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An Assessment of the Impact of Wheat Market Liberalization in Egypt; A Multi-Market Model Approach

Author

Listed:
  • Gamal M. Siam

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

  • André Croppenstedt

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

Abstract

Wheat is central to the government of Egypt’s food security policy which is influenced by a concern for overdependence on imports and the need to provide subsidized bread for the poor. This paper uses a multi-market approach to assess the impact of complete wheat market liberalization, an international wheat price increase, the value of strategic stocks and the impact of investment to generate higher yields and lower transaction costs for wheat producers. Results show that wheat market liberalization implies very substantial costs for consumers and producers. The estimated income losses that these groups suffer would appear to be below the current total subsidy costs and hence a cash transfer program would, in principle, be feasible. The results show that wheat price movements impact strongly on the supply and/or demand side in particular of berseem, rice, maize, cotton and livestock which has significant implications for their net imports as well as input use. Results indicate that strategic stocks can be useful to neutralize the impact of a wheat price spike. Increasing wheat yields and reducing transportation boosts wheat self-sufficiency but does not dampen the impact of removing the wheat subsidy system on household’s welfare.

Suggested Citation

  • Gamal M. Siam & André Croppenstedt, 2007. "An Assessment of the Impact of Wheat Market Liberalization in Egypt; A Multi-Market Model Approach," Working Papers 07-15, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  • Handle: RePEc:fao:wpaper:0715
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    References listed on IDEAS

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    1. Srinivasan, P. V. & Jha, Shikha, 2001. "Liberalized trade and domestic price stability. The case of rice and wheat in India," Journal of Development Economics, Elsevier, vol. 65(2), pages 417-441, August.
    2. Nicholas Minot & Francesco Goletti, 1998. "Export Liberalization and Household Welfare: The Case of Rice in Vietnam," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 738-749.
    3. Dorosh, Paul & del Ninno, Carlo & Sahn, David E., 1995. "Poverty alleviation in Mozambique: a multi-market analysis of the role of food aid," Agricultural Economics, Blackwell, vol. 13(2), pages 89-99, November.
    4. Kherallah, Mylene & Lofgren, Hans & Gruhn, Peter & Reeder, Meyra M., 2000. "Wheat policy reform in Egypt: adjustment of local markets and options for future reforms," Research reports 115, International Food Policy Research Institute (IFPRI).
    5. Aline Coudouel & Stefano Paternostro, 2005. "Analyzing the Distributional Impact of Reforms : A Practioner's Guide to Trade, Monetary and Exchange Rate Policy, Utility Provision, Agricultural Markets, Land Policy and Education, Volume 1," World Bank Publications, The World Bank, number 7251.
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    Cited by:

    1. Roberto Ponce & María Blanco & Carlo Giupponi, 2014. "Climate Change, Water Scarcity in Agriculture and the Country-Level Economic Impacts. A Multimarket Analysis," Serie Working Papers 02, Universidad del Desarrollo, School of Business and Economics, revised Nov 2014.

    More about this item

    Keywords

    Egypt; agriculture sector; wheat; multi-market model; bread subsidy; policy scenario impact analysis.;

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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