Effects of customs union tariffs on domestic rice competitiveness: the case of irrigated rice in Niger
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Date
2010-08
Authors
Abdourahmane, Touré Ali
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Abstract
Niger’s irrigated rice production system was evaluated within the context of the country’s common external tariff regime. The effects of the common external tariff (CET) on the performance of the irrigated rice production system were evaluated at various comparison points where local rice enters into competition with imported rice and by considering the main rice marketing systems (retail and wholesale markets). These comparisons were made taking into account the various brands of imported rice that are commercialised in the country. The results of the policy analysis matrix (PAM) base scenario for the irrigated rice system under the CET show that the system is generally competitive (positive private profitability) and has potential for growth (positive economic profitability). These results are disaggregated by type of rice quality, type of rice market (retail or wholesale) and by two points of comparison (Niamey and Tillabery). At both points of comparison, the PAM indicators show positive financial profitability, indicating that the system is generally competitive and that operators are making some financial gains. Moreover, the irrigated rice production enterprise reveals positive economic profitability for both retailers and wholesalers. Therefore, as an economic activity, it generates net positive income for the national economy per unit of land devoted to this activity. It can be maintained that despite the fact that the inputs used in irrigated rice production are affected by the various common external tariff (CET) measures, the activity still performs to a level that permits the various actors to earn some positive income and sustain their businesses. Despite its competitiveness and efficiency, however, irrigated rice production still performs below potential because it lacks certain additional incentives. To investigate this issue, various sensitivity analyses were performed, using single factors as well as simultaneous changes in several factors. These sensitivity analyses were performed in order to diagnose the effects of possible policy changes on elements such as financial and social profitability, production incentives, and protection coefficients. The sensitivity analyses show that private and social profits, ceteris paribus, are sensitive to improvements in technological factors such as farm-level productivity and post-harvest techniques that enhance the milling conversion rate of paddy into milled rice. The incentives and protection coefficients are also found to be sensitive to possible policy changes. Furthermore, private and social profits, including incentives and protection coefficients, are sensitive to changes in economic factors relating to the reduction of import duties on inputs, as well as to increases in import duties on imported rice and changes in exchange rates. Niger’s irrigated rice system generally performs well under the CET regime, but because certain resources are diverted away from it, the system is in fact being taxed. There is a need to provide greater incentives to everyone active in the system, in the form of technological improvements (farm-level productivity improvement and post-harvest quality enhancement). Greater incentives should also be given in terms of improving marketing channels, especially retail marketing, where a great number of women rice traders are active. More research needs to be conducted on this aspect.
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Irrigation management transfer, Niger, Irrigated rice, Competitiveness, Trade policy, Comparative advantage, Revenues, Costs, Net policy transfer, Protection coefficients, Incentives, Social/economic profits, Private profits, Thesis (Ph.D. Agricultural Economics))--University of the Free State, 2010