The last session of the Vi Seminar on Trade and Poverty, held September 10, and chaired by project mentor, Alessandro Nicita, of UNCTAD’s Division on International Trade in Goods and Services and Commodities, featured the work of researchers from Peru, Nigeria and Viet Nam.
First up were Peruvian Ministry of Foreign Trade and Tourism researchers, Carmen Cecilia Matta Jara (pictured, right) and Ana María del Carmen Vera Ganoza (pictured), who conducted research on the welfare effects of lower tariffs -- from 33.3 percent in 2000 to zero in 2011 -- on yellow corn.
Yellow corn is the third most important agricultural crop in Peru and the main input for the production of chicken meat, which, at a per capita consumption of 37 kilograms, represents a large share of households’ food expenditure.
Their research determined that although lower tariffs resulted in a significant decrease in the price of wholesale yellow corn (24.7 percent), consumers saw a much smaller reduction in the retail price of chicken meat (5.5 percent). Nonetheless, the tariff reduction was found to have a pro-poor effect, registering a slightly higher welfare gain for poor households on the coastal region.
Policy recommendations from the study address increased market integration, as well as port and highway infrastructure development, as a means of extending the benefits of tariff reduction.
“The Vi project was really a great experience. I never imagined that an online course could bring me so many opportunities to improve my career as an economist. Now I can say that it was worthwhile all the efforts and hours dedicated to this project,” Matta Jara reported in the end-of seminar evaluation questionnaire.
“However, it is only the beginning, the first step of many to increase my knowledge of the relationship between trade policies and poverty. A good understanding of this link will help us to recommend better policies that address the poverty in our countries,” she added.
Next to present were Olayinka Idowu Kareem (pictured, left), currently a post-doctoral fellow at the European University Institute, and policymaker partner, Suleman Abedayo Audu (pictured), of the Permanent Mission of Nigeria and the Nigeria Trade Office to the WTO.
Kareem and Audu cooperated on a research project examining the welfare effects in Nigeria of the Common External Tariff (CET) of the Economic Community Of West African States (ECOWAS). Adopted by the country in 2005, tariffs on agricultural imports dropped from about 32 percent in 2000 to 15 percent in 2010; tariffs on manufactured products fell from 25 percent in 2000 to 11 percent in 2010.
Kareem finds a high correlation between the CET and reduced domestic prices, generating a welfare gain for consumers and a loss for producers. However, the savings on expenditure outweighed the losses in income, overall.
“These conclusions actually depict the difficult situation of domestic agricultural producers given the food import dependence of the country, which displaces local producers and increases unemployment,” commented Audu.
To mitigate the losses for rural area producers in particular, the study recommends that steps be taken to increase productivity, including improved infrastructure, training and access to finance, as well as the implementation of social safety nets.
“The recommendations are compatible with the government programme of using agriculture to create jobs, wealth and food security under the Agricultural Transformation Agenda,” Audu added.
“The project has really improved my knowledge in micro-econometric analysis of trade policy issues,” commented Kareem. “The knowledge acquired has been put to use in most of my recent empirical trade policy analyses. I intend to use it in the forthcoming research projects related to distributional effects of non-tariff barriers and of informal trade, in Nigeria.”
The last presentation of the two-and-a-half day seminar came from Ngoc Quang Pham (pictured, left), of the International Labour Organization Country Office for Viet Nam, and co-author, Anh Hai La (pictured), of the Centre for Analysis and Forecasting of the Viet Nam Academy of Social Sciences.
Their research looked at the welfare implications of the Large-Scale Field Model (LSFM) of rice cultivation piloted since 2010 in the Mekong River Delta of Viet Nam, the world’s largest rice exporter. The model aims to increase productivity and reduce production costs, and bypass the intermediaries between farmers and exporters.
The study considers three price-increase scenarios applied to the Mekong River Delta and the Red River Delta, and finds that farmers in the latter region would not benefit from the price increase. Therefore, policy recommendations urge focusing LSFM implementation in the Mekong River Delta, perhaps by private exporters, who may have a higher incentive than state-owned.
“LSFM cannot be expanded if farmers’ benefit is not guaranteed,” commented La. “Successful implementation of the LSFM would require some level of competition among Vietnamese rice exporters and hence access to the rice export quota.”