This document summarizes research analyzing the impact of government policies on agricultural value chains in 4 countries. It studied 9 commodity value chains, calculating Nominal Rates of Protection at different points to see how policies affect incentives. The key findings were that in Ethiopia, policies taxed participants, while in India some were protected and others taxed. In Nigeria, palm oil farmers were protected by policy while cocoa farmers experienced disincentives. Government interventions can have varying impacts along the value chain.

2. Scope of the Synthesizing Work
4 countries, 9 agricultural value chains
• Ethiopia: Goats and Sheep Value Chains
• India: Rapeseed, Groundnut, and Sugar-Molasses-Ethanol Value
Chains
• Nigeria: Palm Oil and Cocoa Value Chains
• Tanzania: Maize and Groundnut Value Chains

3. Motivation
• To support development and protect local markets,
governments often intervene with trade policies or price
supports for particular agricultural commodities.
• These policies impact all economic agents along the value
chain of that commodity, including farmers.
• It is necessary to understand and measure how trade and
agricultural policies affect producer incentives and price
transmission along the complete value chain of a
commodity.

4. Methodology
• One way is using Nominal Rates of Protection (NRP) methodology applied
to different nodes along the value chain (Kruger, Schiff, Valdes (1988)).
Border Price
•Official Exchange Rate
•Quantity Adjustment
•Quality Adjustment
Reference Price at
Border •Quantity Adjustment
•Quality Adjustment
•Processing Margins
•Transportation Margins
•Other Costs
Reference Price at
Point of Competition
•Processing Margins
•Transportation Margins
•Other Costs
•Quantity Adjustment
•Quality Adjustment
Reference Price at
Farm gate

5. Methodology for Africa
We compute NRPs at the farm gate, retail, and at the border:
𝑁𝑅𝑃𝑏𝑜𝑟𝑑𝑒𝑟 =
𝐷𝑃𝑏𝑜𝑟𝑑𝑒𝑟 − 𝑅𝑃𝑏𝑜𝑟𝑑𝑒𝑟
𝑅𝑃𝑏𝑜𝑟𝑑𝑒𝑟
𝑁𝑅𝑃𝑟𝑒𝑡𝑎𝑖𝑙 =
𝐷𝑃𝑟𝑒𝑡𝑎𝑖𝑙 − 𝑅𝑃𝑟𝑒𝑡𝑎𝑖𝑙
𝑅𝑃𝑟𝑒𝑡𝑎𝑖𝑙
𝑁𝑅𝑃𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒 =
𝐷𝑃𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒 − 𝑅𝑃𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
𝑅𝑃𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
𝐷𝑃 is domestic price, 𝑅𝑃 is reference price (“free market” price that would exist without
government intervention).

6. How do Policy Distortions Impact Value
Chains?
Positive NRPs: Producers receive
higher prices than what is
prevailing in international
markets, i.e. policies have
subsidized the producers.
Negative NRPs: Producers
receive lower prices than what
is prevailing in international
markets, i.e. policies have taxed
the producers.

7. Tanzania Maize and Groundnut
Value Chains
Team: Fahd Majeed, Summer Allen, Simla Tokgoz, Bas Paris
IFPRI Discussion Paper 1748. Washington, DC: International Food Policy Research
Institute (IFPRI). http://ebrary.ifpri.org/cdm/ref/collection/p15738coll2/id/132786

8. Consumed at farm (~60%)
Primarily smallholder farmers/
few large-scale farms
Primary Markets
(Farm gate)
Smallholder farmers
Traders
Secondary Markets
(~40%)
Millers, consumers
Consumers (grain or flour)
Urban Market
Foreign buyers (few)Exports
Processors to poultryFeed
Stockholding NFRA, WFP
Maize Value Chain

9. NRPs at the Border for Maize and Maize
Flour
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Maize Flour Maize

10. Maize NRPs at the Farm Gate for Long
Rainy Season Regions
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
2008-09 2010-11 2012-13
Dar es Salaam Dodoma Iringa Kaskazini Pemba Kigoma
Kilimanjaro Lindi Manyara Mara Mbeya
Mtwara Pwani Rukwa Ruvuma Singida
Tabora Tanga

