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The Impact Of Groundnut Trade Liberalization: Implication For The Doha Round

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  • Matthey, Holger
  • Diop, Ndiame
  • Beghin, John C.
  • Sewadeh, Mirvat

Abstract

We use a partial-equilibrium multi-market international model to analyze trade and agricultural policies affecting peanut/groundnut products markets. The model covers four goods (food and crush quality groundnuts, groundnut oil and cake) in 13 countries/regions including a large set of developing countries (Argentina, China, the Gambia, India, Malawi, Mexico, Nigeria, Senegal, and South Africa). Welfare is evaluated by looking at the consumer's equivalent variation, quasi-profits in farming (groundnut farming, livestock), quasi-profit in crushing, and taxpayers' revenues and outlays implied by distortions. We calibrate the model on recent historical data. We analyze several groundnut trade liberalization scenarios. The impact of the reforms is measured in deviation from the recent historical baseline. Trade liberalization in groundnut markets has a strong South-South dimension opposing two large developing countries (India and China) to smaller developing countries mainly located in Africa. Current Chinese and Indian policies substantially depress the world prices of edible groundnuts, groundnut oil and groundnut meal. Following the removal of these distortions, African exporters present in these world markets would gain because they are net sellers of the cash crops. Consumers in China and India would be better off as well with lower consumer prices resulting from the removal of high tariffs more than offsetting the higher world prices of groundnut oil. The cost of adjustment would fall on farmers in India and China who would have to shift to other crops or activities. Crushing in India would also decrease because crushing margins would deteriorate. Net buyers of groundnut products in OECD countries will be worse off. We draw implications for Doha negotiations.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2003 Annual meeting, July 27-30, Montreal, Canada with number 22032.

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Date of creation: 2003
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Handle: RePEc:ags:aaea03:22032

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Keywords: International Relations/Trade;

References

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  1. Beghin, John C. & Bureau, Jean-Christophe & Drogu?, Sophie, 2004. "Calibration of Incomplete Demand Systems in Quantitative Analysis, The," Staff General Research Papers 11771, Iowa State University, Department of Economics.
  2. John C. Beghin & Holger Matthey, 2003. "Modeling World Peanut Product Markets: A Tool for Agricultural Trade Policy Analysis," Food and Agricultural Policy Research Institute (FAPRI) Publications 03-wp332, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  3. Ibrahima Hathie & Rigoberto A. Lopez, 2002. "The impact of market reforms on the Senegalese peanut economy," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 543-554.
  4. Beghin, John C. & Bureau, Jean-Christophe & Drogue, Sophie, 2003. "The Calibration Of Incomplete Demand Systems In Quantitative Analysis," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25820, International Association of Agricultural Economists.
  5. Gary Adams & Patrick Westhoff & Brian Willott & Robert E. Young, 2001. "Do “Decoupled” Payments Affect U.S. Crop Area? Preliminary Evidence from 1997–2000," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1190-1195.
  6. Rucker, Randal R & Thurman, Walter N, 1990. "The Economic Effects of Supply Controls: The Simple Analytics of the U.S. Peanut Program," Journal of Law and Economics, University of Chicago Press, vol. 33(2), pages 483-515, October.
  7. Diop, Ndiame & Beghin, John C. & Sewadah, Mirvat, 2005. "Groundnut Policies, Global Trade Dynamics, and the Impact of Trade Liberalization," Staff General Research Papers 12231, Iowa State University, Department of Economics.
  8. John Beghin & Jean-Christophe Bureau & Sophie Drogue, 2004. "Calibration of incomplete demand systems in quantitative analysis," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 839-847.
  9. Tsunehiro Otsuki & John S. Wilson, 2001. "What price precaution? European harmonisation of aflatoxin regulations and African groundnut exports," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(3), pages 263-284, October.
  10. Badiane, Ousmane & Kinteh, Sambouh, 1994. "Trade pessimism and regionalism in African countries: the case of groundnut exporters," Research reports 97, International Food Policy Research Institute (IFPRI).
  11. Beghin, John C. & Roland-Holst, David & Van der Mensbrugghe, Dominique, 2002. "How Will Agricultural Trade Reforms in High-Income Countries Affect the Trading Relationships of Developing Countries?," Staff General Research Papers 10665, Iowa State University, Department of Economics.
  12. Kherallah, Mylene & Govindan, Kumaresan, 1999. "The Sequencing of Agricultural Market Reforms in Malawi," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 8(2), pages 125-51, July.
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Cited by:
  1. Diop, Ndiame & Beghin, John & Sewadeh, Mirvat, 2004. "Groundnut policies, global trade dynamics, and the impact of trade liberalization," Policy Research Working Paper Series 3226, The World Bank.

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