The impact of stabilization and structural adjustment policies on the rural sector : case-studies of Côte dʼlvoire, Senegal, Liberia, Zambia and Morocco

232 Pages·1991·12.9 MB·English

by  Claassen, Emil Maria, 1934-

The impact of stabilization
and structural
adjustment policies
on the rural sector
Case-studiesofCdte d'lvoire, Senegal
Liberia, Zambia and IMorocco
The impact of stabilization FAO
ECONOMIC
and structural AND SOCIAL
DEVELOPMENT
adjustment policies PAPER
on the rural sector 90
Case-studies of Cote d'lvoire, Senegal,
Liberia, Zambia and Morocco
by
Emil-Maria Claassen
and
Pascal Salin
Report prepared for the
Joint ECA/FAO Agriculture Division
FOOD
AND
AGRICULTURE
ORGANIZATION
TH±8 On OF THE
( UNITED NATIONS
Rome, 1991
BUY1-SBQ-DR3Y
ThedesignationsempioyadandIhepresentationofmalarialinIhis
putilicationdonotimplyttieexpressionofanyopinionwhatsoeveron
the partoftho Food and Agriculture Organization ofthe United
Nationsconcerningthelegalstatusofanycountry,territory,cityor
areaorofitsauthorities,orconcerningthedelimitationofitsfrontiers
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©
FAO 1991
Copyrightedmaterial
Foreword
TheissueofstabOizadon,stractumladjusimeiitoreocm-
omicadjustmentis profoundlyoontioversial.Thede-
bateemploysdifferingdef—initionsoftheissueandslides
acrosslevelsofanalysis fiomthehousehold,todie
national,totheinternationaleconomy.Italsocutsacross
viewpoints,regionsandtimeperiods.
There is a large policy overlap between structural
adjustment and the rural sector. Changes in output
prices.wagerates,subsidiesortaxes, andtariffsorin-
stitutionalarrangements willall affecttheproduction,
mailceting and consumptionofagricultural products,
especiallyfood,andconsequendythelivingconditions
oftheniralpopulation.
Ingeneral,dieimpactofstructuraladjustmentondie
niralsectorwin be mediated throughthe impacton
growdiandincomedistribution,thelevelandstability
offoodproduction,foodexportsandimpoits,andpro-
ducerandconsumerprices.Atypicalstnicniraladjust-
mentpackagemightcontainsomeorallofthefollowing
measuresdirectlyaffectingvarioussectorsofthenual
economy:
Production. A shift in relative pricing in favour of
exportcrops; highercharges forinputs and scr\'ice to
balancethebudget;anincreaseininterestratesforcredit
toregulatethemoneysupply.
Marketing.Areductionintheroleofthepublicsector;
smallbufferstocks;aliberalizationofimpoitsandex-
portstoevenoutthebalanceofpaymentsandbriqgthe
exchangeraleintoline withmarketrequirements.
Consumption. Areduction in general consumersub-
sidiesthroughanincreaseinfoodprices;betterdefined
taigeting offood andnutrition interventions; cuts in
healthandeducationexpendituiesto(obtainlealisdc)
moderatecostsandbalancethebudget.
Anappropriateadjustmentforthesocialandstructural
transformation of African economies is essential and
shouldbenefittheruralsector.However,aninappropri-
ate adjustmentprogramme, withouttransformationof
socio-economicandstructuralchangeswillnegatively
affecttheruralsector,principaUybecausethislastisthe
slowestto adapt The subsectors affectedusually in-
cluderuralinfrastructures,(includinghealthandeduca-
tion), research and otherproductioninterventionsand
inputs.
Thepresentstudyhasdemonstratedthatthenettcost
ofinactionintheaboveareasmayexceedthenettcost
ofaction.Thestudyfocusesontheimpactofstabiliza-
tionand/oradjustmentpoliciesontheruralsectorin
termsnotonlyof"whether^*butalsoof''what**and**how
much"and"where**and**how".lbanswertheseques-
tions,one needstotouchonalargenumberofbroader
economicdevelopmentdebatessuchastechnicalrange,
rural iransfomiation,basicinfrastructureandiniersec-
toralrelations.
Attheriskofbeingconsideredtheoreticalandreduc-
tionist,thestudyhaschosentoabstractfromthewider
