Trade Liberalization And Its Impact On Wheat Sector Of The Sudan

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Hassan, Mirghani Mohammed Ahmed
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This research aims at studying the impact of trade liberalization on agricultural production as general and in particular to the wheat sector in the Sudan by estimating the welfare of producers and consumers through applying partial equilibrium analysis model. Three cornerstone sectors dominate the macro economy of the Sudan; agriculture, industry and services. Each sector’s contribution in the gross domestic product (GDP) is an outcome of strategies and directives of the progressive governments to provide livelihood, employment and prosperity of the community. Since independence, each sector’s share in GDP is fluctuating from one year to another. Whether countries are developed or developing, Governments intervene in the function of agricultural markets in different ways and at different stages of economic development. The Sudan agricultural sector is indebted to supply food requirements as well as raw materials for food industries, tax revenues, more chances to employ 60 – 70 percent of total labor force and to promote exports that earn foreign exchange. The government has its own instruments to protect the interest of producers and consumers and hence it intervenes and purchases at the declared prices when the market prices are lower. Another instrument to protect producers is to impose import tariffs. Such Government interventions will distort trade of agricultural production. This study examines the impact of trade intervention policies through analyzing policies of wheat production and trade. The trade protection for the wheat sector was calculated using both nominal rate of protection coefficient (NPC) and nominal rate of protection (NRP). Both NPC and NRP express positive protection to producers at the cost of consumers. In January 1995, following the Uruguay Round and the establishment of the World Trade Organization (WTO), Sudan’s application was transformed into an application for accession to the WTO. As trade is increasingly liberalized, protection will be ultimately abolished and wheat farmers will be compelled to produce wheat at competitive prices. Accordingly, the area under wheat will decrease and ultimately production decreases. In addition, demand for wheat will increase as a consequence of the reduction in price. In such a case, efforts are essential to improve productivity growth and reduce the per unit cost of production in order to improve the competitiveness of the wheat sector so that it can compete with the rest of the world.
November 2003
Trade,Wheat, Sudan