Abstracts Economics

Agricultural Policy Support, Production Incentives and Market Distortions in Sub-Saharan Africa

by Jean Balie

Most countries in the world adopt policies in support of their agricultural sectors. In doing so, governments seek to influence farmers’ behaviour through various channels. While these policies and their incidence have long been monitored for member countries of the Organization for Economic Cooperation and Development (OECD), there is scarce literature on those provided by the developing countries and especially in Sub Saharan Africa (SSA). Yet, the food and agricultural policies adopted by governments in Sub Saharan Africa (SSA) since their respective independences have gone through a number of phases characterized by changing objectives, intensities of state intervention in the economy, levels of protection or taxation in agriculture, and amounts of public spending and aid to agriculture. There has not been any systematic tracking of these changes and their implications for agricultural development and rural transformation, poverty eradication and food security, for example. In this respect, the work by Kym Anderson as part of the World Bank’s research project on Distortion to Agricultural Incentives constituted a major breakthrough. FAO’s Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme followed this path with the objective of establishing country-owned and sustainable systems to monitor, analyse, and reform food and agricultural policies to enable more effective, efficient and inclusive policy frameworks in support of agricultural development in a growing number of developing and emerging economies. Most of the research underpinning this dissertation builds on MAFAP data and analyses. The dissertation focuses on policy interventions essentially in the form of market price support or budgetary transfers, and their combined incidence on market price signal transmission, agricultural production incentives and the resulting supply response. Results presented in chapter 2 show that policies adopted by governments, for example, in response to price shocks in international markets altered the transmission of international price signals to farmers in developing countries. We also find that other factors play a role in this inadequate price transmission such as transport costs and changes in exchange rates. Moreover, it also appears that price changes in any particular country are not necessarily due to changes in world market prices, which suggests that domestic market conditions, largely determined by the policy environment, play an essential role. Finally, we also find that price movements in Africa exhibit different patterns than those in other regions, with higher levels of price variability for maize and rice mostly due to the domestic market conditions. Taking the case of rice and cotton which are two key commodities for several SSA countries, chapter 3 shows that observed market distortions reflect the combined effects of market and policy failures. In the case of rice, these prevent border protection from reaching farmers while raising consumer prices. Cotton ginning and marketing is… Advisors/Committee Members: Von Cramon-Taubadel, Stephan (advisor), Brümmer, Bernhard (referee), De Haen, Hartwig (referee).