A spatial equilibrium analysis of the rice sector in the Ivory Coast

Rice makes up over 50 percent of the total value of food crop production in the Ivory Coast. Government projections indicate that rice imports will rise from 299,500 tons in 1984 to 423,062 tons in 1995. The pricing policy of setting uniform producer prices distorts the pattern of production incentives among rice producers. Also, the transportation subsidy on imported rice affects import quantities, rice prices and producer income. The interregional rice economy in the Ivory Coast is analyzed by means of a spatial equilibrium model. The programming model involves a quadratic objective function and linear constraints. Eight geographic regions are specified with a representative shipping point selected in each region. Regional domestic demand functions are derived from an aggregate domestic demand function. Regional rice supplies are calculated considering adjustment for seed use, milling loss. In addition to the application of the base model to data for 1984 and projections for 1995, seven modifications of the two models are formulated and used to analyze different situations under alternative assumptions. The results of the empirical analysis indicated that: (1) If the government subsidy would have been eliminated and no restrictions imposed on imports, the quantity imported in 1984 would have been about 13 percent higher, total domestic consumption about 6 percent greater and prices about one-fourth lower. The government would have saved the subsidy, but the country would have paid out about 13 percent more in foreign exchange. (2) Changes in transportation rates alter market shares among regions. There is competition among surplus regions for rice markets in the southwestern areas of the country. (3) Predicted domestic rice production in 1995 will not be enough to meet projected increases in demand. The analysis indicates the country will need to import about 400,000 tons in 1995. The import requirement can be reduced if yields are improved and/or land area is increased through irrigation. (4) Removing government restrictions and investing in infrastructure are important issues affecting consumers, producers and foreign exchange. Benefits and costs of policy changes will need to be evaluated in terms of long term effects