Rocchi Romano Red

8/14/2019 Rocchi Romano Red

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FAO Project GCP/SYR/006/ITA Workshop - Damascus, 1-2 July 2008

Agriculture and EconomicReform in Syria: Impactson Poverty and Inequality

Benedetto Rocchi and Donato Romano

Department of Agricultural and Resource Economics

University of Florence

with the collaboration of the Rural Development Division at NAPC


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Objectives

A SAM of the Syrian economy:- households accounts (rural vs. urban,

income deciles)

- activities accounts (agriculture, food

processing)

Policy simulation assessment:

- policy reform (social market economy)

impacts on poverty and inequality

- changing environment: e.g. soaring food

prices impacts on poverty and inequality


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Account classification

41 activities (from the NAPC Farming Systems Study + CBSdata) 25 crops

3 livestock

13 non-agricultural activities (8 food processing + 5 other acts.)

51 commodities (from the NAPC Farming Systems Study +CBS data) 23 crops

8 animal products

13 agricultural processed products

7 other products

22 institutions (from the SPC-UNDP Poverty Study + CBSdata) 10 rural households (per income deciles)

10 urban households (per income deciles)

firms

government


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Account classification

3 value added (from CBS + IMF data) hired labour

other factors

net fiscal revenue (taxes subsidies)

2 capital formation (from CBS data)

inventory change investment

3 rest of the world (from CBS data) goods and services (current account)

financial flows (capital account)

net lending (lending borrowing)

TOTAL: 122 accounts


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SAM structure51 41 3 20 1 1 2 3


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Definition of policy reform

scenarios change in existing (sector) policies towards a

less distorted environment: dropping subsidies to agriculture and food processing

production reducing by 20% the price of strategic crops

abolishing the Price Stabilization Fund (food consumption

subsidy)

alternative use of budget saving: fiscal deficit reduction (= investment)

public expenditure increase (proportional to the current

composition)

increase transfers to households


7/15FAO Project GCP/SYR/006/ITA Workshop - Damascus, 1-2 July 2008

Policy reform impacts

output incomes povertyelimination of subsidies to agriculture

deficit reduction 3.79 2.45 -0.24

publ exp increse 2.03 1.43 -0.15

tranf to hhold increase 3.06 7.13 -0.92

price reduction for strategic crops

deficit reduction 0.55 0.47 -0.05

publ exp increse 0.33 0.34 -0.04

tranf to hhold increase 0.46 1.07 -0.14

elimination of PSF

deficit reduction 0.43 -2.10 0.51

publ exp increse -0.40 -2.58 0.55

tranf to hhold increase 0.09 0.10 0.19

% impact on



Policy reform impacts onoutput

% impact on output ofagriculture food

process.other

activitiestotal

A) elimination of subsidies to agriculture and food processing

1. deficit reduction 1.19 2.16 4.67 3.79

2. public expenditure increase 0.59 0.99 2.52 2.033. transfers to households increase 2.79 4.16 3.00 3.06

B) price reduction for strategic crops

1. deficit reduction 0.21 0.37 0.67 0.55

2. public expenditure increase 0.14 0.22 0.39 0.33

3. transfers to households increase 0.42 0.63 0.45 0.46

C) elimination of Price Stabilization Fund

1. deficit reduction -0.80 -1.02 0.92 0.43

2. public expenditure increase -1.57 -0.09 -1.87 -0.40

3. transfers to households increase -0.04 -0.07 0.14 0.09



Policy reform impacts onincome

% impact on incomes of

urbantotal

urban 1st dec

urban 10thdec

ruraltotal

rural1st dec

rural 10th

dec

A) elimination of subsidies to agriculture and food processing

1. deficit reduction 2.52 2.29 2.61 2.35 2.28 2.55

2. public expenditure increase 1.55 1.67 1.56 1.26 1.26 1.36

3. transfers to HHs increase 8.35 14.96 6.92 5.32 6.85 3.87

B) price reduction for strategic crops

1. deficit reduction 0.46 0.47 0.45 0.48 0.52 0.45

2. public expenditure increase 0.34 0.39 0.31 0.34 0.38 0.29

3. transfers to HHs increase 1.22 2.11 1.01 0.86 1.11 0.62

C) elimination of PSF

1. deficit reduction -1.41 -5.24 0.10 -3.12 -6.84 -0.39

2. public expenditure increase -1.87 -5.54 -0.40 -3.64 -7.32 -0.95

3. transfers to HHs increase 1.34 0.74 2.13 -1.72 -4.68 0.23



Policy reform impacts onpoverty

deficit

red.

public

xpincr.

transf

to hhs.incr.

deficit

red.

public

xpincr.

transf

to hhs.incr.

deficit

red.

public

xpincr.

transf

to hhs.incr.

