IDEAS home Printed from https://ideas.repec.org/a/bla/rdevec/v24y2020i3p1027-1045.html
   My bibliography  Save this article

Distortions to agricultural incentives: Evidence from Nigerian value chains

Author

Listed:
  • Simla Tokgoz
  • Summer Allen
  • Fahd Majeed
  • Bas Paris
  • Olajide Adeola
  • Evans Osabuohien

Abstract

Understanding how policies affect price transmission and incentives for producers and consumers along the complete value chain is a relevant research question due to the more globalized structure of agricultural value chains. In particular, Nigerian agricultural value chains have been targeted by a number of policy decisions. We analyze the import‐oriented palm oil value chain and the export‐oriented cacao value chain, estimating the price distortions from policies and their implications for production incentives at the regional level. For palm oil, due to protective trade policies and domestic initiatives, the nominal rate of protection (NRP) at the farmgate for palm oil producers shows that producers have been protected. NRPs at the border for cacao beans and cocoa products are negative, which may be due to a quality gap, the export market structure, and the concentration of buyers in global markets. Negative NRPs at the farmgate are seen for all regions, showing disincentives in the cacao beans export market reverberate through the domestic market despite domestic support policies. In both value chains, NRPs at farmgate vary across regions partially due to regional policy frameworks and partially due to local conditions impacting price transmission.