11. Maize NRPs at the Farm Gate for Short
Rainy Season Regions
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2008-09 2010-11 2012-13
Arusha Kagera Morogoro Mwanza Shinyanga

12. Smallholder farmers
Middlemen, neighboring farmers
Primary Markets
(Farm gate)
Smallholder farmers
Traders
Secondary Markets
(Local Markets)
Middlemen
Processors, exporters, consumers
Urban Market
Few large buyers and processors
Local supermarkets, consumers,
exporters
Processing Facilities
(groundnut oil, cake,
butter, paste)
Minimal crushing
Minimal shelling
Groundnut Value Chain

13. NRPs at the Border for Groundnuts and
Groundnut Oil
-100%
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Groundnut Oil Groundnuts

14. Groundnut NRPs at the Farm Gate for LRS
Regions
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2008-09 2010-11 2012-13
LRS Average Dar es Salaam Dodoma Iringa Kaskazini Pemba
Kaskazini Unguja Kigoma Lindi Mbeya Mtwara
Rukwa Ruvuma Singida Tabora

15. Conclusions for Tanzania
• The anti-trade bias in policy decisions hurts the farmers, especially in
maize, leading to lower profit margins for farmers.
• Disincentives in export markets reverberate through the value chain and
hurt farmers by reducing the prices they receive relative to international
market prices.

16. Nigeria Palm Oil and Cocoa Value
Chains
Team: Simla Tokgoz, Summer Allen, Fahd Majeed, Bas Paris, Adeola Olajide,
Evans Osabuohien

17. Harvesting of wild groves, many
smallholder farmers
Process by traditional methods
Farm gate
(Traditional TPO,
PKO)
Medium-scale farmers, large-scale
farmers
Small processors
Farm gate
(Medium TPO,
PKO)
Small and medium plantations
Medium-sized processors
Farm gate
(Medium TPO,
Medium SPO,
PKO)
Consumed within rural
markets, sold on to palm oil
dealers
Sold on to palm oil dealers
HH food consumption,
HH cosmetic uses
Sold on to palm oil dealers,
or secondary refiners
Farm gate
(Integrated SPO,
PKO)
Non-food industrial
uses, food industrial
uses, HH food
consumption
HH food consumption,
HH cosmetic uses
Non-food industrial
uses, food industrial
uses, HH food
consumption
Large plantations
Large processors
Farm gate
(Integrated SPO,
PKO) Secondary refiners
Palm Oil Value Chain

18. NRPs at the Border for Palm Oil
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

19. Palm Oil NRPs at the Farm Gate
0%
50%
100%
150%
200%
250%
300%
350%
400%
2010/11 2012/13
LSMS Average North Central North East South East South South South West

20. Many Producers (smallholders, cooperatives)
Few buyers (small traders/brokers)
Primary Markets
(Farm gate)
Many Suppliers (small traders/brokers)
Few traders (LBAs, cooperatives)
Secondary Markets
Few sellers
Many consumers (wholesalers/cocoa merchants)
Wholesale Market
Few exporters (3 big companies)
Many buyers (Many international buyers
Export Market
Cocoa Value Chain

21. NRPs at the Border for Cocoa Products
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15
Cocoa Paste Cacao Beans Cocoa Butter Cocoa Powder

22. NRPs at the Farm Gate for Cacao Beans
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2010-11 2012-13
LSMS Average South South South West

23. Conclusions for Nigeria
• Negative NRPs at the farmgate for all cacao-producing regions suggest
that the disincentives in the cacao bean export market reverberate through
the domestic market and the farmgate, despite the Nigerian government’s
cacao support policies.
• Due to a protective trade policy and other domestic initiatives, the NRPs at
the farmgate for palm oil producers are positive and high, showing that
the Nigerian government has protected the farmers. This also increased
the prices paid by consumers.

