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http://www.ultraspectra.com
http://www.ultraspectra.net
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Marketing is the fruit of success in any form of business. Agricultural Marketing is the process of supplying farm inputs to the farmers and the movement of agricultural products from the producer to its ultimate consumer which involves various functions such as buying, selling, packaging, transportation, grading and standardization, storage, processing etc. during this process, there is a chance for some risks and uncertainties to take place. Uncertainty is the unknown factor which causes sudden loss that cannot be predicted and managed where risk is the part of uncertainty which is a known factor that means stepping into a process or technique even-though by knowing that there is a probability of loss. Agricultural marketing experiences three types of risks namely the Physical risk, Price risk and the Institutional risk. The physical risk is the loss in the quantity and quality of the product during storage and transport like fire accident; rodents, pest and disease attack and due to improper packing. The price risk includes the fluctuation in the price of the agricultural marketing; changes in the demand and supply of the product. The institutional risk arises due to the change in the government budget policy; due to the change in the import and export policy. The physical risk can be managed by using fire proof materials in the storage structures, by proper packing and by giving pre-storage treatments. The price risk can be minimized by following contract farming, forward and future market, speculation and hedging. The farmer or trader must have thorough knowledge in the management of risk and should adopt the suitable methods in order to get better outcome in the agricultural marketing.
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UltraSpectra is a full-service online company dedicated to providing the services of internet marketing and
IT solutions to professionals and businesses looking to fully leverage the internet.
http://www.ultraspectra.com
http://www.ultraspectra.net
Join Our Network:
facebook.com/ultraspectra
twitter.com/ultraspectra
youtube.com/user/ultraspecra
Sikandra Kurdi
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Retail food prices at the country level and implications for food security
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Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
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Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
Donate to charity during this holiday seasonSERUDS INDIA
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Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
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State crafting: Changes and challenges for managing the public finances
3. Paul Dorosh (IFPRI). What are the distributional consequences of wheat policy in Sudan? A simulation model analysis
1. Sudan Strategy Support
Program (SSSP)
Wheat & Its Role for Food Security in Sudan
International Food Policy Research Institute
Feb. 9, 2022
The SSSP is funded by:
2. 3. What are the distributional consequences of wheat policy in
Sudan?
A simulation model analysis
Presented by: Paul Dorosh
3. Sudan: Wheat Policy: Insights from Model Simulations
Flatbread Costs and Sales Prices in Khartoum, 2018-2021
Estimates of Consumption of Wheat Products in Sudan
Sudan Wheat Model: Structure and Parameters
Impacts of Lower Flatbread Subsidies (Model Simulation Results)
Flatbread Subsidies (Model Simulation Results)
Sudan Wheat Policy Conclusions
4. Sudan: Flat Bread Costs and Sales Prices in Khartoum, 2018-2021
The huge increase in
the sales price of flat
bread in December
2018 led to massive
street protests.
The official sales price
of flatbread has steadily
risen to compensate for
increases in prices of
wheat flour.
These frequent
increases in the sales
price of flat bread have
kept the estimated
private cost of flatbread
below the official price.
Flatbread sales price
are far below the full
cost of flatbread,
however.
Note: “flat bread” (بلدي )خبز
0
20
40
60
80
100
120
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
SDG/
kg
bread
Wheat Flour Private Cost Sales Price: Flat Bread
Cost of Flat Bread inc. Subsidies Cost of Flat Bread w/o Subsidies
Source: Khartoum Bakers Association data, various news articles and authors’ calculations.
5. Sudan: Domestic and International Wheat Prices, 2008-2021
Domestic (Khartoum) wholesale
wheat prices were, on average, 35
percent above import parity prices
from 2014 through 2017.
Domestic wheat prices rose sharply
in 2018-21 in both nominal and real
(adjusted for overall inflation) terms.
The import parity price of wheat has
fluctuated wildly due to high rates of
domestic inflation combined with
periods of fixed nominal exchange
rates followed by sharp
devaluations.
o In mid-2021, the wholesale
price of wheat in Khartoum was
about 25 percent below the
import parity price.
Source: Calculated using data from FAO and World Bank.
