The Paradox of Agricultural Trade Liberalization in Bangladesh and Tanzania

Love M. Chile and Dayal Talukder
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Love M. Chile: Associate Professor, Institute of Public Policy, School of Social Sciences and Public Policy, Auckland University of Technology, Auckland, New Zealand
Dayal Talukder: Lecturer, ICL Business School, Auckland, New Zealand

American Journal of Trade and Policy, 2014, vol. 1, issue 1, 23-31

Abstract: This paper examines some of the contradictions and theoretical ambiguities of agricultural trade liberalization on the welfare of smallholder farmers. Using production, consumption, and price data for pre-and post-liberalization periods for two main crops from Bangladesh (rice) and Tanzania (maize), we critically analyze the correlation between domestic and international prices of rice in Bangladesh and maize in Tanzania to estimate the impact of agricultural trade liberalization on price stability/volatility and food security to measure economic benefits of trade liberalization on smallholder farmers. Using the coefficient of variation of the level of prices (CV) and corrected coefficient of variation (CCV) as measured by Huchet-Bourdon (2011), we found that the values of both CV and CCV for consumer prices in the post-liberalization were quite large, suggesting greater volatility of consumer price of rice in Bangladesh and maize in Tanzania in the post-liberalization period. We conclude that price volatility diminishes the potential benefits of agricultural trade liberalization for smallholder farmers who are net-deficit producers and net-deficit sellers. We recommend supplementary policy interventions to achieve enhanced welfare from trade liberalization.

Keywords: Agricultural trade liberalization; Rice production; consumption and trade; Bangladesh; Maize production; Tanzania; Price volatility (search for similar items in EconPapers)
JEL-codes: O13 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ajotap:0129

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