Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania

Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania
Title Economywide Impact of Maize Export Bans on Agricultural Growth and Household Welfare in Tanzania PDF eBook
Author Xinshen Diao
Publisher Intl Food Policy Res Inst
Pages 28
Release 2013-09-03
Genre Social Science
ISBN

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In recent years, the government of Tanzania, like other governments in Africa south of the Sahara, has periodically banned the export of staple crops (maize) in an attempt to ensure the domestic food supply and protect its citizens from international food price hikes. While this policy seems to be a common response to domestic production shortfalls or to high prices in international or neighboring countries’ markets, export bans not only have the potential to reduce producer prices locally but also, because the bans are often ad hoc, can cause significant market uncertainty for farmers and the private sector, ultimately making them less responsive in both supply and trade opportunities in the future. While complaints by farmers and traders regarding the export bans frequently appear in the newspapers in Tanzania, few rigorous analyses have been done to quantitatively measure the impacts of the policy. Given this knowledge gap and policy demand, we study the impact of export bans in Tanzania using a computable general equilibrium model. We find that although maize is an important food crop in Tanzania, its contribution to food price inflation is rather limited, and that banning cross-border maize exports lowers the national food price index by only 0.6–2.4 percent compared with the free-export scenario. The benefits of lower prices are captured primarily by urban households, but maize producer prices decrease by 7–26 percent, depending on the region. We also find that the export ban decreases the wage rate for low-skilled labor and the returns to land, while returns to nonagricultural capital and wage rate for the skilled labor increase, further hurting poor rural households and thus increasing poverty for the country as a whole.

Food Price Surges, Trade Policy Responses, and the Welfare Implications to Tanzanian Households

Food Price Surges, Trade Policy Responses, and the Welfare Implications to Tanzanian Households
Title Food Price Surges, Trade Policy Responses, and the Welfare Implications to Tanzanian Households PDF eBook
Author Kentaro Murayama
Publisher
Pages 116
Release 2017
Genre Exports
ISBN 9780355495621

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The first essay tests the effectiveness of export bans as a price insulation policy using panel data of local maize prices across 35 markets in 7 countries (Tanzania and its neighboring countries of Burundi, Kenya, Malawi, Mozambique, Uganda, and Zambia). While the data have a relatively high rate of missing values, I use a multiple imputation method to utilize as much of the available information as possible for the analysis. Using an extended competitive storage model, I analyze the dynamics of local maize prices and test the effect of export bans. Not only I reject the null hypothesis of no impact of export bans on local maize prices, but I find that the export ban is associated with higher maize prices. In other words, an implementation of export ban induces higher prices due to the speculative demand instead of keeping the price low through the increased availability at the local market. Moreover, the impact of the export ban is conditional on the existence and magnitude of trade costs: with a high trade cost, the trade flow would not exist prior to an export ban and the ban would not binding. I find that the upward pressure of the export ban on local prices would be underestimated, if such non-binding cases are not taken into account. The second essay estimates a large-scale demand system of foods, and assesses the impact of price changes on food consumption and nutrition consumption patterns of Tanzanian households. Malnutrition is a widespread issue in Tanzania. For securing a sufficient supply of food, particularly grains, price policies such as subsidies or protective trade measures are exercised in Tanzania and many of its neighboring countries. However, evidence on the effectiveness of price policies for improving nutritional intakes are mixed. In the literature, studies on nutrient consumption are particularly scarce, and the roles of income and socioeconomic characteristics is often investigated separately from price responsiveness of food consumption. I assess the price responsiveness of foods and their associated nutritional intakes by estimating a flexible demand system - Exact Affine Stone Index demand system to overcome the limitation of alternative demand systems - using Tanzanian living standard surveys. Using the estimated elasticities, I find that the price of maize is not very influential to the caloric intakes even among very poor households due to these households' high capability to substitute foods and secure the level of energy intake. However, in exchange, intakes of other nutrients are greatly reduced when the maize price increases, due to the major role of maize as a relatively cheap source of calories and other nutrients. Evaluated at the historical maize price changes from 2007-2008, simulations indicate a small decline in the average energy intakes. However, the decreases in average micronutrient intakes are large and the deficiency incidence rises significantly. The third essay extends the framework of the second essay by incorporating the production of foods in households and the general equilibrium effects of food price changes to the wage, assessing the overall welfare changes. Many households in Tanzania are both consumers and producers of food crops. Higher food prices increase the real income of such households, and thus have a potential to significantly reduce the loss or even realize a net gain. In addition, higher prices of agricultural goods - or, in general, traded goods - may increase the demand for labor as the production level is increased. This higher demand, in turn, would increase the return to the wage, under a set of certain assumptions. This general equilibrium effect of food prices to the wage level is evaluated empirically using the living standard survey of Tanzania. Using the estimated price-wage elasticities and the data of budget and income shares, I assess the average welfare impact of the historical maize price increase across sub-populations of households. I find that the net effect through consumption, production, and wage earnings are, on average, positive for all the household across income levels. However, the net gains are much stronger for wealthier households and almost negligibly small for poorer households because of the dominantly strong gain from the wage earning increases compared with the smaller gains from production net consumption. Moreover, I identify the rural and/or farm households experience disproportional net loss, for significantly higher reliance on maize in consumption, compared with urban and/or non-farm households. (Abstract shortened by ProQuest.).

