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Agricultural Policy Impact Analysis with Multi-Market Models: A Primer

André Croppenstedt, Lorenzo Giovanni Bellú,Fabrizio Bresciani and Stefania DiGiuseppe









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    An assessment of the impact of higher yields for maize, soybean and cassava in Indonesia: A multi-market model approach 2007
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    The changing structure of food demand will generate pressure to diversify away from cereals. It is therefore important that cereal productivity increases be maintained to free land as well as to meet the rising demand for animal feed. This study uses a multi-market model to assess the impact of yield increases for maize, soybean and cassava on cropping patterns, prices, incomes, and other variables of interest to policy makers. Raising maize yield reduces imports and has small but positive side- effects in terms of output and consumption of other commodities and in terms of household’s welfare. Raising maize yields and then removing rice tariffs adds a large increase in soybean output and rice imports to the maize yield increase scenario. The impact on household income is modest with middle and bottom income households more affected – and more so in Java. Livestock production and consumption rise strongly and purchasing power of households is much improved. Raising maize, cassava and so ybean yields stimulates production of these crops and reduces imports in particular of maize and cassava but not of soybeans. Rice imports also fall strongly. Household welfare is positively affected but by little. Combining maize, cassava and soybean yield increases with a rice tariff elimination has a particularly pronounced effect on soybean production. Livestock production and consumption grow strongly. Rice imports fall very sharply as do maize imports. Household incomes generally fall but the effect is small. Purchasing power on the other hand increases significantly.
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    An Assessment of the Impact of Rice Tariff Policy in Indonesia: A Multi-Market Model Approach 2007
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    Rice is of key importance to Indonesia’s national and household level food security. The choice of tariff policy has important implications for consumers and producers with policy makers having to decide between the trade-offs implied for the various stakeholders. In this study we use a multi-market model to assess the impact of hypothetical rice tariff changes on household welfare and other variables of interest to rice policy-makers. A reduction in the rice tariff from 30 to 0% reduces rice su pply and wheat demand and stimulates rice demand and soybean supply. Rice imports increase from 0.8 to 2 million tons. Rural households except for the Java-top income group, see incomes fall. In terms of purchasing power all households gain very significantly. Eliminating rice tariffs increases crop diversification and more so in those areas and for those income groups which started off least diversified. It is clear that the higher retail rice price resulting from a 30% ad-valorem tariff rate i mposes significant cost on the 90% of Indonesian households, including most of the very poor households, who are net rice buyers. The implied income gains appear relatively modest but do accrue to middle and poorer households especially in Java. On the other hand an increase in the tariff from 30 to 50% eliminates rice imports, reduces soybean output and stimulates wheat demand. Rural households, except for the Java-top income group, see incomes rise although the effect is relatively modest. In terms of purchasing power households are all worse off.
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    Book (stand-alone)
    Quantitative Socio-Economic Policy Impact Analysis. A Methodological Introduction 2009
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    The present document aims at introducing selected analytical approaches for quantitative analysis of the socio-economic impacts of policies. In the first part of the document, after considering a set of basic questions that a quantitative policy impact analysis has usually to address in order to be useful for informing decision-making processes; some definitions and insights on policy-relevant elements such as policy objectives, policy instruments and impact models are provided. The document the n briefly describes the use of counterfactual analysis for socio-economic policy impact analysis. The second part of the work focuses on the review of selected quantitative analytical approaches frequently applied to assess policy impacts, such as Value Chain Analysis (VCA), Multi-Market Models (MMM), Computable General Equilibrium models (CGE) etc. For each of these, after a description of their “technical” features, an assessment in terms of data, time and expertise requirements for their practical application is provided. For each approach, some real case applications have also been identified and summarily described, considering the specific policy field of application, the hypotheses to be tested and the policy-relevant conclusions provided by their authors. The last section provides some concluding remarks about the use of tools for quantitative policy impact analysis in decision-making processes.

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