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An Assessment of the Impact of Wheat Market Liberalization in Egypt; A Multi-Market Model Approach

Author

Listed:
  • Gamal M. Siam

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

  • André Croppenstedt

    (Agricultural and Development Economics Division, Food and Agriculture Organization)

Abstract

Wheat is central to the government of Egypt’s food security policy which is influenced by a concern for overdependence on imports and the need to provide subsidized bread for the poor. This paper uses a multi-market approach to assess the impact of complete wheat market liberalization, an international wheat price increase, the value of strategic stocks and the impact of investment to generate higher yields and lower transaction costs for wheat producers. Results show that wheat market liberalization implies very substantial costs for consumers and producers. The estimated income losses that these groups suffer would appear to be below the current total subsidy costs and hence a cash transfer program would, in principle, be feasible. The results show that wheat price movements impact strongly on the supply and/or demand side in particular of berseem, rice, maize, cotton and livestock which has significant implications for their net imports as well as input use. Results indicate that strategic stocks can be useful to neutralize the impact of a wheat price spike. Increasing wheat yields and reducing transportation boosts wheat self-sufficiency but does not dampen the impact of removing the wheat subsidy system on household’s welfare.

Suggested Citation

  • Gamal M. Siam & André Croppenstedt, 2007. "An Assessment of the Impact of Wheat Market Liberalization in Egypt; A Multi-Market Model Approach," Working Papers 07-15, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
  • Handle: RePEc:fao:wpaper:0715
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    References listed on IDEAS

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    7. Siam, Gamal M., 2006. "An assessment of the impact of increasing wheat self-sufficiency and promoting cash-transfer subsidies for consumers in Egypt: A multi-market model," ESA Working Papers 289064, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
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    10. Croppenstedt, André, 2006. "Household income structure and determinants in rural Egypt," ESA Working Papers 289065, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
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    Cited by:

    1. Ulimwengu, John M. & Ramadan, Racha, 2009. "How does food price increase affect Ugandan households?: An augmented multimarket approach," IFPRI discussion papers 884, International Food Policy Research Institute (IFPRI).
    2. Bambang Sayaka & Sumaryanto & Masjidin Siregar & André Croppenstedt & Stefania DiGiuseppe, 2007. "An Assessment of the Impact of Higher Yields for Maize, Soybean and Cassava in Indonesia: A Multi-Market Model Approach," Working Papers 07-25, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    3. Croppenstedt, André & Bellú, Lorenzo Giovanni & Bresciani, Fabrizio & DiGiuseppe, Stefania, 2007. "Agricultural policy impact analysis with multi-market models: a primer," ESA Working Papers 289034, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    4. Roberto Ponce & María Blanco & Carlo Giupponi, 2014. "Climate Change, Water Scarcity in Agriculture and the Country-Level Economic Impacts. A Multimarket Analysis," Serie Working Papers 02, Universidad del Desarrollo, School of Business and Economics, revised Nov 2014.
    5. Jeffrey Alwang & Samy Sabry & Kamel Shideed & Atef Swelam & Habib Halila, 2018. "Economic and food security benefits associated with raised-bed wheat production in Egypt," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(3), pages 589-601, June.

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    More about this item

    Keywords

    Egypt; agriculture sector; wheat; multi-market model; bread subsidy; policy scenario impact analysis.;
    All these keywords.

    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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