Agricultural Efficiency Gains and Trade Liberalization in Sudan

The traditional agriculture in Sudan occupies 60% of the total cultivated land and employs 65% of the agricultural population. Nevertheless, it is characterized by its low crop productivity, which is mainly driven by low technical efficiency, while drought and civil conflicts threaten most of its areas countrywide. Therefore, it has contributed only an average of 16% to the total agricultural GDP during the last decade. This paper addresses from an empirical point of view the sectoral and macroeconomic implications of agricultural efficiency improvement in Sudan and assesses the efficiency gains under the assumption of trade liberalization. Efficiency improvement experiments are implemented by augmenting the efficiency parameters of labor, capital, and land in a Computable General Equilibrium (CGE) framework. The CGE model of the study relies on the newly produced Sudanese Social Accounting Matrix (SAM), which provides data on 10 agricultural sectors, 10 industrial sectors and 13 service sectors. Results show that improving the agricultural efficiency would lead to improvements in GDP, welfare level, and trade balance. In addition it would also improve the output and competitiveness of the Sudanese agricultural exports and increase their strength to face the challenges of liberalization.Agricultural efficiency, liberalization, Sudan SAM, CGE analysis, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Consumer/Household Economics, Crop Production/Industries, Food Security and Poverty, Labor and Human Capital, Land Economics/Use, Production Economics, Productivity Analysis, D2, D5, D6, E1, E2, F1, F2, H2,

The Integration of Palestinian-Israeli Labour Markets: A CGE Approach

Replaced with revised version of paper 07/12/11.labor market, CGE, Labor and Human Capital,

Do grain reserves necessarily contribute to prices stability and food security in Sudan? An assessment

AbstractMost governments in Africa implement policies aiming to stabilize the prices of staple foods, which often include building up grain reserves, besides other trade measures insulating their domestic market from the world market. The mechanism should ideally work as follows, grains should be bought and stored from areas, during the surplus seasons (after harvest) so as to assure fair prices to producers and should be distributed during deficit seasons, in deficit areas besides in cases of emergencies. However, ideal approaches are not necessarily followed in many developing countries due to different constraints and situations. The Strategic Reserve Corporation (SRC) is an institution that is established ten years ago to play such a role in Sudan. This paper tries to assess the performance of the SRC against the overall goals and to study the related obstacles if any. We use a sample of 112 respondents from the SRC staff, related and grain farmers as our data source. Results of the research revealed numerous financial and administrative constraints that obstruct SRC from playing the intended role, which need to be considered so as to contribute to price stability and food security in Sudan

The Controversy of Exchange Rate Devaluation in Sudan: An Economy-wide General Equilibrium Assessment

The international Monitory Fund (IMF) has been working with Sudan since 1997 to implement macroeconomic reforms including a managed float of the exchange rate (EXR). The IMF sees the EXR flexibility as key to safeguard and rebuild foreign exchange reserves and essential to meet the international reserve target in Sudan. However, the authorities in Sudan are concerned that greater exchange rate flexibility could contribute to inflationary pressures. In addition, a review of literature focusing on the exchange rate policies in Sudan reflects huge ambiguity about its outcome. This calls for additional empirical investigations that provide economy wide assessments of the various possible scenarios that could be adopted in the Sudanese context. Accordingly, the current paper applies an economy-wide impact assessment tool to investigate the possible effects of devaluating the overvalued (according to the IMF, 2009) Sudanese pound. Namely, it uses a Computable General Equilibrium (CGE) model together with its detailed database of Sudan to simulate the Sudanese pound to depreciate according to three different scenarios by 5%, 10%, and 15%. Results of the paper recommend that the additional flexibility in the Sudanese EXR regime suggested by the IMF should be carefully considered if that would lead the value of the Sudanese currency to be devalued. This imply that the authorities in Sudan should closely monitor and control the EXR to avoid its depreciation in the short run, while encouraging both public and private investments to help creating additional jobs that increases domestic income and reduces the negative consequences of inflation

Oil and Agriculture in the Post-Separation Sudan

The Comprehensive Peace Agreement (CPA), which was signed by the government of Sudan and the Sudanese People’s Liberation Movement (SPLM) ended more than 20 years of civil war. According to the CPA, the Sudan’s government has 50% of the oil exploited from the wells existing in the south in addition to the oil produced from the northern wells. The latter represents about 30% of the total oil production in Sudan. In January 2011, the people in southern Sudan have voted for separation from the Sudan and in July 2011 the Republic of South Sudan was officially announced as Africa’s newest state. Now the CPA period is over and the south possesses its entire production of oil, but need to use the export infrastructure that exists in the north to export it. For that the south need to pay fees and customs for which the exact amounts need to be further negotiated. Sudan would lose a huge part of its revenue from oil, which constituted a growing share in its trade, government revenue and GDP during the last decade. This paper tries to investigate the consequences of separation on the Sudan’s economy. A regional general equilibrium model with Africa database of the Global Trade Analysis Project (GTAP) is applied. Results show that the entire economy would be hit when a 20% cut in oil output is simulated. The study introduces the non-oil exports of the agricultural sector as an alternative to oil and recommends enhancing the efficiency in agriculture and promoting agricultural exports to gradually bring the economy back on track

