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Can protectionism improve food security? Evidence from an imposed tariff on imported edible oil in Tanzania

Charles Peter Mgeni (), Stefan Sieber, T. S. Amjath-Babu and Khamaldin Daud Mutabazi
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Charles Peter Mgeni: Humboldt Universität zu Berlin
Stefan Sieber: Leibniz Centre for Agricultural Landscape Research (ZALF), Institute for Socio-Economics
T. S. Amjath-Babu: Leibniz Centre for Agricultural Landscape Research (ZALF), Institute for Socio-Economics
Khamaldin Daud Mutabazi: Sokoine University of Agriculture

Food Security: The Science, Sociology and Economics of Food Production and Access to Food, 2018, vol. 10, issue 4, 799-806

Abstract: Abstract To improve food security, many countries adopt protectionist measures and block actions that are needed to improve the competitiveness and efficiency of domestic food commodity production. This article evaluates the policy of imposing an import tariff in order to improve the domestic production of sunflower oil in Tanzania. Promoting domestic production of edible oil in Tanzania through reduction in production costs and increase in productivity efficiency could lead to a stable and sustainable supply of edible oil at affordable prices to consumers. Annual edible oil demand currently is around 400,000 t, a figure that is increasing at a rate of 3% annually. Tanzania imports 60% of its edible oil needs, consuming much of its scarce foreign currency reserves. There is growing interest and efforts by the government and other stakeholders to improve the competitiveness of domestic sources of edible oils in order to substitute for imports. Tanzania, in line with its edible oil strategy 2016–2020, has imposed a 10% tariff on imported edible oils as an import substitution trade policy. There is a strong need for evidence-based assessment of this policy intervention, with this paper evaluating it, using the Policy Analysis Matrix (PAM) approach. Three central issues – competitiveness, efficiency, and policy transfers – are analyzed here. Results show that domestic edible oil producers have a comparative advantage but taxes on tradable inputs render domestic edible oil producers uncompetitive. Therefore, there is a need for Tanzania to protect domestic edible oil producers by reducing taxes on tradable inputs, as this will enable an increase in the domestic production of edible oils, which consequently would save the country the foreign currency that is spent on edible oil imports. Tanzania needs to adopt policies that can improve the competitiveness and efficiency of agriculture rather than increased protectionism.

Keywords: Edible oil; Demand; Protectionism; PAM; Competitiveness; Efficiency; Tanzania (search for similar items in EconPapers)
Date: 2018
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