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Analysing changes to price incentives during the first wave of COVID-19












FAO. 2022. Analysing changes to price incentives during the first wave of COVID-19. FAO Agricultural Development Economics Policy Briefs, No. 49. Rome.



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    Book (series)
    Realigning policy interventions on agricultural prices
    Monitoring incentives in low- and middle-income countries during the first wave of COVID-19
    2022
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    COVID-19 has resulted in a shock to agrifood systems around the world, with the potential for low- and middle-income countries to be particularly affected. Although policy responses were more muted than during the 2007–2008 world food crisis, efforts to insulate from supply shocks and ensure local availability during COVID-19 have generally included export restrictions and import tariff reductions, among other responses. In an effort to enable rapid market monitoring and realignment, we develop a new indicator defined as a monthly nominal rate of protection “express” which seeks to isolate as much as possible the effect of trade and market policies on domestic prices in real-time in order to understand how they responded. This analysis examines changes to this indicator during the first wave of the pandemic in 27 low- and middle-income countries for the most-consumed staple cereals of the poor and food insecure. We show that agricultural price incentives declined by 12.6 percentage points compared to the same months in previous years, suggesting that retail domestic price spikes may have largely been mitigated or avoided. However, impacts varied across countries and commodities, and this indicator can serve as a tool for examining primary drivers of changes and conducting causal analysis to facilitate adequate agrifood policy responses to support economic recovery in the post-COVID-19 era.
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    Book (stand-alone)
    Agricultural trade & policy responses during the first wave of the COVID-19 pandemic in 2020 2021
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    Measures adopted around the world to contain the COVID-19 outbreak helped curb the spread of the virus and lowered the pressure on health systems. However, they also affected the global trading system, and the supply and demand of agricultural and food products. In response to concerns over food security and food safety worldwide, many countries reacted immediately to apply policy measures aiming to limit potentially adverse impacts on domestic markets. Covering the first half of 2020, the report provides an overview of short-term changes in trade patterns and policy measures related to agricultural trade that countries adopted in response to the pandemic. Despite the shocks caused by the COVID-19 pandemic and containment measures, the efforts of governments and agricultural sector stakeholders to keep agricultural markets open and trade flowing smoothly contributed to remarkably resilient value chains. Effects on global trade in food and agriculture remained limited to short-term disruptions at the very beginning of the pandemic. Governments’ policy responses covered a wide range of measures, including export restrictions, lowering of import barriers, and domestic measures. Most of the trade restricting measures were short-lived. International political commitments were pivotal in the coordination of a global response to the crisis and in deterring countries from taking unilateral measures that could have harmed food security in other parts of the world. However, COVID-19 is still spreading and may entail severe implications for access to food and longer-term shifts in global demand and supply of food and agricultural commodities.
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    Booklet
    Analysing beef price incentives to strengthen policies for production and exports in Uganda
    Technical note
    2023
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    In Uganda, 58 percent of households depend on livestock for their livelihoods, with cattle being the most important livestock subsector in the country. Despite natural pastures, water resources, and big demand in national and world markets, beef production in Uganda grew by only 1 percent in the last decade, and lags behind local demand. In the last decade, the government has adopted several policies within the framework of the National Development Plan, aimed at increasing domestic beef production and exports. This report assesses the effects of policy support on the beef sector in Uganda over the last four years (2017–2020), and also includes previous analysis on live cattle for the period 2005–2016. To measure price incentives, the study relies on renowned indicators; the nominal rate of protection, nominal rate of assistance and the market development gap. The results reveal that in the past (2011–2016) breeders were penalized by low prices, while recently they benefitted from prices above the international-equivalent, mainly due to restrictions on cattle movement due to a foot-and-mouth disease (FMD) outbreak, which increased domestic prices. The persistent gaps between domestic and international prices can also be explained by the very limited price transmission and weak market integration of the beef value chain in Uganda. FMD is a critical issue to tackle to improve beef commercialization and competitiveness, together with the significant value chain inefficiencies, such as high transport costs and the presence of informal fees, that still hinder marketing and profitability of this sector.

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