Sudan: Real (2021) Wheat Prices, 2008-2021
0
20
40
60
80
100
120
140
160
180
200
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
SDG
(2021)
/
kg
Khartoum Wheat Imp Parity (ex: US Gulf)
6. Sudan: Consumption of Wheat Products
Based on quantity shares from the 2009 national
household survey, the wheat in “flat bread” (بلدي )خبز
accounted for an estimated 71.1 percent of the 2.7
million tons of wheat consumed in Sudan in 2021.
Wheat grain and local flour together accounted for
17.3 percent of consumption.
In value terms, however, flat bread (which was
heavily subsidized), accounted for only 53.0 percent
of the total value of consumption of wheat and wheat
products in 2009.
“Long bread” ()خبزطويل and other types of bread
accounted for 24.7 percent of consumption.
Source: Sudan HIES, 2009 and author’s estimates.
Sudan: Estimated Consumption of Wheat Products, 2021
Sudan: Household Cereal Expenditures, 2009
Wheat grain
11.4%
Flour (local)
5.9%
Flour (high
quality local)
3.7%
Flour (high quality
imported)
2.3%
Flat bread
71.1%
Long bread
4.8%
Other bread
0.8%
Total Quantity
2,709 (thousand tons)
Wheat grain
9.3%
Flour (local)
5.8%
Flour (high
quality local)
4.2%
Flour (high
quality imported)
3.0%
Flat bread
53.0%
Long bread
11.8%
Other bread
12.9%
Total Expenditures
4.65 bn SDG
7. Sudan Wheat Model: Structure and Parameters
Data: National Household Survey (2009) household expenditures on wheat products and total household
expenditures; FAO and USDA national wheat supply and utilization.
Production: Own-price elasticity of wheat supply = 0.3.
Demand: Four household groups (urban poor, urban nonpoor, rural poor, rural nonpoor)
Two wheat consumer goods: Flatbread (with a fixed (exogenous) price and Other Wheat Products (including
wheat grain, wheat flour, other bread, pastries)
o Elasticities of demand for flatbread vary by household group (-0.543 to -0.885)
o Elasticities of demand for other wheat products (-0.8 for all household groups)
Imports are exogenously determined by the government.
Market equilibrium: the market price of wheat adjust to equate supply and demand in a national integrated market
for wheat and wheat products.
8. Sudan: Impacts of Lower Flatbread Subsidies (Simulation Results)
Increasing the price of
flatbread reduces household real
incomes and lowers total wheat
demand.
Non-flatbread wheat prices
fall, reducing producer incentives;
production falls by 10.4 percent.
If imports are reduced by 300
thousand tons, the price of other
wheat products declines by only
3.3 percent and the average
price of wheat products rises by
13.7 percent leading to steep
declines in consumption.
Source: Sudan wheat model simulations.
Base
Sim 4:
Higher Price
Flatbread
Sim 5:
Sim 4 w/
Lower Imps
Production ('000 tons) 725.0 -10.4% -1.0%
Imports ('000 tons) 2,150.0 0.0% -14.0%
Total Supply ('000 tons) 2,875.0 -2.6% -10.7%
Price Flatbread (SDG/kg) 62.5 30.0% 30.0%
Other Wheat Products (SDG/kg) 273.9 -30.6% -3.3%
Average Price Wheat Products (SDG/kg) 192.1 -2.0% 13.7%
Wheat Consumption ('000 tons)
Urban Poor 307.0 -13.7% -17.7%
Urban Nonpoor 1,131.4 -6.0% -12.7%
Rural Poor 197.1 -3.5% -11.3%
Rural Nonpoor 1,073.6 4.5% -6.8%
9. Sudan: Impacts of Lower Flatbread Subsidies (Simulation Results)
Increasing the price of
flatbread reduces household real
incomes and lowers total wheat
demand.
Non-flatbread wheat prices
fall, reducing producer incentives;
production falls by 10.4 percent.
If imports are also reduced,
percent, the price of other wheat
products declines by only 3.3
percent and the average price of
wheat products rises by 13.7
percent leading to steep declines
in consumption.
Source: Sudan wheat model simulations.
