Feasibility study: simulating the impacts of farm subsidies on poverty and inequality in African countries
Agricultural subsidies may have significant productive and distributional consequences, and policy-makers need to be able to assess these impacts as a part of the overall tax and benefit policy. Microsimulation models offer a tool for such analysis also in developing countries, but their coverage and modelling of agricultural input subsidies have been limited.
This note reviews the relevant literature on the impacts of input subsidies, considers ways in which they could be modelled in the African SOUTHMOD models, and maps the relevant policies in these countries and data requirements. The note also provides recommendations for further work.
Overall, for most countries included in the study, there is some scope for simulating the existing input subsidy programmes. In some instances, however, it would be better to carry out the analysis by using alternative agricultural datasets. It can also be the case that alternative datasets are necessary for a reliable analysis. In case of incomplete take up, the SOUTHMOD models offer a functionality which allows making different assumptions about the take-up rates of policies