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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.

Suggested Citation

  • 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.
  • Handle: RePEc:wbk:wbrwps:3226
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    References listed on IDEAS

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    1. 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).
    2. Fang, Cheng & Beghin, John C., 2002. "Urban Demand for Edible Oils and Fats in China: Evidence from Household Survey Data," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 732-753, December.
    3. 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.
    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).
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    Citations

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    Cited by:

    1. 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).
    2. Dorothee Boccanfuso & Luc Savard, 2008. "Groundnut Sector Liberalization in Senegal: A Multi-household CGE Analysis," Oxford Development Studies, Taylor & Francis Journals, vol. 36(2), pages 159-186.
    3. Beghin, John & Diop, Ndiame & Matthey, Holger, 2006. "Groundnut trade liberalization: Could the South help the south?," World Development, Elsevier, vol. 34(6), pages 1016-1036, June.
    4. 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).
    5. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
    6. 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.
    7. 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).
    8. John C. Beghin & Holger Matthey, 2003. "Modeling World Peanut Product Markets: A Tool for Agricultural Trade Policy Analysis," Food and Agricultural Policy Research Institute (FAPRI) Publications 03-wp332, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
    9. 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.
    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. Mofya-Mukuka, Rhoda & Shipekesa, Arthur M., 2013. "Value Chain Analysis of the Groundnuts Sector in the Eastern Province of Zambia," Food Security Collaborative Working Papers 171869, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    12. Agyekum, Michael & Jolly, Curtis M., 2017. "Peanut trade and aflatoxin standards in Europe: Economic effects on trading countries," Journal of Policy Modeling, Elsevier, vol. 39(1), pages 114-128.
    13. Masters, William A., 2007. "Distortions to Agricultural Incentives in Senegal," Agricultural Distortions Working Paper 48517, World Bank.
    14. 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.
    15. Author-Name: Jeffrey D. Sachs & John W. McArthur & Guido Schmidt-Traub & Margaret Kruk & Chandrika Bahadur & Michael Faye & Gordon McCord, 2004. "Ending Africa's Poverty Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 117-240.

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