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Simulating the Impact of Exogenous Food Price Shock on Agriculture and the Poor in Nigeria: Results from a Computable General Equilibrium Model

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  • Nkang, Nkang
  • Omonona, Bolarin
  • Yusuf, Suleiman
  • Oni, Omobowale

Abstract

Motivated by the recent global economic crisis, this paper simulated the impact of a rise in the price of imported food on agriculture and household poverty in Nigeria using a computable general equilibrium (CGE) model and the Foster, Greer and Thorbecke (FGT) class of decomposable poverty measures on the 2006 social accounting matrix (SAM) of Nigeria and the updated 2004 Nigeria Living Standards Survey (NLSS) data. Results show that a rise in import price of food increased domestic output of food, but reduced the domestic supply of other agricultural commodities as well as food and other agricultural composites. Furthermore, a rise in the import price of food increased poverty nationally and among all household groups, with rural-north households being the least affected by the shock, while their rural-south counterparts were the most affected. A major policy implication drawn from this paper is that high import prices in import competing sectors like agriculture tend to favour the sector but exacerbate poverty in households. Thus, efforts geared at addressing the impact of this shock should strive to balance welfare and efficiency issues.

Suggested Citation

  • Nkang, Nkang & Omonona, Bolarin & Yusuf, Suleiman & Oni, Omobowale, 2012. "Simulating the Impact of Exogenous Food Price Shock on Agriculture and the Poor in Nigeria: Results from a Computable General Equilibrium Model," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 1(2).
    • Handle: RePEc:ags:ccsesa:231367
    DOI: 10.22004/ag.econ.231367
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    1. B. Decaluwé & L. Savard & E. Thorbecke, 2005. "General Equilibrium Approach for Poverty Analysis: With an Application to Cameroon," African Development Review, African Development Bank, vol. 17(2), pages 213-243.
    2. Dorothée Boccanfuso & Luc Savard, 2011. "The Food Crisis and its Impacts on Poverty in Senegal and Mali: Crossed Destinies," Development Policy Review, Overseas Development Institute, vol. 29(2), pages 211-247, March.
    3. Dorothée Boccanfuso & Luc Savard, 2005. "Impact Analysis of the Liberalization of Groundnut Production in Senegal: A Multi-household Computable General Equilibrium Model," Cahiers de recherche 05-12, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
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    7. Jean-Yves Duclos & Abdelkrim Araar, 2006. "Poverty and Equity," Economic Studies in Inequality, Social Exclusion, and Well-Being, Springer, number 978-0-387-33318-2, January.
    8. Decaluwe, B. & Patry, A. & Savard, L. & Thorbecke, E., 1999. "Poverty Analysis Within a General Equilibrium Framework," Cahiers de recherche 9909, Université Laval - Département d'économique.
    9. Manson Nwafor & Adeola Adenikinju & Kanayo Ogujiuba, 2007. "The Impacts of Trade Liberalization on Poverty in Nigeria: Dynamic Simulations in a CGE Model," Working Papers MPIA 2007-16, PEP-MPIA.
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    Cited by:

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    2. Séne, Ligane Massamba, 2014. "Heterogeneous responses to heterogeneous food price shocks in Senegal: insights from a CGE," MPRA Paper 58835, University Library of Munich, Germany.
    3. Cheng, Natalie Fang Ling & Hasanov, Akram Shavkatovich & Poon, Wai Ching & Bouri, Elie, 2023. "The US-China trade war and the volatility linkages between energy and agricultural commodities," Energy Economics, Elsevier, vol. 120(C).
    4. Ikhide, Emily Edoisa & Umaru, Ezra K. & Oyebola, Fehintola & Omoju, Oluwasola E., 2021. "A CGE Analysis of the Gender Productivity Gap in Nigeria’s Agriculture Sector," 2021 Conference, August 17-31, 2021, Virtual 315922, International Association of Agricultural Economists.
    5. Idiaye, C. & Kuhn, A. & Okoruwa, V., 2018. "Minimum Wage Policy and Rural Household Welfare in Nigeria," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277114, International Association of Agricultural Economists.

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