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Commodity prices, structural constraints and food price shocks in Tanzania

Author

Listed:
  • Conforti, Piero
  • Sarris, Alexander H.

Abstract

This paper explores the impact of the recent soar in world commodity prices on economic activity and household welfare in Tanzania, and the possible policy responses to that shock. The analysis is based on a single country computable general equilibrium model that includes considerable factor market and household details, as well as marketing margins between producers, consumers and foreign markets. Results indicate that the Tanzanian economy may fail to benefit from the opportunities arising from the increase in world agricultural prices, as this would imply a considerable reduction in most production activities, but the few that are directly export oriented. Policies can counteract only to a limited extent these negative impacts. Tariff and domestic tax reductions show some desirable results, albeit small in size, while export taxes further depress the domestic economy. Injections of foreign resources fail to stimulate domestic production. Structural bottlenecks deeply affect the results: a reduction of the high marketing margins would improve the ability of the economy to adapt to any change in world prices.

Suggested Citation

  • Conforti, Piero & Sarris, Alexander H., 2009. "Commodity prices, structural constraints and food price shocks in Tanzania," 2009 Conference, August 16-22, 2009, Beijing, China 51905, International Association of Agricultural Economists.
  • Handle: RePEc:ags:iaae09:51905
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    File URL: http://ageconsearch.umn.edu/record/51905/files/PCASpriceboom.pdf
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    References listed on IDEAS

    as
    1. Rattso, Jorn, 1982. "Different macroclosures of the original Johansen model and their impact on policy evaluation," Journal of Policy Modeling, Elsevier, vol. 4(1), pages 85-97, March.
    2. Thurlow, James & Wobst, Peter, 2003. "Poverty-focused social accounting matrices for Tanzania," TMD discussion papers 112, International Food Policy Research Institute (IFPRI).
    Full references (including those not matched with items on IDEAS)

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