The Vi seminar on trade and poverty kicked off on Monday, September 8, gathering an audience of 75 participants representing academia, government and international organizations.
The seminar convened the 11 researcher-policymaker tandems that produced case studies examining the effect of trade on poverty in the context of a three-year capacity-building project sponsored by UN Department of Economic and Social Affairs and the Government of Finland.
The morning session was chaired by UNCTAD’s Amelia Santos Paulino, of the Division for Africa, Least Developed Countries and Special Programmes, who also served as mentor for one of the projects.
The first presentation of the day was delivered by Argentinian researcher, Paula Calvo (pictured, left), of the Universidad de San Andrés, who wrote a paper examining the effect of wheat policy measures implemented between 2002 and 2007, on the welfare of urban households in her country. The measures were put in place to shield domestic grain prices from international price hikes, and to ensure an adequate supply for the domestic market.
“Since wheat derivatives (bakery products and pasta) are important components of the Argentinian food basket, restrictions implicitly aimed to restrain inflation and avoid welfare losses,” Calvo said, specifying that the poorest households allocate 11% of their total expenditure to these products, as opposed to about 3% for richer households.
Her analysis found that although the measures kept national wheat prices down, they came at a high price for the government in terms of subsidies, and had a marginal effect on households, given that the price of wheat makes up only a small fraction of the of the cost of products destined for the consumer.
Policy recommendations emerging from the study advocate the elimination of export restrictions as an incentive to increase local production, which dropped by 41.5 percent between 2007 and 2013. The study also suggests considering targeted consumer subsidies, which may have a higher impact on poor households at a lower cost to the government.
“The substantial drop in wheat production shows that the intervention policy has been particularly detrimental to the first link in the chain, wheat producers,” said Raúl Auger (pictured), of the National Senate of Argentina, who served as Calvo’s policymaker partner. "The recommendations from Paula's research are not only appropriate, but necessary."
The second paper of the morning was presented by Benin’s Didier Yélognissè Alia (pictured, left), currently a PhD candidate at the University of Kentucky, USA. His paper assesses whether higher cotton prices can improve the livelihoods of farmers, 36.8 percent of whom live in poverty.
One of Benin’s largest cash crops, cotton provides income to over 3.5 million people, and represents up to 70 percent of the country’s agricultural exports. Faced with a sharp decline in production, the government instated price support measures that substantially increased the price paid to producers between 2009 and 2013.
Alia’s analysis found that the price increase had positive effects on both production and the welfare of poor households. He estimates that a 1-percent price increase would generate 1.3 to 2.6 percent more cotton-sown area, and determined that the 31.6 percent increase in the cotton price between 2009 and 2012 improved the average cotton producer’s welfare by 9.8 percent.
“Cash crops offer greater opportunities for households to get out of poverty,” Alia said. “The recent decision to increase producer prices to FCFA 250–260 per kg is an important policy measure that could yield positive results even in the short run.”
“I have found this project a very rich learning experience,” commented Alia’s policymaker partner, Epiphane Adjovi (pictured), of Benin’s Projet de Renforcement des Capacités en Conception et Analyse des Politiques de Développement (capacity building project on the design and analysis of development policy). “The methods proposed should be disseminated much more to research centers in Africa.”
For more on the seminar and the book, visit http://vi.unctad.org/tap