24. Ethiopia Small Ruminants Value
Chains
Team: Girma Kassie, Rahel Wube, Simla Tokgoz, Fahd Majeed, Aden Aw
Hassan, Barbara Rischkowsky, Mulugeta Yitayih
Forthcoming in Journal of Agribusiness in Developing and Emerging
Economies

25. Addis Ababa
Few sellers Many consumers
Secondary Markets
Many suppliers Few traders
Primary markets
Many producers Few buyers
Export Market
Few exporters Many buyers
Sheep and Goats Value Chains

26. NRPs at Retail and Farm Gate for Sheep
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2010 2011 2012 2013 2014 2015
Percent
NRP at Retail NRP at Farm Gate

27. NRPs at Retail and Farm Gate for Goats
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2010 2011 2012 2013 2014 2015
Percent
NRP at Retail NRP at Farm Gate

28. Conclusions for Ethiopia
• Policies of the government are taxing value chain participants rather than
protecting them.
• Policy induced distortions were separated from market inefficiencies
through use of data on access costs throughout the value chain. These
access costs are positive and high, showing high market inefficiencies.

29. India Oilseeds and Sugar-
Molasses-Ethanol Value Chains
Team: Simla Tokgoz and Fahd Majeed
Journal of Agricultural Economics (2018): http://dx.doi.org/10.1111/1477-
9552.12305

30. Methodology for India
• We extend the nominal rate of protection (NRP) methodology
to a value chain framework for three types of value chains:
1. a new value chain created by policy,
2. a value chain in which a by-product is created in the processing of a
commodity, and
3. a value chain in which processing of a commodity generates new
product(s).
• We consider two cases of value chains: when the commodity is
tradable and when it is non-tradable.

31. Methodology for India
𝑉𝐶𝑁𝑅𝑃𝑚𝑒𝑎𝑙+𝑜𝑖𝑙
𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
=
𝑠ℎ𝑎𝑟𝑒∙(𝐷𝑃𝑠𝑒𝑒𝑑 𝑒𝑞𝑣
𝑜𝑖𝑙,𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
+𝐷𝑃𝑠𝑒𝑒𝑑 𝑒𝑞𝑣
𝑚𝑒𝑎𝑙,𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
)−𝑠ℎ𝑎𝑟𝑒∙(𝐼𝑃𝑠𝑒𝑒𝑑 𝑒𝑞𝑣
𝑜𝑖𝑙,𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
+𝐼𝑃𝑠𝑒𝑒𝑑 𝑒𝑞𝑣
𝑚𝑒𝑎𝑙,𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
)
𝑅𝑃𝑠𝑒𝑒𝑑
𝐹𝐺
𝑉𝐶𝑁𝑅𝑃 𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
= 𝑉𝐶𝑁𝑅𝑃 𝑚𝑒𝑎𝑙+𝑜𝑖𝑙
𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
+ 𝑁𝑅𝑃𝑠𝑒𝑒𝑑
𝑓𝑎𝑟𝑚𝑔𝑎𝑡𝑒
VCNRP is value chain NRP, integrating the NRP of the raw
commodity with the NRP of the downstream products.

32. Value Chain NRPs for ethanol-molasses-
sugar-sugarcane value chain
-50%
0%
50%
100%
150%
200%
250%
300%
Sugarcane
NRP
Molasses
Value Chain
NRP
Ethanol +
Molasses
Value Chain
NRP
Molasses +
Commodity
Value Chain
NRP
Ethanol +
Molasses +
Commodity
Value Chain
NRP
Sugarcane equivalent
NRPs are calculated across marketing years, and averages of 2008-2009, 2009-2010, 2010-2011, and 2011-
2012 values.
-50%
0%
50%
100%
150%
200%
250%
300%
Sugar NRP Molasses
Value Chain
NRP
Ethanol +
Molasses
Value Chain
NRP
Molasses +
Commodity
Value Chain
NRP
Ethanol +
Molasses +
Commodity
Value Chain
NRP
Sugar equivalent

33. Value Chain NRPs for Oilseeds Value
Chain
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Groundnut NRP Meal and Oil Value
Chain NRP
Meal + Oil + Seed
Value Chain NRP
Groundnut equivalent
NRPs are calculated across marketing years, and averages of 2008-2009, 2009-2010, 2010-
2011, and 2011-2012 values.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Rapeseed NRP Meal and Oil Value
Chain NRP
Meal + Oil + Seed
Value Chain NRP
Rapeseed equivalent

34. Conclusions on India
• Farmers are being protected.
• Producers of ethanol and molasses are being taxed, whereas
consumers of these two commodities are being subsidized.
• Producers of meal and oil are being subsidized to aid the
development of the domestic crushing industry.
• When we analyze producers along the value chain, we find that
producers experience different impacts from the GOI’s policies -
some positive and some negative.

