Declining Agricultural Commodity Prices: Productivity Gain Or Immiserising Growth?What are the best strategic options for developing country governments to improve rural living standards through agricultural growth? Tropical commodities such as coffee, sugar and rice are experiencing a long-term decline in prices. This presents a particular problem for producers, since these commodities have traditionally formed the core of agricultural exports of most developing countries since the 1960s. The European Commission has argued comfortingly that declining prices are driven mainly by productivity gains, but the analysis presented here suggests otherwise. Instead the authors find evidence that the difference in productivity levels between countries is increasing, with some falling further and further behind. Diversification into higher value-adding agricultural industries will be difficult without dramatic improvements to rural infrastructure and institutional support. Since these improvements are unlikely to be achieved, the authors conclude that the major objective for agricultural producers in developing countries must remain productivity gains in existing commodity industries. |
Contents
Review of Commodity Production and Export of Selected Tropical | 5 |
Figures | 6 |
3 | 12 |
3 | 21 |
6 | 23 |
12 | 36 |
3 | 37 |
3 | 38 |
Annual Rates of Change in TFP in Commonwealth Countries 19702002 | 42 |
8 | 49 |
16 | 50 |
9 | 68 |
Conclusion | 77 |
Annual Rates of Change in TFP Labour Productivity and Export Unit | 86 |
Common terms and phrases
achieved African Commonwealth countries African countries agricultural productivity agricultural sector Annual Rates Bangladesh cent per annum Central African Republic change in TFP cocoa coconut oil coefficient commodity exports Côte d'Ivoire cotton countries Total commodities crop price index cumulative TFP index estimated Export Price Index export quantities export unit values Figure Ghana higher immiserising growth increase index Linear price industries inputs Intercept Kenya lauric oils less developed countries levels Linear price index Malaysia modities Nigeria output palm kernel oil palm oil Papua New Guinea Price index Linear producer prices productivity change productivity gains productivity growth rates rate of decline rate of TFP rates of change result rice rural Sampled Countries selected commodities selected tropical commodities Sierra Leone significant single factoral terms Solomon Islands Standard error study period substantial terms of trade TFP change TFP growth rate total factor productivity Trinidad and Tobago unit value index Vanuatu variable Zambia