The Impact of a New WTO Agricultural Agreement ... - Tufts University

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23 P KEY: W* W S T S F D: Domestic consumers’ demand S F : Farmers’ marginal cost of production S T : Traders’ marginal cost W: Initial world price (before subsidies removed) W*: World price after removal of subsidies P: Initial quantity produced domestically C: Initial quantity consumed domestically P*: Quantity produced after change C*: Quantity consumed after change D P P* C* C Q Figure 1. The market for a cereal, in a net-importing country. P W* W S T S F KEY: D: Domestic consumers’ demand S F : Farmers’ marginal cost of production S T : Traders’ marginal cost W: Initial world price (before subsidies removed) W*: World price after removal of subsidies P: Initial quantity produced domestically C: Initial quantity consumed domestically P*: Quantity produced after change C*: Quantity consumed after change D C* C P P* Q Figure 2. The market for a cereal, in a net-exporting country.
24 In a net-importing country, the population consumes more than it produces. Therefore, we expect the negative consumption effect to be greater than the positive production effect. In this case, the removal of subsidies would bring a net loss of welfare to the country. Most countries in Africa are net importers of maize and wheat. In a net-exporting country, farmers’ production exceeds domestic consumers’ demand. If the price increases, we expect the production effect to dominate the consumption effect. In Figure 2, we see that exports, illustrated by the difference between P and C, increase when the world price increases. In 2001, four sub-Saharan African countries were net exporters of maize: South Africa, Uganda, Burkina Faso and Côte D’Ivoire. South Africa was the only net exporter of wheat in 2001. 6 We must also acknowledge a third case. With an increase in the cereal’s price, an initially net importing country can become a net exporter. Figure 3 illustrates this situation. If an initially net-importing country becomes a net exporter, the net welfare effect may be positive or negative. 6 Maize and wheat trade data from FAOSTAT, 2004.
Page 1 and 2: The Impact of a New WTO Agricultura
Page 3 and 4: The Impact of a New WTO Agricultura
Page 5 and 6: 2 INTRODUCTION “The rural poor, g
Page 7 and 8: 4 in agriculture, the welfare of fa
Page 9 and 10: 6 1. Background on the WTO and Dome
Page 11 and 12: 8 Of the three types of domestic su
Page 13 and 14: 10 for differences between internat
Page 15 and 16: 12 the G-20 suggests stricter adjus
Page 17 and 18: 14 Africa. They are important to th
Page 19 and 20: 16 subsidy removal. The range of es
Page 21 and 22: 18 However, these studies ignore mu
Page 23 and 24: 20 reside in rural areas where prim
Page 25: 22 country will be W. 5 Thus P is t
Page 29 and 30: 26 found that low-income countries
Page 31 and 32: 28 P KEY: W* W d a c b D S T S F D:
Page 33 and 34: 30 FAO questionnaires. The FAO also
Page 35 and 36: 32 consumed, QC 0 , was 429.7 thous
Page 37 and 38: 34 Benin 1886.9 364.0 0.08% Burundi
Page 39 and 40: Central African Rep. -765.0 -319.9
Page 41 and 42: 38 positive effects decrease. One c
Page 43 and 44: 40 but not in 2001. However, these
Page 45 and 46: 42 Most important, the net welfare
Page 47 and 48: 44 consumers, as well as producers,
Page 49 and 50: 46 the rural population report that
Page 51 and 52: 48 17 The HICES provides the measur
Page 53 and 54: 50 Adult Equivalent Scale: 16 Male
Page 55 and 56: 52 Since only 12% of rural househol
Page 57 and 58: 54 missing all cereals values. We c
Page 59 and 60: 56 and sellers of cereals in urban
Page 61 and 62: 58 However, when we consider only t
Page 63 and 64: 60 MT, is produced domestically. 24
Page 65 and 66: 62 information. The high marketing
Page 67 and 68: 64 It is also important to note tha
Page 69 and 70: 66 Bibliography ActionAid. 2002.
Page 71 and 72: 68 Food and Agriculture Organizatio
Page 73 and 74: 70 Data Sources FAOSTAT, 2003-2004,
Page 75 and 76: 72 Net Welfare Effect of a 100% or
Page 77 and 78:
74 Net Welfare Effect of a 100% or
Page 79 and 80:
Table 3: Net Welfare Effect of a 10
Page 81 and 82:
78 APPENDIX B: Household Data Table
Page 83 and 84:
80 Table 8. Household Expenditure p
Page 85 and 86:
Table 12. Households Participating
Page 87 and 88:
84 Table 13. Net Buyers and Sellers
Page 89:
Table 15. Net Buyers and Sellers of
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