debates and focus on the particular, ofrelevance to
'^structuraladjustmentandtheruralsector".Thisseems
tobeamoresystematicapproachthanthatoftr>'ingto
juxtaposecompeting theories which oftenaddressdif-
ferentissuesatdifferentlevelsolanalysis.
lbcomprehendquitehowtheeffectsofstabilization
CopyrighicKjmalenal
and/orstnicturaladjustmentcameabout,anappropriate
framework(ilicorcLicalandpractical)isneededforana-
lysisatcountrylevel.Suchaframeworkmaybeutilized
invariousways, dependingonthe specificitiesofthe
individualcountiy.Consequently,attheendofthestudy,
theautlioisturnexplicitlytothequestionof**addii|gup'*
andtoanoverallframeworkforunderstandingtheim-
paaofstructuraladjustmentontiieruralsectorinAfii-
ca.lliustMsstudy anditsapplicationtofiveAfHcan
countriesopensthedoorandcontributestolesseningthe
gap.
Inthefuture,anewgenerationofstabilizationand/or
structuraladjustmentmeasures,withtransformatioii.is
likelytoproduceasignificant,higlilyweteomeevol-
utionintherdationsbetweenruralanduit>andtizens.
MoreworkisneededontheimpUcationoftliesechanges
forindividualcountries.
S.C.Nana-Sinkam
Director
JointECA/FAO
AgricultureDivision
Copyrighted
Contents
Foreword iii
Tables 2d
Figures xvii
Abbreviations xxi
INTRODUCTION 1
PART
1
BACKGROUND
1.Sub-Saharanagricultural development 11
Africa.Asia.LatinAmerica U
Shiiisofresourcesfromiheagriculturalsector 12
Twoparadigms 15
The.WorldRankanditscritics 12
Structuralandmacro-economicadjustment 20
ForeignaidandtheSahelproblem 22
Concludingremarks 26
References 29
2.AtheofetlcafIratwework 31
Introduction 21
Macro-economicpolicies 32
Theimpactofmacro-economicand
adjustmentpoliciesonagriculture 42
Theimpactofsector-specificpolicieson
agriculture 54
Pricepolicies 55
Otherpolicies 61
viii
Overallviewonstabilizationprogrammes 62
References 67
PART2
CASE-STUDIES
3.Cote divoire: transfers from agriculture
andthebusinesscycle 71
AgricultureinC6ted'lvoire 71
Transfersfromagricultureandpricepolicy 74
Priceincentives 81
Thebusinesscycle 84
Foranewconditionality 92
References 9()
4.Theomnipresenceof state intervention in
Senegal'sgroundnuteconomy 97
Maineconomicandajzricultijralindicators 97
Foodcrops 100
Cashcrops(groundnuts) 105
Senegal'sagrariansocialismorthe
nationalizationofSenegal'sgroundnut
marketing 111
Theparastatalapproach,industrialprocessing,
thesyndromeofcollective-debtdefault,
andparallelmarkets 114
IMFandWoridBank actionsinthe 1980s 177.
Reformmeasuresfortheruralsector 124
Senegal'soptionsoffutureagricultural
development 127
References 130
5.Liberia'sdual agricultural economy and
the urgent needforcurrency reform 133
Maineconomicandagricultural iiulicaiors 133
Copyri ''
ix
Anagriculturalenclaveeconomy 136
Self-sufficiencyinriceasanimport
substitutionpolicy 138
Doc-lari/.ation 141
Theurgentneedforcurrencyrefonn 145
References 142
6.Zambia: the destructive effects of Its
exchangerate policy 149
Generaleconomicconditionsandeconomic
policiesinZambia 149
Maincharacteristicsofagriculturalactivities 154
Maizeandthemarketingsystem 156
Theroleofincentives 162
Thebusinesscycle 169
Anoverviewofagriculturalproduction
andproblems 170
Stabilizationprogrammesandagriculture 171
References 173
7.Thefailureof Morocco'sdevelopment
strategyforIrrigationagriculture 175
Maineconomicandagriculturalindicators 175
WetversusdryagricultureduringtheFrench
protectorate 177
Envelopmentstrategyforirrigation
agriculturesince 1960 179
Morocco'spolicyofexportpromotion
andimportsubstitutionforirrigatedcrops 184
Morocco'spolicydilemmaofmacro-economic
stabilizationandagriculturaladjustment
programmes 191
References 1^
X
201
Problem-specificrecommendaiions 202
Country-specificrecommendations 205
References 210
AppendixA
Substitutesforexchangerateadjusunenis 211
Appendix B
Riceself-sufficiencyinWestAfrica 215
Cr