The Elimination of Madagascar's Vanilla Marketing Board, Ten Years on

40 Pages Posted: 20 Apr 2016

See all articles by Olivier Cadot

Olivier Cadot

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Centre for Economic Policy Research (CEPR); World Bank

Laure Dutoit

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne)

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

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Date Written: August 1, 2006

Abstract

This paper explores how the elimination of Madagascar's Marketing Board in 1995 affected prices paid to farmers, incentives, and regional indicators of poverty and inequality. After steadily losing market share, Madagascar has been able to regain some of the lost ground since the mid-1990s. Margins between freight on board (FOB) and farmgate prices have spectacularly narrowed down, but this effect is dwarfed by that of world-price volatility. A counterfactual analysis based on a model of Cournot competition between vanilla traders suggests that whatever limited competition there is among them has contributed to raise purchase prices and the cash income of vanilla farmers. But the effect on farmers' consumption remains small because a large part of it is self-consumed. The effect on aggregate measures of poverty and inequality is even smaller, even at the regional level. After taking into account the reduction in Madagascar's monopoly power on the world vanilla market implied by the elimination of the Marketing Board, the induced rise in producer prices is estimated to have lifted about 20,000 individuals out of poverty.

Keywords: Markets and Market Access, Access to Markets, Economic Theory & Research, Crops & Crop Management Systems, Food & Beverage Industry

Suggested Citation

Cadot, Olivier and Dutoit, Laure and de Melo, Jaime, The Elimination of Madagascar's Vanilla Marketing Board, Ten Years on (August 1, 2006). World Bank Policy Research Working Paper No. 3979. Available at SSRN: https://ssrn.com/abstract=923286

Olivier Cadot (Contact Author)

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland
+41 21 692 3463 (Phone)
+41 21 692 3495 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

World Bank ( email )

1818 H Street NW
Washington, DC 20433
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Laure Dutoit

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Jaime De Melo

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 705 8273 (Phone)
+41 22 705 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/demelo/Jaime.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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