MODULE 3. Price Incentives and
Disincentives
Module 3.1. Commodity Selection
Module objectives:

Presentation of main criteria for selecting the products for which price incentives and
disincentives will be calculated.

Agree on the list of products for which price incentives and disincentives will be
calculated
Why select products....

MAFAP estimates incentives and disincentives for agriculture using indicators based on
prices

Prices are product related and thus it is necessary to agree for which products these
incentives are calculated

The same criteria for product selection should be used in all countries to allow for
comparison and aggregation

Moreover, these products will also be used to analyze public expenditure
Classification of goods according to...

Trade status:

Import substitute: produced in country but the country is a net
importer of the commodity

Exported good: produced in the country and exported (cash-crops)

Non-traded: produced in the country and due to its characteristics (i.e.
perishable) or market development (i.e. no processing; high
transportation costs) the commodity is not internationally traded with
this country
Criteria for product selection

1st criteria: Cover a significant percentage of total agricultural production (target: 70% in value)

2nd criteria: cover major items of the food import bill

3rd criteria: cover major agricultural exports

4th criteria: cover major items of the diet (in quantity, calories and expenditure)

And any other product that the country might be interested in studying
How to strike a balance between a comprehensive product selection and a
manageable amount of products
How to proceed....using FAO available data

Should use 5-year averages to assure that there is no impact of
extraordinary events

Criteria #1: Source: FAOSTAT Production – Production Indices



Data available for 2005-2009
Gross and Net Production value in international currency for all
FAO Members
List commodities by size of production and select those
accounting for 70%
How to proceed....using FAO available data

Criteria #2 & #3: Source: FAOSTAT TradeSTAT – Crops and Livestock
products



Data available for 2004-2008
Import and Export Value
List commodities by value of exports and imports and select
those accounting for 70%
How to proceed....using FAO available data

Criteria #4: Source: FAOSTAT Food Balance Sheets




Latest data available for 2007
Data on quantities and calories per commodity
Again select products covering at least 70% of diet
For expenditure need to use retail prices from other sources
(ideally covering a significant % of diet)
Combining the different criteria....






Start with commodities covering 70% of agricultural output.
Add any major import or export not covered above if it represents
more than 5% of total exports or imports or more than 1% of total
country’s agricultural output.
Add any major staple food in diet not covered above if it represents
more than 5% of total diet or more than 1% of total country’s
agricultural output.
Check whether Africa-Wide and Regional-Wide key products are
included, if not add if it represents more than 1% of total country’s
agricultural output.
Review the list and see whether it is feasible to study all
commodities.
If not delete products with the minor impact on total agricultural
output.
List of commodities
covering 70% of
agricultural output
FINAL LIST OF
PRODUCTS
Do the missed
commodities
represent more
than 5% of total
X or M?
yes
no
Are
commodities
covering 70%
of X and M
included?
Reduce products
starting from
smallest share of
total agricultural
output
yes
Add products
to the initial
list
no
no
yes
Do the missed
commodities
represent more
than 5% of total
diet?
yes
Add products
to the initial
list
no
Do the missed
commodities
represent more
than 1% of total
agricultural
output?
Are Africa
and region
wide
products
covered?
no
yes
yes
no
no
yes
Add products
to the initial
list
Add products
to the initial
list
no
Are
commodities
covering
70% of diet
included?
Is the list
feasible
for study?
yes
Is there any
additional
product
interesting
for analysis?
Check against local data sources....

Undertake the same process with local data sources (maybe more recent – diet
composition mainly)

Are the list the same? How can we explain differences?

Does the country want to include a specific commodity? why?
ACTIVITY: Do the product selection procedure as described and discuss
potential issues for analysis based on data availability
OUTPUT:
Final product list agreed
Thank you!