Price Policies on Competitiveness of Oil Seeds Production in Sudan

Abstract

Sudan has the features of the least developing economy which are mainly the inadequacy of foreign reserves. The agricultural sector is the main source of non oil exports and provides 90% of the country's foreign exchange earnings from non oil exports. The objective of the study was to analyze the agricultural price policy that affects the profitability and competitiveness of production and exports of oil seed crops (sesame and groundnut). In order to study the impact of these policies on the oil seed crops, secondary data for the period 2001/02 – 2006/07 was analyzed using the Policy Analysis Matrix (PAM) as a quantitative tool of analysis to quantify the private and social profitability of oil seeds. A basic result was that both crops, in different production systems were profitable and competitive in relative and absolute terms, but irrigated groundnut was more competitive than rainfed groundnut. Also, the sesame production in the mechanized sector was more competitive than in the traditional sector. In relative and absolute terms, groundnut was more competitive than sesame. Although, the study results showed a slight increase of implicit subsidies in North and South Kordofan, they revealed that both crops were heavily taxed at different production farming systems in the selected areas. To establish right and stable price policies for oil seeds production, the study concluded the need for complementary relationships between these policies instruments and their time synchronization. Also, the study emphasized the need for effective export promotion policy package to increase oil seeds exports. The study recommended revision of policy package (the taxes and levies) to increase oil seeds yield and to improve seed quality that could result in vertical expansion of oil seeds production. Also, the study recommended coordination among government entities with regard to oil seeds production, processing and marketing that might be reflected in reduction in production and marketing costs.