Poverty Effects of Expansion and Policies in Cotton Economies in Rural Mozambique: An Economy-wide Approach

35 Pages Posted: 6 Jan 2019

See all articles by Rui S Benfica

Rui S Benfica

International Fund for Agricultural Development (IFAD)

Channing Arndt

International Food Policy Research Institute (IFPRI)

David Tschirley

Michigan State University - Department of Agricultural Economics

Duncan Boughton

Michigan State University - Department of Agricultural, Food and Resource Economics

Date Written: 2006

Abstract

This paper uses a Regional Computable General Equilibrium (CGE) model calibrated with a Social Accounting Matrix (SAM) for the Mozambique Zambezi Valley cotton concession sub-region to examine the economy-wide impacts and relative changes in the levels of income poverty of grower and non-grower household groups, following exogenous shocks, such as contract faming specific capital expansion, technology improvements, changes in world prices, and Government policies. Simulation results indicate that productivity gains have a broad-based income growth and poverty reduction potential, even greater than increased cotton world prices; because sustained increases in world prices are unlikely, this result is encouraging. While employment linkages are relatively weak in these economies when compared to tobacco growing areas, income diversification strategies by non-grower households, particularly through non-farm selfemployment and food crop marketing, ensure that they are not left behind when interventions are focused on cotton growers. Even when impacts are limited among growers, any expansion in cotton production results in some positive effects to nongrowers. The implied potential of interventions focused on increasing cotton productivity present a great opportunity for concession firms and policy makers to design strategies that are beneficial to both grower farmers, firms and the population at large. This will require public-private coordination efforts stressing better research and extension, the use of high yielding seed varieties, and emphasis on quality. Although results indicate limited negative effects of high import prices for inputs, measures aimed at reducing the costs of importation and transportation are highly encouraged as they can help minimize or counterbalance any negative effects from factors outside the control of domestic agents. While current poverty impacts of cotton cropping are relatively small, there is high potential for significant broad based gains under a more productive system.

Keywords: Income poverty, regional general equilibrium, exogenous shocks

JEL Classification: C68, C88, D31, D33, I32

Suggested Citation

Benfica, Rui S and Arndt, Channing and Tschirley, David and Boughton, Duncan, Poverty Effects of Expansion and Policies in Cotton Economies in Rural Mozambique: An Economy-wide Approach (2006). Available at SSRN: https://ssrn.com/abstract=3305085 or http://dx.doi.org/10.2139/ssrn.3305085

Rui S Benfica (Contact Author)

International Fund for Agricultural Development (IFAD) ( email )

Via Paolo di Dono
Rome, 00142
Italy

Channing Arndt

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

David Tschirley

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

Duncan Boughton

Michigan State University - Department of Agricultural, Food and Resource Economics ( email )

MI
United States

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