Urb dec 1 -0.01 0.00 -0.04 0.00 0.00 -0.01 0.02 0.02 0.00

Urb dec 2 -0.12 -0.08 -0.52 -0.02 -0.02 -0.07 0.21 0.23 0.02

Urb dec 3 -0.28 -0.18 -1.20 -0.06 -0.04 -0.17 0.37 0.42 -0.06

Urb dec 4 -3.41 -2.20 -14.62 -0.66 -0.50 -2.11 4.14 4.71 -1.15

Rur dec 1 0.00 0.00 -0.01 0.00 0.00 0.00 0.01 0.01 0.01

Rur dec 2 -0.14 -0.08 -0.43 -0.03 -0.02 -0.07 0.34 0.37 0.20

Rur dec 3 -0.46 -0.26 -1.46 -0.10 -0.07 -0.23 1.11 1.21 0.64

Rur dec 4 -3.19 -1.78 -9.32 -0.68 -0.50 -1.48 6.90 7.56 4.01

Total -0.24 -0.15 -0.92 -0.05 -0.04 -0.14 0.51 0.55 0.19

elimination of

subsidies to agri-food

price reduction for

strategic cropselimination of PSF



Soaring cereal prices:redistributive effects

deficit

red.

public

xp incr.

transf to

hhs.

incr.

deficit

red.

public

xp incr.

transf to

hhs.

incr.

deficit

red.

public

xp incr.

transf to

hhs.

incr.

Urb dec 1 0.08 5.59 17.08 4.24 5.42 14.29 -6.01 -5.69 1.65

Urb dec 2 -2.93 0.45 11.41 -4.28 -3.54 6.38 -7.40 -7.26 -2.17

Urb dec 3 -4.79 -1.24 13.13 -10.12 -9.32 4.95 -5.37 -5.22 0.80

Urb dec 4 -3.75 1.12 14.92 -5.54 -4.47 8.36 -4.26 -3.99 2.70

Urb dec 5 -2.96 3.64 22.74 -5.44 -3.96 13.94 -3.26 -2.85 7.25Urb dec 6 -1.05 1.57 6.13 -0.75 -0.18 4.13 1.08 1.26 3.97

Urb dec 7 2.79 3.40 1.69 1.77 1.95 1.80 1.79 1.87 2.43

Urb dec 8 6.26 5.89 1.44 3.16 3.19 1.95 6.92 7.01 7.34

Urb dec 9 16.63 16.68 9.61 12.80 13.05 11.47 18.45 18.76 22.22

Urb dec 10 74.24 61.66 1.76 70.05 68.14 28.01 54.27 54.48 51.65

Rur dec 1 -0.79 -0.67 -0.36 4.67 4.61 2.09 -10.37 -10.47 -10.72

Rur dec 2 -4.51 -3.55 0.02 0.90 1.00 0.90 -11.44 -11.52 -11.41

Rur dec 3 -5.09 -3.43 0.08 2.41 2.63 1.73 -12.03 -12.07 -11.94Rur dec 4 -6.57 -6.27 -1.59 -3.54 -3.59 -2.21 -12.29 -12.44 -12.88

Rur dec 5 -7.37 -7.64 -5.72 -2.27 -2.48 -4.47 -10.02 -10.20 -12.40

Rur dec 6 -13.27 -14.09 -10.79 -6.95 -7.37 -9.80 -8.68 -8.92 -12.97

Rur dec 7 -11.83 -12.44 -10.30 -7.34 -7.67 -9.78 -5.22 -5.41 -9.31

Rur dec 8 -15.70 -18.19 -18.05 -16.02 -16.76 -19.17 -3.64 -3.97 -10.99

Rur dec 9 -10.65 -13.82 -19.02 -10.88 -11.71 -17.87 3.59 3.32 -4.35

Rur dec 10 -8.76 -18.66 -34.19 -26.87 -28.96 -36.69 13.91 13.30 -0.84

Tot abs value 985 1 103 7 172 629 637 1 293 7 575 7 501 7 406

elimination of subsidies to

agri-food

price reduction for

strategic cropselimination of PSF



The impact on poverty ofsoaring cereal prices

no yes

elimination of subsidies to agriculture

deficit reduction -0.24 0.25

publ exp increse -0.15 0.35

tranf to hhold increase -0.92 -0.42

price reduction for strategic crops

deficit reduction -0.05 0.45

publ exp increse -0.04 0.46

tranf to hhold increase -0.14 0.36

elimination of PSF

deficit reduction 0.51 1.00

publ exp increse 0.55 1.05

tranf to hhold increase 0.19 0.68

cereal price increase



Conclusions

The estimated SAM for Syria is a suitabletool for policy impact simulations

Policy lessons: crucial role of Government budget strategies on the

outcomes of a given sector policy (reform) importance of output growth for poverty reduction

existence of structural asymmetries in income

distribution (e.g. rural vs. urban)

Limitations: static model: only short-run impacts

the classification of household groups by deciles may

change as a consequence of simulated policies



Conclusions

Future developments: analyze alternative policy mixes

- less extreme policy mixes

- impact of debt service of production loans on HHs

- decrease in oil production

foreign exchange

access to international food market

alternative classification criteria for households sector

(sector of occupation of the reference person, education

level, composition of the households total income)

regional disaggregation of the Syrian SAM CGE


15/15FAO Project GCP/SYR/006/ITA Workshop Damascus 1 2 July 2008

The impact of an exogenousshock

in d u st r ie s fa c to rs h o u s e h

industr ies

in ter industr

f lows

househ

consump

fac tors

i n c ome

dis t r ibut ionfac to rs

h o u s e h o l d s

i n c ome

dis t r ibut ion

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