Economic analysis of effects of government intervention on production,marketing and consumption of rice in Tanzania
Loading...
Date
1992
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Sokoine University of Agriculture
Abstract
In this affecting policies study, production, marketing and consumption of rice in Tanzania are reviewed. Distortionary and effects we 1 fare government
of intervention are empirically estimated. Partial equiLibrium analysis involving Policy Analysis (PAM) and partial equilibrium model Ma tri x PAM Norn i naI
(through Effective Resource Coefficient Protection Coefficient Protection (EPC) (NPC), Domestic and used to estimate distortionary is Cost. ( DRC) ) is used. The
effects of government intervention in small and large scale rice production systems, while is used to estimate welfare partial equilibrium model effects of
government intervention. Correction for overvaluation of currency is also carried out. Primary data from the survey village of Madaganya in Morogoro district and secondary data from Dakawa Rice Farm, Ministry of Agriculture and Livestock Development, and its institutions, Bank of Tanzania and Bureau of Statistics form the basis of analyses. The system is results indicate that inefficient and the official marketing incurs large financial losses which are not borne by the parastatals but directly by the producers general (through public prices) and subsidies to reduced through partly the by the marketing institutions and consumer prices. Net NPCs and EPCs for both production systems are less than one. From the net NPC and EPC values, small holder producers experience a net tax of 20% while that of large scale producers is between 63- 80% implying that taxation i s for a major disincentive greater rice output. Net DRC for both production system is less than one (ie. 0.15 each) indicating that rice production is efficient and socially profitable and in the absence of distortion, production would generate more than enough value added to remunerate factors of production at their opportunity cost. The economy incurs large welfare losses due to misallocation of resources. Producers incur large welfare losses (Tsh 6,578x10' .3 ’) while consumers incur large welfare gain (Tsh 17,283.27x10'). Government suffers losses of revenue (Tsh 12,377.15x10 3) and foreign exchange (Tsh 8769.76x103- as a result of distortion. The implication is that quantity of rice produced domestically declines while amount consumed locally increases. These results are based on partial equilibrium analysis which captures only partial effects. Distortions of the size discussed here would have a repercussion in other sectors of the economy as well. The general equilibrium analysis would have larger estimates than those given here. Some policies to improve marketing efficiency, to raise farm level prices and increase output are recommended.
Description
Thesis