MODULE 3. Price Incentives and DisincentivesSESSION 1. Commodity Selection

Presentation of main criteria for selecting the products for which price incentives and disincentives will be calculated.

Agree on the list of products for which price incentives and disincentives will be calculated

Module objectives:

MAFAP estimates incentives and disincentives for agriculture using indicators based on prices

Prices are product related and thus it is necessary to agree for which products these incentives are calculated

The same criteria for product selection should be used in all countries to allow for comparison and aggregation

Moreover, these products will also be used to analyze public expenditure

Why select products....

Trade status:

Import substitute: produced in country but the country is a net importer of the commodity

Exported good: produced in the country and exported (cash-crops)

Non-traded: produced in the country and due to its characteristics (i.e. perishable) or market development (i.e. no processing; high transportation costs) the commodity is not internationally traded with this country

Classification of goods according to...

1st criteria: Cover a significant percentage of total agricultural production (target: 70% in value)

2nd criteria: cover major items of the food import bill

3rd criteria: cover major agricultural exports

4th criteria: cover major items of the diet (in quantity, calories and expenditure)

And any other product that the country might be interested in studying

Criteria for product selection

How to strike a balance between a comprehensive product selection and a manageable amount of products

Should use 5-year averages to assure that there is no impact of extraordinary events

Criteria #1: Source: FAOSTAT Production – Production Indices

Data available for 2005-2009 Gross and Net Production value in international currency for all

FAO Members List commodities by size of production and select those

accounting for 70%

How to proceed....using FAO available data

Criteria #2 & #3: Source: FAOSTAT TradeSTAT – Crops and Livestock products

Data available for 2004-2008 Import and Export Value List commodities by value of exports and imports and select

those accounting for 70%

How to proceed....using FAO available data

Criteria #4: Source: FAOSTAT Food Balance Sheets

Latest data available for 2007 Data on quantities and calories per commodity Again select products covering at least 70% of diet For expenditure need to use retail prices from other sources

(ideally covering a significant % of diet)

How to proceed....using FAO available data

Start with commodities covering 70% of agricultural output. Add any major import or export not covered above if it represents

more than 5% of total exports or imports or more than 1% of total country’s agricultural output.

Add any major staple food in diet not covered above if it represents more than 5% of total diet or more than 1% of total country’s agricultural output.

Check whether Africa-Wide and Regional-Wide key products are included, if not add if it represents more than 1% of total country’s agricultural output.

Review the list and see whether it is feasible to study all commodities.

If not delete products with the minor impact on total agricultural output.

Combining the different criteria....

List of commodities covering 70% of

agricultural output

Are commodities covering 70%

of X and M included?

Are commodities

covering 70% of diet

included?

Do the missed commodities

represent more than 5% of total X

or M?

Add products to

the initial list

Are Africa and region wide

products covered?

Do the missed commodities

represent more than 5% of total

diet?

Add products to

the initial list

Is there any additional

product interesting for

analysis?

FINAL LIST OF PRODUCTS

Do the missed commodities

represent more than 1% of total

agricultural output?

Add products to

the initial list

Add products to

the initial list

Is the list feasible

for study?

Reduce products starting from

smallest share of total agricultural

output

yes

yesyes

no

yesyes

yes

yesyes

no

no

no

no

no

no

no

Undertake the same process with local data sources (maybe more recent – diet composition mainly)

Are the list the same? How can we explain differences?

Does the country want to include a specific commodity? why?

Check against local data sources....

ACTIVITY: Do the product selection procedure as described and discuss potential issues for analysis based on data availability

OUTPUT: Final product list agreed

Thank you!