier than the warnings issued by the regional early warning networks