Abstract
The objective of this paper is to examine the importance of energy and climate shocks in Uganda’s food price processes. The unique features of this paper are threefold: first, we identify climate shocks computed as the deviations of monthly temperature and rainfall realisations from their respective long term means. Second, controlling for external and domestic shocks, we examine the possible role of energy prices in food price processes. Third, we examine these issues in a single equation model exploiting cointegration techniques and general-to-specific methods. Results indicate that energy prices have a long run cointegrating relationship with food prices. In addition, temperature shocks are more important than rainfall shocks in explaining food price variability.
Highlights
Ensuring food security is one of the most pressing global development challenges (Godfray et al 2010; World Bank 2008)
Food prices are an important aspect of food security (Swinnen and Squicciarini 2012; Pinstrup-Andersen 2009) and especially for the poor (Dawe and Timmer 2012)
The external food market The long run co-integrating external food market is expressed in equation 9, assuming that domestic food prices adjust to exchange rate and movements in international food prices: lfoodt 1⁄4 β0 þ β1lxratet þ β2lcerealt þ εt ð9Þ
Summary
Ensuring food security is one of the most pressing global development challenges (Godfray et al 2010; World Bank 2008). Our understanding of the drivers of food prices especially in the developing world is still limited. In Uganda discussions have majorly concentrated on the consequences of the high food prices (Benson et al 2008; Matovu and Twimukye 2009; Ulimwengu and Ramadan 2009). A scanty amount of literature has focused on the drivers of food prices in Uganda (see for example Dillon and Barrett 2013; Haggblade and Dewina 2010). This paper, contributes to a better understanding of the drivers of food prices in Uganda.
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