Competitiveness and Profitability of Gum Arabic in North Kordofan State, Sudan

AbstractGum Arabic is a natural forest product; it produced from Acacia senegal and Acacia seyal trees. Sudan is considered as a key supplier of raw gum Arabic in the world as it used to provide more than 80% of high quality gum Arabic in the world market. The product is used primarily in the food industry but has medicinal and technical uses as well.This study aimed to measure the competitiveness and profitability of gum Arabic produced in Sudan. The study depended mainly on primary data which were collected from direct interview with the gum Arabic farmer's, covered 2010/11 and 2011/12 seasons. Also, secondary data were collected from relevant sources related to the topic of the study. Policy Analysis Matrix (PAM) was used to measure the impact of government agricultural policy on the production of gum Arabic. The results of the analysis indicated that the international value added (IVA) gave positive foreign exchange earnings, indicating absolute competitive of the product, but the nominal protection coefficient (NPC) and the effective protection coefficient (EPC), have values of 0.92 and 0.91 respectively in 2011/12, which indicates that the product is taxed by the government. The values of the domestic resources cost (DRC) were 0.79 and 0.65 respectively to the two seasons. That means that the social cost of domestic resources used in the production of gum Arabic are less than the value added by its production using social prices which indicates that the product has comparative advantage. Production of gum Arabic should be expanded, producer prices should be determined in relation to exchange rate parity prices, the tax structure should be revised and price policy should be recognized as an important policy instrument to influence gum Arabic production pattern