Academic journal article Agricultural and Resource Economics Review

Reducing Rice Imports in Côte d'Ivoire: Is a Rise in Import Tariff the Solution?

Academic journal article Agricultural and Resource Economics Review

Reducing Rice Imports in Côte d'Ivoire: Is a Rise in Import Tariff the Solution?

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Rice is a major source of cereal consumed in Côte d'Ivoire and other West African countries. The share of household expenditures for rice there shows that it plays an essential role in household consumption. In 2008, expenditures for food in Côte d'Ivoire were estimated at euro3,380 million and 17 percent of those expenditures were for rice (Directorate of Statistics, Documentation, and Information (DSDI) 2011). Consumption of rice has been growing rapidly as a result of increasing urbanization and a growing Ivorian population, and Côte d'Ivoire's production is not adequate to meet the rising demand. In 2011, the country imported 935,000 metric tons of rice, which represented more than 60 percent of the nation's consumption (Programme National Riz (PNR) 2012), making Côte d'Ivoire Africa's third-largest rice-importing country after Nigeria and Senegal.

This increasing dependence on the world market to satisfy domestic consumption likely is not sustainable over time. In 2008, for instance, this import-oriented policy had an adverse effect on the national economy following a surge in the international price of rice. International price hikes translated directly into substantial increases in domestic prices that then had a negative impact on consumer welfare. Dimova and Gbakou (2012) used 2008 household survey data and found that middle-income households in Côte d'Ivoire were hardest hit by price shocks because of their inability to smooth out price increases by consuming and producing alternative crop varieties. In addition, rice prices did not return to pre-2008 levels and remained on an upward trend (Seck et al. 2010) despite the increase in area planted and local yields of rice.

The rapid expansion of rice imports in many West African countries has been classified as a perverse effect of trade liberalization on smallholder producers' livelihoods and a hindrance to development of the domestic rice sector (Oxfam 2005). As a result, producers, along with development and lobbying organizations in the Economic Community for West African States (ECOWAS)1 customs union, are pushing hard for greater protection of the domestic rice sector through an increase in the import tariff. This type of restrictive trade policy could present an opportunity to reduce imports and revamp the local industry. However, a higher import tariff on rice also would result in higher retail prices, and given the extensive reliance on imports to meet rapidly increasing domestic demand for rice, the policy could hurt consumers in Côte d'Ivoire and other import-dependent countries. Several studies have shown that households suffer from rising food prices mainly because they are net food buyers (Ivanic and Martin 2008, Minot and Dewina 2013), but the impact is country-specific and depends on macroeconomic conditions and household food production and consumption patterns (Cudjoe, Breisinger, and Diao 2010).

Despite the importance of rice in consumption patterns, little has been done in West Africa to estimate the elasticity of demand for imports or the impacts of an increase in the rice import tariff on the welfare of rice consumers. It has often been argued, without providing any quantitative estimates of the demand elasticities, that the demand for imported rice is inelastic in sub-Saharan Africa and that import-dependent countries will therefore be harmed by higher import tariffs and/or higher international prices. The lack of quantitative estimates, however, prohibits an assessment of the true impact of policy changes on domestic demand for rice and consumer welfare. Therefore, an in-depth analysis is needed to inform policymakers and producers about the effects such an increase in the import tariff would be likely to have on demand for imported rice and consumer welfare.

Since Côte d'Ivoire has been viewed as particularly vulnerable to price shocks in global rice markets (Dimova and Gbakou 2012), the objective of this study is to estimate demand elasticities for rice of varying qualities imported into Côte d'Ivoire from different points of origin and the welfare impact of the suggested increase in the import tariff. …

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