Groundnut Policies, Global Trade Dynamics, and the Impact of Trade Liberalization
Groundnut products are of central economic importance to millions of smallholders in Africa, India, and Southern China. The products generate 60 percent of rural cash income and account for about 70 percent of the rural labor force in Senegal and T...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/03/3030843/groundnut-policies-global-trade-dynamics-impact-trade-liberalization http://hdl.handle.net/10986/14213 |
| Summary: | Groundnut products are of central
economic importance to millions of smallholders in Africa,
India, and Southern China. The products generate 60 percent
of rural cash income and account for about 70 percent of the
rural labor force in Senegal and The Gambia. Groundnut trade
is heavily distorted, and this has affected the competitive
position of various players in world markets. Using a
partial-equilibrium, multi-market, international model, the
authors analyze the trade and welfare effects of several
groundnut trade liberalization scenarios compared with the
recent historical baseline. They evaluate net welfare as the
sum of consumers' equivalent variation, quasi-profits
in farming, quasi-profits in crushing, and taxpayers'
revenues and outlays implied by distortions. The authors
find that trade liberalization in groundnut markets has a
strong South-South dimension with policies in India, and to
a lesser extent China, heavily depressing the world prices
of groundnut products at the expense of smaller developing
countries mainly located in Africa. Under free trade,
African exporters would gain because they are net sellers of
groundnut products. In India, consumers would be better off
with lower consumer prices resulting from the removal of
prohibitive tariffs and large imports of groundnut products.
The cost of adjustment would fall on Indian farmers and
crushers. In China, crush margins would improve because of
the large terms of trade effects in the groundnut oil market
relative to the seed market. China's groundnut product
exports would expand dramatically. Net buyers of groundnut
products in OECD countries would be worse off. The authors
draw implications for the Doha negotiations. |
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