35. Conclusions from 4 Studies
• Policies may have overlapping or opposed outcomes along the value chain, with
important implications for smallholder farmers.
• Encouraging development of value chains can benefit both smallholder producers
and consumers at the same time.
• By reducing transportations costs that helps farmers bring their goods to the urban markets
more directly
• By reducing margins received by middlemen/traders which would increase the prices
received by farmers and reduce the prices paid by consumers
• By aiding development of processing facilities that produce downstream products
domestically rather than importing maize flour, palm oil, groundnut oil, etc.
• Analysis of policy distortions along the value chain can aid policymakers in
deciding where to focus interventions.

36. Next Step: Connecting Food System Flows

37. Thank you!
Questions?
For more information, please contact:
Simla Tokgoz (s.tokgoz@cgiar.org), Markets, Trade and Institutions Division, International
Food Policy Research Institution (IFPRI)

38. APPENDIX

39. Tanzanian Agricultural Sector
Tanzania’s National Development Mission 2025, which guides economic policy in the
country, aims to transform Tanzania from an agricultural economy to a semi-
industrialized economy supported by a productive agricultural sector.
Tanzania’s agricultural policies, e.g., Agriculture Sector Development Strategy and
the National Agriculture Policy (2013), focus on developing agricultural value chains
and supporting the transition from subsistence to commercial agriculture.
This study analyzes two agricultural value chains in Tanzania (maize and groundnut)
that have the potential to add to agricultural development, create value for the
Tanzanian economy, and increase rural incomes.

40. Data Sources for Tanzania
Our analysis measures the impact of sector-specific, regional, and national policies in
Tanzania for maize and groundnut value chains.
National- and regional-level price data at different points in the value chain are used
to measure distortions to agricultural incentives at the national and regional level.
Data used in the study includes World Bank LSMS survey data for farm gate prices,
trade margins for value chains from BMGF technical reports, international prices
from UNComtrade and World Bank, and trade status from FAOSTAT and
UNComtrade.

41. Nigerian Agricultural Sector
Nigeria has placed renewed focus on supporting agricultural development
through a variety of programs, including the Agricultural Transformation
Agenda and its successor, the Agriculture Promotion Policy (Federal Ministry
of Agriculture and Rural Development 2016).
We analyze two important agricultural value chains in Nigeria: the import-
oriented palm oil value chain and the exported-oriented cocoa value chain.
These value chains comprise an important share of Nigeria’s agricultural
sector and affect many smallholder farmers.

42. Data Sources for Nigeria
Our analysis measures the impact of sector-specific, regional, and national
policies in Nigeria for palm oil and cocoa value chains.
National- and regional-level price data at different points in the value chain
are used to measure distortions to agricultural incentives at the national and
regional level.
Data used in the study includes World Bank LSMS survey data for farm gate
prices, trade margins for value chains from PIND and ICCO reports,
international prices from World Bank and EUROSTAT, and trade status from
USDA and FAOSTAT.

43. Ethiopia Small Ruminant Sector
Ethiopia has the largest livestock sector in East Africa. Small
ruminants account for the largest share of total livestock
population, second only to cattle.
Live animal exports are high, although the vast majority of
these pass through informal channels.
Small ruminants serve for smallholder farmers essentially as a
store of value and as a readily available liquid asset.

44. Data Sources for Ethiopia
National and Wereda level NRPs are computed for a five-year
period (2010-2015). We are presenting one out of 4 scenarios.
Farm gate prices at Wereda level are from a household survey,
with geographic targeting done using GIS and agricultural
livelihood systems over nine districts covered (Kassie et al., 2016).

45. NRPs at Farm Gate for Sheep for Weredas
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2010 2011 2012 2013 2014 2015
Atbi Wemberta Menz Gera Menz Mama Ziquala Abergele Horro Shinile Angecha

46. NRPs at Farm Gate for Goats for Weredas
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
2010 2011 2012 2013 2014 2015
Atbi Wemberta Menz Gera Menz Mama Ziquala Abergele Horro Shinile Angecha