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The elimination of Madagascar's Vanilla Marketing Board, ten years on

Author

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  • Cadot, Olivier
  • Dutoit, Laure
  • de Melo, Jaime

Abstract

This paper explores how the elimination of Madagascar's Marketing Board in 1995 affected prices paid to farmers, incentives, and regional indicators of poverty and inequality. After steadily losing market share, Madagascar has been able to regain some of the lost ground since the mid-1990s. Margins between freight on board (FOB) and farmgate prices have spectacularly narrowed down, but this effect is dwarfed by that of world-price volatility. A counterfactual analysis based on a model of Cournot competition between vanilla traders suggests that whatever limited competition there is among them has contributed to raise purchase prices and the cash income of vanilla farmers. But the effect on farmers'consumption remains small because a large part of it is self-consumed. The effect on aggregate measures of poverty and inequality is even smaller, even at the regional level. After taking into account the reduction in Madagascar's monopoly power on the world vanilla market implied by the elimination of the Marketing Board, the induced rise in producer prices is estimated to have lifted about 20,000 individuals out of poverty.

Suggested Citation

  • Cadot, Olivier & Dutoit, Laure & de Melo, Jaime, 2006. "The elimination of Madagascar's Vanilla Marketing Board, ten years on," Policy Research Working Paper Series 3979, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3979
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    References listed on IDEAS

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    1. Jaime de Melo & Marcelo Olarreaga & Wendy Takacs, 2015. "Pricing Policy Under Double Market Power: Madagascar and the International Vanilla Market," World Scientific Book Chapters,in: Developing Countries in the World Economy, chapter 8, pages 199-218 World Scientific Publishing Co. Pte. Ltd..
    2. Jonathan Isham & Michael Woolcock & Lant Pritchett & Gwen Busby, 2005. "The Varieties of Resource Experience: Natural Resource Export Structures and the Political Economy of Economic Growth," World Bank Economic Review, World Bank Group, vol. 19(2), pages 141-174.
    3. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters,in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314 World Scientific Publishing Co. Pte. Ltd..
    4. Margaret McMillan, 2001. "Why Kill The Golden Goose? A Political-Economy Model Of Export Taxation," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 170-184, February.
    5. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-271, September.
    6. Sahn, David E & Sarris, Alexander H, 1991. "Structural Adjustment and the Welfare of Rural Smallholders: A Comparative Analysis from Sub-Saharan Africa," World Bank Economic Review, World Bank Group, vol. 5(2), pages 259-289, May.
    7. Hoekman, Bernard & Michalopoulos, Constantine & Schiff, Maurice & Tarr, David, 2001. "Trade policy reform and poverty alleviation," Policy Research Working Paper Series 2733, The World Bank.
    8. Nicita, Alessandro, 2004. "Who benefited from trade liberalization in Mexico? Measuring the effects on household welfare," Policy Research Working Paper Series 3265, The World Bank.
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    Cited by:

    1. Maret, Fenohasina, 2007. "Distortions to Agricultural Incentives in Madagascar," Agricultural Distortions Working Paper 48551, World Bank.

    More about this item

    Keywords

    Markets and Market Access; Access to Markets; Economic Theory&Research; Crops&Crop Management Systems; Food&Beverage Industry;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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