The Controversy of Exchange Rate Devaluation in Sudan: An Economy-wide General Equilibrium Assessment back

The international Monitory Fund (IMF) has been working with Sudan since 1997 to implement macroeconomic reforms including a managed float of the exchange rate (EXR). The IMF sees the EXR flexibility as key to safeguard and rebuild foreign exchange reserves and essential to meet the international reserve target in Sudan. However, the authorities in Sudan are concerned that greater exchange rate flexibility could contribute to inflationary pressures. In addition, a review of literature focusing on the exchange rate policies in Sudan reflects huge ambiguity about its outcome. This calls for additional empirical investigations that provide economy wide assessments of the various possible scenarios that could be adopted in the Sudanese context. Accordingly, the current paper applies an economy-wide impact assessment tool to investigate the possible effects of devaluating the overvalued (according to the IMF, 2009) Sudanese pound. Namely, it uses a Computable General Equilibrium (CGE) model together with its detailed database of Sudan to simulate the Sudanese pound to depreciate according to three different scenarios by 5%, 10%, and 15%. Results of the paper recommend that the additional flexibility in the Sudanese EXR regime suggested by the IMF should be carefully considered if that would lead the value of the Sudanese currency to be devalued. This imply that the authorities in Sudan should closely monitor and control the EXR to avoid its depreciation in the short run, while encouraging both public and private investments to help creating additional jobs that increases domestic income and reduces the negative consequences of inflation.Khartoum Universit

INTERNATIONAL PRICE TRANSMISSION IN CGE MODELS: HOW TO RECONCILE ECONOMETRIC EVIDENCE AND ENDOGENOUS MODEL RESPONSE?

The field of price transmission is dominated by econometric time-series analysis (PTA) and rather disconnected from analyses based on CGE models. This paper addresses how a certain degree of empirically determined price transmission can be met in a single country CGE model. We examine and validate seven determinants including structural characteristics of the model, the parameterization of behavioral functions and properties of the sectors concerned

Food self-sufficiency versus foreign currency earnings in the Sudanese irrigated agriculture

The analysis undertaken in this paper applies a multimarket model to simulate two policy measures based on the assumption that the government of Sudan would pursue two policies on the Gezira scheme the biggest irrigated scheme in Africa in attempts to achieve food self-sufficiency from wheat (major food crop), or to improve the foreign exchange earnings from cotton (major cash crop) through expanding their portions of cultivated land. The paper investigates the implications of each scenario on crops output, food self-sufficiency indicators and tenants’ welfare. Findings show that, the food security scenario raises self-sufficiency from wheat by 40% and reduces it for sorghum by 4%. However, it reduces the welfare level as the earnings from exports and revenues from tariffs decline. The foreign earning scenario on the other hand, improves the overall foreign earnings and enhances farmers’ welfare. Nonetheless, the study suggests that none of the two policies would achieve both objectives alone, hence it is recommended that, both policies are to be considered in a policy package that considers as well other related components

Agricultural Efficiency Gains and Trade Liberalization in Sudan

The traditional agriculture in Sudan occupies 60% of the total cultivated land and employs 65% of the agricultural population. Nevertheless, it is characterized by its low crop productivity, which is mainly driven by low technical efficiency, while drought and civil conflicts threaten most of its areas countrywide. Therefore, it has contributed only an average of 16% to the total agricultural GDP during the last decade. This paper addresses from an empirical point of view the sectoral and macroeconomic implications of agricultural efficiency improvement in Sudan and assesses the efficiency gains under the assumption of trade liberalization. Efficiency improvement experiments are implemented by augmenting the efficiency parameters of labor, capital, and land in a Computable General Equilibrium (CGE) framework. The CGE model of the study relies on the newly produced Sudanese Social Accounting Matrix (SAM), which provides data on 10 agricultural sectors, 10 industrial sectors and 13 service sectors. Results show that improving the agricultural efficiency would lead to improvements in GDP, welfare level, and trade balance. In addition it would also improve the output and competitiveness of the Sudanese agricultural exports and increase their strength to face the challenges of liberalization