The effect of climate change on food prices in Sub-Saharan Africa

Abstract

Sub-Saharan Africa (SSA) has experienced a substantial rise in food prices over the past two decades, exacerbating inflation, poverty, and food insecurity in the region. This trend is particularly concerning given SSA's vulnerability to climate change, which affects agricultural productivity and food prices. This study examined the effect of climate change on food prices in SSA from 2000 to 2022. Using a System Generalized Method of Moments (GMM) technique, this analysis addresses endogeneity concerns and provides robust estimates. Key findings reveal that a one-unit increase in temperature results in a 0.03 percentage point rise in food prices, while rainfall variability exhibits a convex relationship with food prices. Initially, a unit increase in rainfall reduces prices by 0.07 percentage points; however, once variability surpasses 0.88, each additional unit increase raises food prices by 0.04 percentage points. Previous food prices have a strong positive effect on current prices, with a lagged effect of 0.75 percentage points. Additionally, regulatory quality and rural population growth reduce food prices by 0.27 and 0.09 percentage points, respectively, whereas GDP per capita growth slightly increases prices by 0.002 percentage points. These findings highlight the need for climate-smart agricultural practices, such as drought-resistant crop varieties, solar irrigation, and large-scale tree planting. Moreover, developing strong regulatory frameworks is essential for stabilizing food prices. Governments should also focus on rural programs that provide education and access to credit, to foster inclusive growth and resilience.