The impact of agricultural producer price on sustainable food security in Africa – a system GMM approach

Enoch Kwaw-Nimeson; Ze Tian

doi:10.51599/are.2021.07.03.04

Enoch Kwaw-Nimeson Hohai University https://orcid.org/0000-0001-8298-3394
Ze Tian Hohai University; Low Carbon Economy Institute https://orcid.org/0000-0002-8318-0398

DOI: https://doi.org/10.51599/are.2021.07.03.04

Keywords: agricultural producer price, food security, agricultural sustainability, public investments on agriculture, System-GMM

Abstract

Purpose. Given the efforts towards achieving the United Nations’ Sustainable Development Goals (SDGs) for food security by 2030, this study investigates the moderating impact of public investments in agriculture on the agricultural producer price – agricultural sustainability nexus in 40 African countries covering the period from 2000 till 2019.

Methodology / approach. In this study we used multiple regression techniques to explore a dynamic panel data model based on the one-step system Generalized Method of Moments (System-GMM). Proposed by Arellano and Bover and further developed by Blundell and Bond, the System-GMM estimator was preferred over other techniques because of its efficiency in eliminating the simultaneous biases that are associated with regression model estimations. Specifically, the one-step System-GMM was preferred over the two-step System-GMM for our estimation due to the efficiency of its optimal weighting matrices.

Results. The study discovered that although the interactions between public investments on agriculture and agricultural sustainability amplify the positive impact of a set of explanatory variables on agricultural producer price to an extent, the impact on food security in Africa is insignificant. The study also discovers that the net effects of a set of interactive terms on producer price in the developing countries in Africa are slightly lower than in the least-developed countries. The weighted average food security index for the period under study was abysmal 44.54%, indicating moderate food insecurity in Africa.

Originality / scientific novelty. In the context of food security literature in Africa, this study is the first attempt at exploring the agricultural producer price – agricultural sustainability nexus based on the moderating impact of public investments on agriculture with the Global Food Security Index (GFSI), a composite food security model developed by the Economist Intelligence Unit (EIU). Among our study proposals it is a call for a detour from the current agricultural investment and producer price policies especially the current ‘one-size-fits-all’ regional frameworks which have proved to be less progressive and less transformative to more robust country/sector-specific frameworks that have the potential to better the fortunes of agriculture and improve food security.

Practical value / implications. The current state of agricultural producer price in most African countries is ample proof that the role and importance of the producer price have been gravely diminished. Despite governments’ efforts towards improving food security, the evidence as presented in this study supports the fact that those efforts have not achieved much success. The study, which contains a number of recommendations, highlights agricultural producer price as a potentially important driver of agricultural sustainability and sustainable food security in Africa.

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