MSU Agricultural Economics  Research > Food Security III > Policy Syntheses > No. 56



Niama Nango Dembélé, James F. Tefft, and John M. Staatz*

Food Security II Cooperative Agreement between U.S. Agency for International Development Global Bureau, Economic Growth and Agricultural

Development Center, Office of Agriculture and Food Security and Department of Agricultural Economics, Michigan State University

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BACKGROUND: The Malian Cereal Market Information System (SIM, by its French acronym) was created in 1989 as a key component of Mali's cereal market reforms. It grew from the realization that (1) government and donors needed timely information on how price and supply conditions were evolving in the new context of broad-based economic reforms, and (2) private sector actors, including consumers, needed timely, accurate, low-cost information to operate effectively in a liberalized market. Furthermore, price information was needed to evaluate and adapt the reforms to the evolving macroeconomic and political context as well as to design effective policies to promote food security and higher economic growth through private investment and reduced transaction costs.

OBJECTIVES: This bulletin briefly highlights the successes achieved by the Malian SIM over the last twelve years in improving the performance of Mali's agricultural sector and promoting the food security objectives sought by the reforms. It also examines the principal factors that have contributed to the establishment of a successful and sustainable SIM and the instrumental role played by support from USAID/Mali and the multi-donor Cereals Market Restructuring Program (PRMC). Finally, it discusses future challenges facing the SIM, which in 1998 was restructured and renamed the Observatoire du Marché Agricole (OMA).


SIM Successes

(Egg 1999) indicates that marketing margins have fallen significantly along major trading routes as a result of improved availability and access to market information and increased competition. The result was increased real producer prices and lower costs for cereal consumers for coarse grains. Although the reforms have improved price incentives for producers, price volatility remains a serious challenge for both policy makers and market participants.

In the rice sector, both real producer and consumer prices have exhibited a significant downward trend since the liberalization of the rice market that began in the late 1980s (Figure 1). Despite falling farm-level prices, productivity gains through higher yields has actually improved farmer profitability.

In Mali, OMA has also been instrumental in helping facilitate the creation of the first national association of input dealers, aimed at improving coordination in the agricultural input markets. Already, the association, which is self-financed, has called for a revision of government regulations and policies covering the agricultural input sector. In this effort, the association will work with the chambers of agriculture, chambers of commerce and OMA.

Key Factors Shaping Successes

Four factors stand out as primary contributors to the success of the Malian SIM: technical expertise needed to produce quality products; responsiveness to user needs; financially-sustainable operations; and innovative institutional evolution.

IMPLICATIONS AND FUTURE CHALLENGES: The effective mix of technical expertise, responsiveness to user needs, institutional innovation and financially sound operations has enabled the Malian market information system successfully to serve the growing and changing needs of a dynamic private sector over the last twelve years. Future success will continue to depend strongly on the way these factors affect OMA's ability to face the following challenges.

The growing integration of regional markets has three effects on the Malian food sector that will increase demands on OMA for expanded market information and analysis. First, the integration puts Malian consumers in competition with consumers in neighboring countries, who frequently have higher purchasing power. This raises the risk that poor Malian consumers may be priced out of the market or have to bear the brunt of price increases that result from Malian cereal exports to these neighboring countries. Consequently, government will need to develop its capacity for food policy analysis. Such food policy analysis will depend on reliable information from OMA and affiliated organizations to address issues such the benefits of open trade and options for the design of market-compatible safety nets for the poor.

Second, the regional integration opens new business opportunities for Malian exporters. Therefore, OMA will be under pressure to provide information that supports market transactions in neighboring countries. Already, traders are putting pressure on OMA to provide them with information on the evolving regional demand for different Malian agricultural products. Third, because of the instability of the regional export demand, the domestic Malian agricultural markets will face greater price volatility in the future. As a result, there will be a growing demand for the development of appropriate risk management tools for farmers and traders. Consequently, OMA will need to provide the required data series to characterize the risks so that appropriate risk management tools can be developed.

For more information, see:

Dembélé, Niama Nango, and John M. Staatz. 1999. The Impact of Market Reform on Agricultural Transformation in Mali. MSU Department of Agricultural Economics Staff Paper No. 99-29. East Lansing: Michigan State University. Paper presented at the Tegemeo/ECAPAPA/ MSU/USAID Workshop on Agricultural Transformation, 27-30 June, Nairobi, Kenya.

Dembélé, Niama Nango, and John M. Staatz. 2000. The Response of Cereals Traders to Agricultural Market Reform in Mali. In Democracy and Development in Mali, ed. R. James Bingen, David Robinson, and John M. Staatz. East Lansing: Michigan State University.

Egg, Johny. 1999. Etude de l'Impact de la libéralisation sur le fonctionnement des filières céréalières au Mali: rapport de synthèse. Bamako: Programme de Restructuration du Marché Céréalier/Comité d'Orientation et de Coordination du Système de Sécurité Alimentaire.

Work for this summary was conducted under the Food Security II Cooperative Agreement (PCE-A-00-97-00044-00) between Michigan State University and the United States Agency for International Development, through the Office of Agriculture and Food Security in the Economic Growth Center of the Global Bureau (G/EGAD/AFS). Supplemental funding for this research was provided to the FS II Cooperative Agreement by USAID/Mali.

*Dembélé is Visiting Assistant Professor of Agricultural Economics, Michigan State University (MSU) and MSU Coordinator of PASIDMA (Projet d'Appui au Système d'Information Décentralisé du Marché Agricole), Bamako, Mali. Tefft is Visiting Specialist and Staatz is Professor, both in the Department of Agricultural Economics, MSU. The views expressed in this document are exclusively those of the authors.