Base
Sim 4:
Higher Price
Flatbread
Sim 5:
Sim 4 w/
Lower Imps
Production ('000 tons) 725.0 -10.4% -1.0%
Imports ('000 tons) 2,150.0 0.0% -14.0%
Total Supply ('000 tons) 2,875.0 -2.6% -10.7%
Price Flatbread (SDG/kg) 62.5 30.0% 30.0%
Other Wheat Products (SDG/kg) 273.9 -30.6% -3.3%
Average Price Wheat Products (SDG/kg) 192.1 -2.0% 13.7%
Wheat Consumption ('000 tons)
Urban Poor 307.0 -13.7% -17.7%
Urban Nonpoor 1,131.4 -6.0% -12.7%
Rural Poor 197.1 -3.5% -11.3%
Rural Nonpoor 1,073.6 4.5% -6.8%
Most of the urban’s poor wheat
consumption is in the form of flatbread
for which the price rose by 30.0 percent.
10. Sudan: Flatbread Subsidies (Simulation Results)
Non-poor households capture much of the flatbread
subsidy in the base 2021 data:
o 175 and 123 bn SDG for urban and rural non-poor
households, respectively,
o but only 53 and 29 bn SDG for poor households in
urban and rural areas.
Raising the price of flatbread by 30 percent lessens the
size of the subsidy received by 41 to 45 percent for all
households.
Source: Sudan Wheat Model Simulations.
Sudan: Per Capita Flatbread Subsidies by Household Group
On a per capita basis, flatbread subsidies of the urban
nonpoor are larger than those of the urban poor (12.-
and 10.4 thousand SDG/person, respectively).
Reducing imports by 300 thousand tons raises market
prices of wheat and so increases the gap between the
full cost of flatbread and the fixed (subsidized) price.
Sudan: Flatbread Subsidies by Household Group
53
175
29
123
29
101
17
73
37
128
21
94
0
20
40
60
80
100
120
140
160
180
200
Urban Poor Urban Nonpoor Rural Poor Rural Nonpoor
(billion
SDG)
Base Sim 4: Flatbread Price +30% Sim 5: Sim 4 w/ Lower Imps
0
5
10
15
20
25
Urban Poor Urban Nonpoor Rural Poor Rural Nonpoor
('000
SDG/person)
Base Sim 4: Flatbread Price +30% Sim 5: Sim 4 w/ Lower Imps
11. Sudan: Wheat Policy Conclusions
Despite reforms in early 2021, including a devaluation of the currency and a liberalization
of imports, there remain significant distortions in Sudan’s wheat value chain,
especially related to subsidized sales prices of flatbread.
The flatbread subsidy is not well-targeted: calculations based on 2009 national
household survey data and current 2021 prices and wheat supply, urban poor households
receive slightly less than urban non-poor households (18.9 and 20.9 thousand
SDG/capita). Rural poor households receive only 2.7 thousand SDG/capita.
Increased wheat imports (like those financed by food aid) add to supplies for
processing into wheat flour, flatbread and other wheat products, resulting in lower prices
for consumers and increased consumption, but also disincentives for production.
o Model simulations indicate that a 300 thousand ton increase in wheat imports enabled
by food aid results in an 8 percent increase in wheat consumption and a 35 percent
decline in the market price of non-flatbread wheat products. Production falls by 12
percent.
o Since flatbread prices are unchanged, wheat consumption of the urban poor (for whom
flatbread is the major wheat product consumed) increases by only 4 percent.
12. Sudan: Wheat Policy Conclusions (2)
Raising flatbread prices by 30 percent to reduce the size of the fiscal subsidy reduces
total consumption of flatbread by 17 percent and sharply reduces wheat consumption and
real incomes of the urban poor.
o All households suffer a loss of 41 to 45 percent in the value of flatbread subsidies
received..
o The urban poor experience the largest decline in total consumption of wheat (14
percent) and in total income (11 percent). (The average total income loss for all
households is only 3 percent.)
Reducing the flatbread subsidy without a compensating income transfer would
significantly reduce welfare of the urban poor and likely threaten political stability.
Plans for further work include refinement of the base data, additional sensitivity analysis,
and in the medium-term, economy-wide analysis of broader agricultural policy.
Editor's Notes
Major price reforms in late 2018 and early 2021 involved large increases in the sales price of flour to bakeries, as well as large increases in the price of subsidized flatbread. The huge increase in the sales price of flat bread from 1 SDG/loaf to 3 SDG/loaf in December 2018 led to massive street protests that contributed to the downfall of the Bashir regime several months later in April 2019. The sales price of wheat flour to bakeries was also increased at the same time, limiting the impact on profits of bakeries.