Achieving food security and industrial development in Malawi

Achieving food security and industrial development in Malawi
Title Achieving food security and industrial development in Malawi PDF eBook
Author Aragie, Emerta
Publisher Intl Food Policy Res Inst
Pages 20
Release 2016-07-12
Genre Political Science
ISBN

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Restrictions on exports of staples or cash crops are frequently imposed in developing countries to promote food security or industrial development goals. By diverting production to the local market, these policies aim to reduce prices and increase the supply of food or intermediate inputs to the benefit of consumers or downstream industrial users. Although export restrictions reduce aggregate welfare, they are attractive to policymakers: Governments gain support when they are seen to keep consumer prices low; likewise, politicians are swayed by industrial lobbyists who promise increased value-addition in exchange for access to cheaper inputs. This study weighs in on the debate around the desirability of export restrictions by simulating the economy-wide effects of Malawi’s longstanding maize export ban as well as a pro-posed oilseed export levy intended to raise value-addition in processing sectors. Our results show that, while export restrictions may have the desired outcome in the short run, producers respond to weakening market prospects in the longer run by restricting supply, often to the extent that the policies become self-defeating. Specifically, maize export bans only benefit the urban non-poor, while poor farm households experience income losses and reduced maize consumption in the long run. The oilseed export levy is equally ineffective: Even when export tax revenues are used to subsidize processors, gains in industrial value-addition are outweighed by declining agricultural value-addition as production in the fledgling oilseed sector is effectively decimated. The policy is further associated with welfare losses among rural households, while urban non-poor households benefit marginally.

Women’s Empowerment and Nutrition

Women’s Empowerment and Nutrition
Title Women’s Empowerment and Nutrition PDF eBook
Author Mara van den Bold
Publisher Intl Food Policy Res Inst
Pages 80
Release 2013-11-01
Genre Social Science
ISBN

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Many development programs that aim to alleviate poverty and improve investments in human capital consider women’s empowerment a key pathway by which to achieve impact and often target women as their main beneficiaries. Despite this, women’s empowerment dimensions are often not rigorously measured and are at times merely assumed. This paper starts by reflecting on the concept and measurement of women’s empowerment and then reviews some of the structural interventions that aim to influence underlying gender norms in society and eradicate gender discrimination. It then proceeds to review the evidence of the impact of three types of interventions—cash transfer programs, agricultural interventions, and microfinance programs—on women’s empowerment, nutrition, or both. Qualitative evidence on conditional cash transfer (CCT) programs generally points to positive impacts on women’s empowerment, although quantitative research findings are more heterogenous. CCT programs produce mixed results on long-term nutritional status, and very limited evidence exists of their impacts on micronutrient status. The little evidence available on unconditional cash transters (UCT) indicates mixed impacts on women’s empowerment and positive impacts on nutrition; however, recent reviews comparing CCT and UCT programs have found little difference in terms of their effects on stunting and they have found that conditionality is less important than other factors, such as access to healthcare and child age and sex. Evidence of cash transfer program impacts depending on the gender of the transfer recipient or on the conditionality is also mixed, although CCTs with non-health conditionalities seem to have negative impacts on nutritional status. The impacts of programs based on the gender of the transfer recipient show mixed results, but almost no experimental evidence exists of testing gender-differentiated impacts of a single program. Agricultural interventions—specifically home gardening and dairy projects—show mixed impacts on women’s empowerment measures such as time, workload, and control over income; but they demonstrate very little impact on nutrition. Implementation modalities are shown to determine differential impacts in terms of empowerment and nutrition outcomes. With regard to the impact of microfinance on women’s empowerment, evidence is also mixed, although more recent reviews do not find any impact on women’s empowerment. The impact of microfinance on nutritional status is mixed, with no evidence of impact on micronutrient status. Across all three types of programs (cash transfer programs, agricultural interventions, and microfinance programs), very little evidence exists on pathways of impact, and evidence is often biased toward a particular region. The paper ends with a discussion of the findings and remaining evidence gaps and an outline of recommendations for research.

