More Efficient Production Subsidies for Emerging Agriculture in Arab Micro-States: A Conceptual Model
Review of Middle East Economics and Finance 2013; 9(3): 293-319
28 Pages Posted: 16 Sep 2014
Date Written: September 14, 2014
Recent periods of volatile food prices have prompted several import-dependent Arab micro-states to consider at least some domestic production as a way of mitigating extremely volatile food prices, which even in rich micro-states can have adverse health and economic effects. Using Qatar as a case study, we employ non-linear mathematical programming and analogs to measures of volatility in the financial sector to develop a model to guide the constitution of a crop portfolio for the inaugural year for domestic production, supplemented by storage, which is optimal in the sense of achieving the most dampening effect on price volatility. We conclude that the desired result cannot be achieved for grains through domestic production and that strategic storage will play a crucial role. However, our defined target for volatility reduction, well short of self-sufficiency, can be achieved for all other raw products through an obtainable level of domestic production.
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