Measuring the Impact of a Change in the Price of Cashew Received by Exporters on Farmgate Prices and Poverty in Guinea-Bissau
This paper assesses the impact of a change in the price of cashew received by exporters in general -- and by FUNPI, a fund to promote the industrialization of agricultural products, in particular -- on farmgate prices and poverty in Guinea-Bissau....
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| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/09/20211379/measuring-impact-change-price-cashew-received-exporters-farmgate-prices-poverty-guinea-bissau-measuring-impact-change-price-cashew-received-exporters-farmgate-prices-poverty-guinea-bissau http://hdl.handle.net/10986/20369 |
| Summary: | This paper assesses the impact of a
change in the price of cashew received by exporters in
general -- and by FUNPI, a fund to promote the
industrialization of agricultural products, in particular --
on farmgate prices and poverty in Guinea-Bissau. The
analysis builds a theoretical model of supply chains in
export agriculture that includes exporters, traders, and
farmers competing in a bilateral oligopoly fashion. The
model is adapted to data from the country's cashew
sector and a household survey. Given the market structure, a
shock on export prices or the introduction of an export tax,
such as the FUNPI contribution, has a strong effect on
farmgate prices, as farmers absorb about 80 percent of the
tax (while exporters take up 13 percent and traders absorb
the remaining 7 percent). The effect is uneven across
households, as poor rural households are more exposed to
price volatility and most cashew farmers are poor. It is
estimated that their income falls by 12 percent as a result
of the FUNPI contribution. Complementary policies can
overcome the effect of the FUNPI surcharge on farmgate
prices by aiming for reductions in transport,
infrastructure, and transaction costs for traders and
exporters. Fostering cashew processing would create added
value through a displacement of volume from exporters to
processors. The analysis finds it implausible that, under
reasonable assumtions, a subsidy would overturn the welfare
costs of the FUNPI contribution. |
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