Effects of COVID-19 and other shocks on Papua New Guinea’s food economy: A multi-market simulation analysis

Effects of COVID-19 and other shocks on Papua New Guinea’s food economy: A multi-market simulation analysis
Title Effects of COVID-19 and other shocks on Papua New Guinea’s food economy: A multi-market simulation analysis PDF eBook
Author Diao, Xinshen
Publisher Intl Food Policy Res Inst
Pages 51
Release 2021-02-19
Genre Political Science
ISBN

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Understanding how the Papua New Guinea (PNG) agricultural economy and associated household consumption is affected by climate, market and other shocks requires attention to linkages and substitution effects across various products and the markets in which they are traded. In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG. In this study, we use a multi-market simulation model of the PNG food economy that explicitly includes production, consumption, external trade and prices of key agricultural commodities to quantify the likely impacts of a set of potential shocks on household welfare and food security in PNG. We have built the model to be flexible in order to explore different potential scenarios and then identify where and how households are most affected by an unexpected shock. The model is designed using region and country-level data sources that inform the structure of the PNG food economy, allowing for a data-driven evaluation of potential impacts on agricultural production, food prices, and food consumption. Thus, as PNG confronts different unexpected challenges within its agricultural economy, the model presented in this paper can be adapted to evaluate the potential impact and necessary response by geographic region of an unexpected economic shock on the food economy of the country. We present ten simulations modeling the effects of various shocks on PNG’s economy. The first group of scenarios consider the effects of shocks to production of specific agricultural commodities including: 1) a decrease on maize and sorghum output due to Fall Armyworm; 2) reduction in pig production due to a potential outbreak of African Swine Fever; 3) decline in sweet potato production similar to the 2015/16 El Niño Southern Oscillation (ENSO) climate shock; and 4) a decline in poultry production due to COVID-19 restrictions on domestic mobility and trade. A synopsis of this report, which focuses on the COVID-19 related shocks on the PNG economy is also available online (Diao et al., 2020).1 The second group of simulations focus on COVID-19-related changes in international prices, increased marketing costs in international and domestic trade, and reductions in urban incomes. We simulate a 1) 30 percent increase in the price of imported rice, 2) a 30 percent decrease in world prices for major PNG agricultural exports, 3) higher trade transaction costs due to restrictions on the movement of people (traders) and goods given social distancing measures of COVID-19, and 4) potential economic recession causing urban household income to fall by 10 percent. Finally, the last simulation considers the combined effect of all COVID-19 related shocks combining the above scenarios into a single simulation. A key result of the analysis is that urban households, especially the urban poor, are particularly vulnerable to shocks related to the Covid-19 pandemic. Lower economic activity in urban areas (assumed to reduce urban non-agricultural incomes by 10 percent), increases in marketing costs due to domestic trade disruptions, and 30 percent higher imported rice prices combine to lower urban incomes by almost 15 percent for both poor and non-poor urban households. Urban poor households, however, suffer the largest drop in calorie consumption - 19.8 percent, compared to a 15.8 percent decline for urban non-poor households. Rural households are much less affected by the Covid-19 related shocks modeled in these simulations. Rural household incomes, affected mainly by reduced urban demand and market disruptions, fall by only about four percent. Nonetheless, calorie consumption for the rural poor and non-poor falls by 5.5 and 4.2 percent, respectively.

