CEPII, Recherche et Expertise sur l'economie mondiale
Agricultural Supply Chains and Farmers Constraints: Welfare Impacts in ECOWAS Countries

Nicolas Depetris-Chauvin
Guido Porto

 Highlights :
  • The effect of more competition on farm gate prices depends on the initial level of competition in that country and crop. For many crops, in particular food crops, there is already a lot of competition and further changes in the level of competition will not affect farm gate prices much.
  • In some other specific cases, in particular in cash crops and livestock, the initial level of competition is low and more competition is likely to have larger impact on producer prices.
  • In terms of the effect of complementary policy and other factors affecting the allocation decision of farmers, the largest impacts often come from an increase of international price where we often find a pass-through that is higher to one and from changes in the transaction cost on the production of the crop that increases the farm gate price in equilibrium.
  • Complementarities between shocks to the structure of competition among exporters and shocks to household constraints need to be taken seriously in the design of agricultural policies.

 Abstract :
We study the interplay between market structure and other domestic factors that affect the production and consumption decisions of agricultural families in Africa. We are interested in modeling the production allocation of factors of production to various cash and food crops and in how this allocation depends on competition along the supply chain and on the constraints faced by different types of farmers. The model describes the behavior of farms, exporters and importers in a simple partial equilibrium setting. In particular, we build three different versions of the model to deal with the three basic scenarios that we face in our empirical work. That is, we build a model to explore the case of cash crop production (mostly for exports). We then adapt this model to deal with the case of a country that is a net exporter of a food crop. Finally, we develop a different version of the model for the case of a country that is a net importer of a food crop. We study changes in market structure and in key parameters of the model that capture various household constraints and institutional access. We analyze the changes in real income of household caused by the hypothetical price changes of cash and food crops predicted by the models’ simulations in Burkina Faso, Ghana, Nigeria and Senegal.

 Keywords : Supply chains | Food crops | Cash crops | Market Structure

 JEL : Q12, Q13
CEPII Working Paper
N°2014-20, December 2014

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 Fields of expertise

Emerging Countries