Political Economy of Agricultural Trade Interventions in Africa

Abstract

This paper uses new data on agricultural policy interventions to examine the political economy of agricultural trade policies in Sub-Saharan Africa. Historically, African governments have discriminated against agricultural producers in general (relative to producers in non-agricultural sectors), and against producers of export agriculture in particular. While more moderate in recent years, these patterns of discrimination persist. They do so even though farmers comprise a political majority. Rather than claiming the existence of a single best approach to the analysis of policy choice, we explore the impact of three factors: institutions, regional inequality, and tax revenuegeneration. We find that agricultural taxation increases with the rural population share in the absence of electoral party competition; yet, the existence of party competition turns the lobbying disadvantage of the rural majority into political advantage. We also find that privileged cash crop regions are particular targets for redistributive taxation, unless the country's president comes from that region. In addition, governments of resource-rich countries, while continuing to tax export producers, reduce their taxation of food consumers. 1 When greater than zero, the indicators suggest that government policies favor farming; when the relative rate of assistance is below zero, it suggests policies have an anti-agricultural bias.As indicated in chapter 2, governments in Africa, like those elsewhere, have adopted less distorting/more neutral policies since the 1980s. Increasingly their policies impact farming and other industries in a less biased manner. However, policies in Africa continue to alter prices in ways that discriminate against farming, and more so than in other developing country regions.In this chapter we describe the levels of protection in our sample of 20 Sub-SaharanAfrican countries 2 and the manner in which they vary; and, drawing from the literature on the political economy of agriculture, we advance and test a series of explanations for the patterns we observe. , and Zimbabwe (L). These countries account for no less than 90 percent of Sub-Saharan Africa's population, GDP, farm households and agricultural output. "C" indicates coastal; "L" indicates landlocked, and "R" indicates resource-rich. Note that for five of these countries (Benin, Burkina Faso, Chad, Mali, and Togo) the data refer only to cotton. We include these countries only in our analyses of agricultural exportables and tradables. The data in figure 2 suggest that Africa's governments (with the exception of those in landlocked countries) have tended to protect food crops, raising the level of domestic prices above those prevailing in world markets, while taxing cash crops. The distortions introduced by government policies have eroded over time, with nominal rates of assistance for cash crops converging toward zero. Within the region, governments of resource rich countries tend to provide the most favorable policy environment for producers of both food a...

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