Spatial price efficiency in Mozambique's post-reform maize markets

Maize ("Zea mays") shortages and maize price instability continue to occur in Mozambique in spite of policy reforms and great capacity for increased production in northern Mozambique. This study measured the efficiency of spatial maize price arbitrage in Mozambique's post-reform period. Spatial price inefficiency does not seem to explain why food shortages continue to occur in Mozambique, suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations. Baulch's spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern Mozambique. Records of interregional maize shipments show that indeed grain is not being shipped from the north to the south. Market liberalization may have improved spatial price efficiency, but high transfer costs still limit trade and potential benefits from freeing markets. Under these circumstances, food shortages and price instability are likely to continue. Copyright 2005 International Association of Agricultural Economics.