Suggested Citation

  • Simla Tokgoz & Summer Allen & Fahd Majeed & Bas Paris & Olajide Adeola & Evans Osabuohien, 2020. "Distortions to agricultural incentives: Evidence from Nigerian value chains," Review of Development Economics, Wiley Blackwell, vol. 24(3), pages 1027-1045, August.
    • Handle: RePEc:bla:rdevec:v:24:y:2020:i:3:p:1027-1045
    DOI: 10.1111/rode.12664
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/rode.12664
    Download Restriction: no
    File URL: https://libkey.io/10.1111/rode.12664?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bouët, Antoine & Odjo, Sunday P., 2019. "Africa agriculture trade monitor 2019," IFPRI books, International Food Policy Research Institute (IFPRI), number 9780896296909.
    2. Mavrotas, George & Mogues, Tewodaj & Oyeyemi, Motunrayo & Smart, Jenny & Xiong, Zhe, 2018. "Agricultural public expenditures, sector performance, and welfare in Nigeria: A state-level analysis," NSSP working papers 60, International Food Policy Research Institute (IFPRI).
    3. Kemisola O. Adenegan & Foluke Fagbemi & Oladele I. Osanyinlusi & Abiodun Olusola Omotayo, 2018. "Impact Of The Growth Enhancement Support Scheme (Gess)' On Farmers’ Income In Oyo State, Nigeria," Journal of Developing Areas, Tennessee State University, College of Business, vol. 52(1), pages 15-28, January-M.
    4. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," World Trade Review, Cambridge University Press, vol. 7(4), pages 675-704, October.
    5. Egwuma, Henry & Shamsudin, Mad Nasir & Mohamed, Zainalabidin & Kamarulzaman, Nitty Hirawaty & Wong, Kelly Kai Seng, 2016. "A Model For The Palm Oil Market In Nigeria: An Econometrics Approach," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(2), pages 1-17, April.
    6. Bouet, Antoine & Cosnard, Lionel & Fall, Cheickh Sadibou, 2019. "Africa in global agricultural trade," IFPRI book chapters, in: Africa agriculture trade monitor 2019, chapter 2, pages aatm17-41, International Food Policy Research Institute (IFPRI).
    7. Awe, O. O. & Akinlana, D. M. & Yaya, O. S. & Aromolaran, O., 2018. "Time Series Analysis of the Behaviour of Import and Export of Agricultural and Non-Agricultural Goods in West Africa: A Case Study of Nigeria," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 10(2).
    8. Patrick L. Hatzenbuehler & Philip C. Abbott & Tahirou Abdoulaye, 2017. "Price Transmission in Nigerian Food Security Crop Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 143-163, February.
    9. Alaba David Alori & Adebayo Augustine Kutu, 2019. "Export Function of Cocoa Production, Exchange Rate Volatility and Prices in Nigeria," Journal of Economics and Behavioral Studies, AMH International, vol. 11(2), pages 1-14.
    10. World Bank, 2020. "World Development Report 2020," World Bank Publications - Books, The World Bank Group, number 32437, December.
    11. Richard J. Sexton & Ian Sheldon & Steve McCorriston & Humei Wang, 2007. "Agricultural trade liberalization and economic development: the role of downstream market power," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 253-270, March.
    12. Alan V. Deardorff & Indira Rajaraman, 2009. "Buyer Concentration in Markets for Developing Country Exports," Review of Development Economics, Wiley Blackwell, vol. 13(2), pages 190-199, May.
    13. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," The World Bank Economic Review, World Bank, vol. 2(3), pages 255-271, September.
    14. John Baffes & Bruce Gardner, 2003. "The transmission of world commodity prices to domestic markets under policy reforms in developing countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(3), pages 159-180.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kym Anderson & Johan Swinnen, 2008. "Distortions to Agricultural Incentives in Europe's Transition Economies," World Bank Publications - Books, The World Bank Group, number 6502, December.
    2. Kareem, Olayinka Idowu & Wieck, Christine, 2022. "Mapping agricultural trade within the ECOWAS: structure and flow of agricultural products, barriers to trade, financing gaps and policy options A research project in cooperation with GIZ on behalf of ," Working Papers 316918, Universitaet Hohenheim, Institute of Agricultural Policy and Agricultural Markets.
    3. Kareem, Olayinka Idowu & Wieck, Christine, 2022. "Cartographie du commerce agricole au sein de la CEDEAO : structure et flux des produits agricoles, obstacles au commerce, lacunes en matière de financement et options politiques.Un projet de recherche," Working Papers 316973, Universitaet Hohenheim, Institute of Agricultural Policy and Agricultural Markets.
    4. Kym Anderson & Ernesto Valenzuela, 2021. "What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 265-290, April.
    5. Ahmed, Mohamed M. & Balie, Jean, 2016. "Why is it important to measure the Market Development Gap? An application to the agricultural sector of Uganda," 2016 Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246446, African Association of Agricultural Economists (AAAE).
    6. C. Larochez-Dupraz & M. Huchet-Bourdon, 2016. "Agricultural support and vulnerability of food security to trade in developing countries," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 8(6), pages 1191-1206, December.
    7. Ilaria Fusacchia & Jean Balié & Luca Salvatici, 2022. "The AfCFTA impact on agricultural and food trade: a value added perspective," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(1), pages 237-284.
    8. Kym Anderson & Gordon Rausser & Johan Swinnen, 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 423-477, June.
    9. Anderson, Kym & Kurzweil, Marianne & Martin, William J. & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Methodology for Measuring Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48326, World Bank.
    10. Bekkers, Eddy & Brockmeier, Martina & Francois, Joseph & Yang, Fan, 2017. "Local Food Prices and International Price Transmission," World Development, Elsevier, vol. 96(C), pages 216-230.
    11. Kym Anderson, 2013. "Agricultural price distortions: trends and volatility, past, and prospective," Agricultural Economics, International Association of Agricultural Economists, vol. 44(s1), pages 163-171, November.
    12. Thomas Kopp & Richard J. Sexton, 2021. "Farmers, Traders, and Processors: Buyer Market Power and Double Marginalization in Indonesia," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(2), pages 543-568, March.
    13. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," World Trade Review, Cambridge University Press, vol. 7(4), pages 675-704, October.
    14. Anderson, Kym & Martin, Will & van der Mensbrugghe, Dominique, 2013. "Estimating Effects of Price-Distorting Policies Using Alternative Distortions Databases," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 877-931, Elsevier.
    15. Baffes, John & Haniotis, Tassos, 2010. "Placing the 2006/08 commodity price boom into perspective," Policy Research Working Paper Series 5371, The World Bank.
    16. John Baffes & Varun Kshirsagar, 2020. "Shocks to food market systems: A network approach," Agricultural Economics, International Association of Agricultural Economists, vol. 51(1), pages 111-129, January.
    17. Baffes, John, 2009. "More on the energy / non-energy commodity price link," Policy Research Working Paper Series 4982, The World Bank.
    18. Kym Anderson, 2009. "Krueger/Schiff/Valdes Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since the 1980s," School of Economics and Public Policy Working Papers 2009-22, University of Adelaide, School of Economics and Public Policy.
    19. Catherine Laroche-Dupraz & Marilyne Huchet, 2013. "Impact of domestic support and border measures for developing countries’ food security," Post-Print hal-01123056, HAL.
    20. Huang, Jikun & Liu, Yu & Martin, Will & Rozelle, Scott, 2009. "Changes in trade and domestic distortions affecting China's agriculture," Food Policy, Elsevier, vol. 34(5), pages 407-416, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:rdevec:v:24:y:2020:i:3:p:1027-1045. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.