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The impact of OECD Agricultural trade liberalization on poverty in Uganda

Charles Augustine Abuka, Michael Atingi-Ego, Jacob Opolot, Marian Mraz and Patrick Okello

The paper examines the projected impacts of agricultural trade liberalisation by OECD countries on poverty in Uganda and compares them to the poverty impacts of all merchandise trade liberalisation. The overall impact of OECD agricultural trade liberalisation on welfare in Uganda from this simulation is positive in contrast to previous research, nevertheless, the poor appear to be made worse off. The liberalisation of all OECD merchandise trade including non-agricultural commodities reduces welfare for all deciles irrespective of household poverty status, residence and region. The results for global partial merchandise trade liberalisation are similar to those for total trade liberalisation with an overall welfare decline of about 0.5 percent. More specifically, even the modest welfare gains for producers from increased prices seem to be offset by welfare losses from increases in consumer goods. Overall, because of the large subsistence agricultural sector, households tend to experience little or no change in total welfare arising from agricultural price changes. Increases in market value of their agricultural based output tend to be offset by changes in the opportunity cost of their subsistence consumption of the bulk of that output.

Key words : Microsimulation, agricultural trade liberalization, Uganda , poverty

JEL classification : I32, Q18

Last updated 28 August 2014 by IIIS (Email).