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Groundnut policies, global trade dynamics, and the impact of trade liberalization

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  • Diop, Ndiame
  • Beghin, John
  • Sewadeh, Mirvat

Abstract

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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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3226.

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Date of creation: 01 Mar 2004
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Handle: RePEc:wbk:wbrwps:3226

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Keywords: Food&Beverage Industry; Environmental Economics&Policies; Markets and Market Access; Crops&Crop Management Systems; Economic Theory&Research; Crops&Crop Management Systems; Environmental Economics&Policies; Food&Beverage Industry; Economic Theory&Research; Access to Markets;

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  1. Matthey, Holger & Diop, Ndiame & Beghin, John C. & Sewadeh, Mirvat, 2003. "The Impact Of Groundnut Trade Liberalization: Implication For The Doha Round," 2003 Annual meeting, July 27-30, Montreal, Canada 22032, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Fang, Cheng & Beghin, John C., 2001. "Urban Demand for Edible Oils and Fats in China. Evidence from Household Survey Data," 2001 Conference (45th), January 23-25, 2001, Adelaide 125620, Australian Agricultural and Resource Economics Society.
  3. 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).
  4. 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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Cited by:
  1. John C. Beghin & Holger Matthey, 2003. "Modeling World Peanut Product Markets: A Tool for Agricultural Trade Policy Analysis," Center for Agricultural and Rural Development (CARD) Publications 03-wp332, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
  3. Simtowe, Franklin & Kassie, Menale & Asfaw, Solomon & Shiferaw, Bekele A. & Monyo, Emmanuel & Siambi, Moses, 2012. "Welfare Effects of Agricultural Technology adoption: the case of improved groundnut varieties in rural Malawi," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126761, International Association of Agricultural Economists.
  4. Matthey, Holger & Diop, Ndiame & Beghin, John C. & Sewadeh, Mirvat, 2003. "The Impact Of Groundnut Trade Liberalization: Implication For The Doha Round," 2003 Annual meeting, July 27-30, Montreal, Canada 22032, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Beghin, John C. & Diop, Ndiame & Matthey, Holger, 2003. "Groundnut Trade Liberalization: Could the South Help the South?," Staff General Research Papers 10875, Iowa State University, Department of Economics.
  6. 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.
  7. Masters, William A., 2007. "Distortions to Agricultural Incentives in Senegal," Agricultural Distortions Working Paper 48517, World Bank.
  8. World Bank, 2007. "The Gambia - From Entrepot to Exporter and Eco-tourism : Diagnostic Trade Integration Study for the Integrated Framework for Trade-related Technical Assistance to Least Developed Countries," World Bank Other Operational Studies 7682, The World Bank.
  9. Simtowe, Franklin & Asfaw, Solomon & Diagne, Aliou & Shiferaw, Bekele A., 2010. "Determinants of Agricultural Technology adoption: the case of improved groundnut varieties in Malawi," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95921, African Association of Agricultural Economists (AAAE);Agricultural Economics Association of South Africa (AEASA).
  10. Nadolnyak, Denis A. & Fletcher, Stanley M. & Hartarska, Valentina M., 2006. "Southeastern Peanut-Production Cost Efficiency Under the Quota System: Implications for the Farm-Level Impacts of the 2002 Farm Act," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(01), April.
  11. Fletcher, Stanley M. & Nadolnyak, Denis A., 2005. "Accommodating Imperfect Competition in A Model of World Peanut Trade," 2005 Annual meeting, July 24-27, Providence, RI 19460, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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