From Subsidizing Agriculture to Improving Efficiency: An Analysis to National and Regional Implications of Agricultural Efficiency Improvement in Sudan
Posted: 28 Sep 2010
Date Written: September 28, 2010
Despite the huge decline in the contribution of agriculture to the Sudanese exports from 73% in 1998 to only 5% in 2007 as a result of the growing share of petroleum; agriculture remain an important sector in the economy contributing 35% to GDP in 2007 and employing about 70% of the Sudanese labour force. Traditional agriculture occupies 60% of the total cultivated land and employs 65% of the total agricultural population; nonetheless, it contributes only 16% to total agricultural GDP, attributed to low crop productivity beside the concurrent droughts. These factors have influenced food security situation in the region negatively and increased poverty rates. The objective of this paper is therefore to investigate the effects of improving the agricultural efficiency in the traditional rainfed sector of Sudan assuming additional capital allocation and improving the skills of labour. These assumptions are justified by the increasing investments flows in the Sudanese agriculture especially from Arab countries due to the recent world food crises. Further, the paper also simulates subsidy elimination as well as tax imposition on the output of the selected sectors, as a source of government income. The rational of that is to compensate the amount of government spending located to improve the efficiency. GTAP model and the new GTAP Africa data base are employed with 11 regions to see possible effects on some African and MENA countries. Sectors are aggregated to 14, separating cereals and oilseeds, which represent the most important crops in the traditional rainfed sector. Results show that, GDP, welfare, private income and consumption in Sudan will improve because of efficiency improvements. Moreover, output, trade balance, domestic demand, and exports of cereals and oilseeds would apparently improve while their imports and domestic import demand will decline. Importantly, welfare levels and domestic imports demand of these sectors would also increase in MENA.
Keywords: Agriculture, Sudan, CGE
JEL Classification: D6, D2, A2
Suggested Citation: Suggested Citation