Access to markets for smallholder farmers in Alto Molócue and Molumbo, Mozambique: Mid-term impact evaluation of INOVAGRO II

Access to markets for smallholder farmers in Alto Molócue and Molumbo, Mozambique: Mid-term impact evaluation of INOVAGRO II
Title Access to markets for smallholder farmers in Alto Molócue and Molumbo, Mozambique: Mid-term impact evaluation of INOVAGRO II PDF eBook
Author Hosaena Ghebru
Publisher Intl Food Policy Res Inst
Pages 38
Release 2019-10-22
Genre Political Science
ISBN

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The Innovation for Agribusiness (InovAgro) project, which launched with its first three year phase in 2010, uses a market system development (MSD) approach towards the goal of increasing incomes of men and women small-scale farmers in northern Mozambique. InovAgro interventions promote improved agricultural productivity, participation in selected high-potential value chains and the development of inclusive and sustainable market systems, such that impacts are expected to last long beyond the termination of the project. This paper presents results from a midline quantitative impact evaluation of the second phase of the InovAgro project interventions (2014-2017). In it, we use a carefully designed and executed quasi-experimental study design to credibly attribute changes in market engagement and welfare of participating farmers to exposure to the InovAgro II project, identifying and testing in what respects the intervention was most successful, and what regard it had less impact. Although InovAgro II projects operate in 11 districts of Zambézia and Cabo Delgado provinces, this impact evaluation focuses on two districts in Zambézia province (Alto Molócue and Molumbo), and in terms of value chains, focuses on the soybean and pigeon pea high-potential value chains, while the InovAgro II project interventions focus on these in addition to maize, sesame and groundnut. A baseline survey was undertaken in 2015 covering the 2014/2015 agricultural season and a midline follow-up survey was conducted in 2017, covering the 2016/2017 agricultural season and reaching 1,749 households of the original 1,886 households interviewed in the baseline survey. Using difference-in-difference estimation and propensity score matching, we find that exposure to the InovAgro II project is associated with an increase in the proportion of households selling soybean and pigeon pea by approximately 5% and 16%, respectively (significant at the .01 level). Exposure to the InovAgro II project also results in significantly higher shares of smallholder farmers using improved seed for soybean and pigeon pea (an increase of 6% for soybean and 2% for pigeon pea). We find that the InovAgro II project is also associated with significant increases in access to agricultural output market information from formal sources (5%) and hired labor for farming activities (8%). Despite the significant impacts on short term outcome variables, exposure to the InovAgro II project had limited impact on long term outcome variables, such as on rural-urban migration as well as engagement in the non-farm sector (two proxies for assessing potential welfare implications of the project) however this finding is not surprising given the impact evaluation covers only two years-a short period of time to bring about the long-term impacts expected to eventually emanate from an MSD project.

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the adoption of modern agricultural technologies in Uttar Pradesh, India

Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the adoption of modern agricultural technologies in Uttar Pradesh, India
Title Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) and the adoption of modern agricultural technologies in Uttar Pradesh, India PDF eBook
Author Varshney, Deepak
Publisher Intl Food Policy Res Inst
Pages 35
Release 2020-01-27
Genre Political Science
ISBN

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The Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme aims to provide income support to farmers to facilitate timely access to inputs by easing their liquidity needs. This study, based on 1,406 farmers of Uttar Pradesh and using a binary choice model, examines the scheme’s targeting accuracy and the correlates of farmers’ spending patterns. Triple difference with matching estimators are used to identify the differential impact of PM-KISAN on Krishi Vigyan Kendras (farm science centers, or KVKs) beneficiaries. Results show that PM-KISAN reached to one-third of all the farmers in the first three months of its implementation. Moreover, the study finds no selection bias based on social, economic and agricultural characteristics. The scheme has significantly helped those who are relatively more dependent on agriculture and have poor access to credit. Moreover, scheme has significantly stimulated the KVK ’s impact on the adoption of modern cultivars.