Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi

Restricting cross-border trade through export bans in an attempt to stabilize domestic prices has been a particularly popular policy tool used by many sub-Saharan countries in recent years. However, little is known about how the variability in harv...

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Main Authors:	Fuje, Habtamu, Pullabhotla, Hemant K.
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	GRAIN MARKET AGRICULTURAL TRADE EXPORT BAN FOOD SECURITY HOUSEHOLD WELFARE GRAIN PRICES TRADE RESTRICTIONS TRADE POLICY PRICE DISPERSION
Online Access:	http://documents.worldbank.org/curated/en/571291602596745920/Impact-of-Grain-Trade-Policies-on-Prices-and-Welfare-Evidence-from-Malawi http://hdl.handle.net/10986/34631

id	okr-10986-34631
recordtype	oai_dc
spelling	okr-10986-346312022-09-20T00:10:59Z Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi Fuje, Habtamu Pullabhotla, Hemant K. GRAIN MARKET AGRICULTURAL TRADE EXPORT BAN FOOD SECURITY HOUSEHOLD WELFARE GRAIN PRICES TRADE RESTRICTIONS TRADE POLICY PRICE DISPERSION Restricting cross-border trade through export bans in an attempt to stabilize domestic prices has been a particularly popular policy tool used by many sub-Saharan countries in recent years. However, little is known about how the variability in harvests and seasonality -- two critical dimensions of smallholder agriculture in Africa -- mediate the effects of export bans on household welfare. This study assesses the short-term impact of export bans on prices and welfare of households in Malawi, accounting for these heterogeneities. It uses monthly panel data on maize prices from 152 markets in Malawi and neighboring countries. To identify the impacts of the bans, the study compares the change in price dispersion between a domestic market in Malawi and another market in a neighboring country, relative to the price dispersion between the domestic market and other markets within Malawi that are at a similar distance as the domestic-foreign market pair. The findings show that export bans, in the short run, are associated with lower domestic prices, lower relative prices, and less seasonality in prices in Malawi. This is after accounting for harvest levels and the existence of trade restrictions in neighboring countries. The short-run effects of the export bans help explain why policymakers are likely to engage in the use of such policies. However, the welfare analysis shows that the welfare gains and poverty reduction effects are small in magnitude and likely to be offset by the long-run distortionary effects of restrictive trade policies. 2020-10-16T19:45:55Z 2020-10-16T19:45:55Z 2020-10 Working Paper http://documents.worldbank.org/curated/en/571291602596745920/Impact-of-Grain-Trade-Policies-on-Prices-and-Welfare-Evidence-from-Malawi http://hdl.handle.net/10986/34631 English Policy Research Working Paper;No. 9436 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Malawi
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	GRAIN MARKET AGRICULTURAL TRADE EXPORT BAN FOOD SECURITY HOUSEHOLD WELFARE GRAIN PRICES TRADE RESTRICTIONS TRADE POLICY PRICE DISPERSION
spellingShingle	GRAIN MARKET AGRICULTURAL TRADE EXPORT BAN FOOD SECURITY HOUSEHOLD WELFARE GRAIN PRICES TRADE RESTRICTIONS TRADE POLICY PRICE DISPERSION Fuje, Habtamu Pullabhotla, Hemant K. Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
geographic_facet	Africa Malawi
relation	Policy Research Working Paper;No. 9436
description	Restricting cross-border trade through export bans in an attempt to stabilize domestic prices has been a particularly popular policy tool used by many sub-Saharan countries in recent years. However, little is known about how the variability in harvests and seasonality -- two critical dimensions of smallholder agriculture in Africa -- mediate the effects of export bans on household welfare. This study assesses the short-term impact of export bans on prices and welfare of households in Malawi, accounting for these heterogeneities. It uses monthly panel data on maize prices from 152 markets in Malawi and neighboring countries. To identify the impacts of the bans, the study compares the change in price dispersion between a domestic market in Malawi and another market in a neighboring country, relative to the price dispersion between the domestic market and other markets within Malawi that are at a similar distance as the domestic-foreign market pair. The findings show that export bans, in the short run, are associated with lower domestic prices, lower relative prices, and less seasonality in prices in Malawi. This is after accounting for harvest levels and the existence of trade restrictions in neighboring countries. The short-run effects of the export bans help explain why policymakers are likely to engage in the use of such policies. However, the welfare analysis shows that the welfare gains and poverty reduction effects are small in magnitude and likely to be offset by the long-run distortionary effects of restrictive trade policies.
format	Working Paper
author	Fuje, Habtamu Pullabhotla, Hemant K.
author_facet	Fuje, Habtamu Pullabhotla, Hemant K.
author_sort	Fuje, Habtamu
title	Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
title_short	Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
title_full	Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
title_fullStr	Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
title_full_unstemmed	Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi
title_sort	impact of grain trade policies on prices and welfare : evidence from malawi
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/571291602596745920/Impact-of-Grain-Trade-Policies-on-Prices-and-Welfare-Evidence-from-Malawi http://hdl.handle.net/10986/34631
_version_	1764481314112667648

Impact of Grain Trade Policies on Prices and Welfare : Evidence from Malawi

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