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A value chain approach to measuring distortions to incentives and food policy effects (with application to Pakistan’s grain policy)

Author

Listed:
  • Elena Briones Alonso
  • Jo Swinnen
Abstract
We develop an extended Nominal Rate of Assistance (NRA) methodology to disentangle the welfare impacts of policies for various interest groups along the value chain (to disaggregate effects within the “producer” and “consumer” umbrellas). We apply our value chain NRA methodology to the case of Pakistan’s price and trade policy. We analyse the welfare implications for various agents in the wheat-flour value chain from 2000 to 2013, a period characterized by major global price volatility and by regular adjustments of domestic policies. We find that the wheat price policy has generally benefitted flour consumers and wheat traders at the expense of wheat farmers and to a lesser extent flour millers. Our findings illustrate that the welfare implications of policies can be quite different within the “producer” and “consumer” umbrellas, which has potentially important implications for economic and political economy analyses and for the design of policies that aim to target the poorest groups along value chains.

Suggested Citation

  • Elena Briones Alonso & Jo Swinnen, 2015. "A value chain approach to measuring distortions to incentives and food policy effects (with application to Pakistan’s grain policy)," Working Papers of Department of Economics, Leuven 493428, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
    • Handle: RePEc:ete:ceswps:493428
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    References listed on IDEAS

    as
    1. Barry K. Goodwin & Ashok K. Mishra & François Ortalo-Magné, 2011. "The Buck Stops Where? The Distribution of Agricultural Subsidies," NBER Chapters, in: The Intended and Unintended Effects of US Agricultural and Biotechnology Policies, pages 15-50, National Bureau of Economic Research, Inc.
    2. Dorosh, Paul & Valdés, Alberto, 1990. "Effects of exchange rate and trade policies on agriculture in Pakistan:," Research reports 84, International Food Policy Research Institute (IFPRI).
    3. Paul A. Dorosh, 2008. "Regional Trade and Food Price Stablisation in South Asia: Policy Responses to the 2007-08 World Price Shocks," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 803-813.
    4. Kym Anderson & Gordon Rausser & Johan Swinnen, 2013. "Political Economy of Public Policies: Insights from Distortions to Agricultural and Food Markets," Journal of Economic Literature, American Economic Association, vol. 51(2), pages 423-477, June.
    5. Abdul Salam, 2012. "Review of Input and Output Policies for Cereals Production in Pakistan," Working Papers id:5176, eSocialSciences.
    6. Paul Dorosh & Abdul Salam, 2008. "Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 71-87.
    7. Pavel Ciaian & Johan F.M. Swinnen, 2009. "Credit Market Imperfections and the Distribution of Policy Rents," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1124-1139.
    8. Salam, Abdul, 2012. "Review of input and output policies for cereals production in Pakistan:," PSSP working papers 6, International Food Policy Research Institute (IFPRI).
    9. Kym Anderson & William A. Masters, 2009. "Distortions to Agricultural Incentives in Africa," World Bank Publications - Books, The World Bank Group, number 2607.
    10. Kym Anderson, 2009. "Distortions to Agricultural Versus Nonagricultural Producer Incentives," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 55-74, September.
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    12. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    13. Swinnen, Johan F M, 1998. "Economic Transition and the Distribution of Policy Rents: The Case of the Wheat-Flour-Bread Chain in Bulgaria," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 25(2), pages 243-258.
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    15. Anderson, Kym, 2009. "Five Decades of Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48742, World Bank.
    16. Alessandro Olper & Johan Swinnen, 2013. "Mass Media and Public Policy: Global Evidence from Agricultural Policies," The World Bank Economic Review, World Bank, vol. 27(3), pages 413-436.
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    18. Laure Latruffe & Chantal Le Mouël, 2009. "Capitalization Of Government Support In Agricultural Land Prices: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 659-691, September.
    19. Ciaian, Pavel & Swinnen, Johan F.M., 2009. "AJAE appendix for ‘Credit Market Imperfections and the Distribution of Policy Rents’," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 91(4), pages 1-10, February.
    20. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications - Books, The World Bank Group, number 9436.
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    24. repec:lic:licosd:35914 is not listed on IDEAS
    25. Pavel Ciaian & Johan F.M. Swinnen, 2006. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 799-815.
    26. World Bank, 2010. "Food Price Increases in South Asia : National Responses and Regional Dimensions," World Bank Publications - Reports 2885, The World Bank Group.
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    1. Luca Salvatici & Silvia Nenci, 2017. "New features, forgotten costs and counterfactual gains of the international trading system," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 44(4), pages 592-633.

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