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Costs and benefits of higher tariffs on wheat imports to South Africa

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  • McDonald, Scott
  • Punt, Cecilia
  • Rantho, Lillian
  • van Schoor, Melt

Abstract

Low international wheat prices, caused by tariffs and subsidies in developed countries, have been blamed for causing financial difficulty to South African farmers. While indignation at unfair trade practices may be valid, it does not necessarily follow that protection of the local industry is the best response. This study uses a static general equilibrium model to describe and quantify the effects of increased tariffs (by up to 25 percentage points) on the local wheat industry, other affected industries-- particularly downstream industries-- and the economy at large. The effects on factors, households and the government are also analysed. The results show that the benefits to the wheat industry are highly concentrated and smaller than the loss of income caused in other sectors. Welfare is negatively affected, especially for low-income households, for whom the effects are exacerbated by increases in relative food prices.

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Bibliographic Info

Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

Volume (Year): 47 (2008)
Issue (Month): 1 (March)
Pages:

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Handle: RePEc:ags:agreko:6031

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Web page: http://www.aeasa.org.za/
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Related research

Keywords: Computable general equilibrium (CGE); wheat; import tariffs; Crop Production/Industries; Demand and Price Analysis; International Relations/Trade;

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  1. Meyer, Ferdinand H. & Westhoff, Patrick C. & Binfield, Julian C.R. & Kirsten, Johann F., 2006. "Model closure and price formation under switching grain market regimes in South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(4), December.
  2. van Schoor, Melt & Punt, Cecilia & McDonald, Scott, 2006. "Compiling National, Multiregional and Regional Social Accounting Matrices for South Africa," Technical Paper Series 58067, PROVIDE Project.
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