MODULE 3. Price Incentives and Disincentives SESSION 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...

 1 st criteria: Cover a significant percentage of total agricultural production (target: 70% in value)  2 nd criteria: cover major items of the food import bill  3 rd criteria: cover major agricultural exports  4 th 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  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  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 Is the list feasible for study? Reduce products starting from smallest share of total agricultural output yes no yes 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!