By Christopher D. Gerrard, Greg D. Posehn, Granville Ansong
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Additional resources for Agricultural pricing policy in Eastern Africa: a macroeconomic simulation for Kenya, Malawi, Tanzania, and Zambia, Part 76
D. Gerrard, "Government Commodity Policies in Domestic Food Grain Markets: The Case of Four Countries in East Africa" Canadian Journal of Agricultural Economics, Annual Meeting Proceedings (Held at Truro, Nova Scotia, July 1013, 1983). e. supplying domestic markets from domestic production. They enforced these domestic food grain prices by means of a government monopoly of the marketing of food grains which entered urban markets and of international trade in food grains. They equilibrated supply and demand in each year at the government-decreed prices by quantity adjustments in government-held stocks and international trade.
The impact of import-substitution policies, in general, and a protective tariff, in particular, on agricultural exports is like the impact of rent controls on the supply of apartments. In the short term, the rent controls have virtually no impact on the supply of apartments in a given urban center, only on the revenues of apartment owners. The owners of apartments are unable to re-allocate the capital invested in apartments to alternative uses in the short term. But, in the long term, rent controls reduce the incentive for apartment owners to build new apartments and to maintain existing apartments, and therefore rent controls reduce the supply of apartments in the future.
Exports were primarily non-food products. All four countries had similar import structures. Non-agricultural products accounted for 82 to 91 percent of merchandise imports. Although imports of agricultural products were small, food imports constituted 47 to 76 percent of agricultural imports. Cereals accounted for 22 to 40 percent of food imports. All four countries inherited a system of government marketing boards for food crops from the colonial era. These generally began during the Great Depression or World War II as a means of protecting European settler farmers from low world prices and provided them with a guaranteed share of the domestic market.