MOHAMED ELGALI1, RAJAA MUSTAFA1, SIEGFRIED BAUER2
1University of Gezira, Agricultural Economics, Sudan
2Justus-Liebig University of Giessen, Institute of Farm and Agribusiness Management, Germany
The recent dramatic increase of world food prices has been attributed to many factors; among them on the supply side are weather-related production shortfalls, changes in stock levels and increasing fuel costs. While on the demand side, the changing structures of demand and biofuels production from agricultural commodities are considered as the main factors. Sudan as one of the developing countries and a price taker in the world market of food has been affected greatly by the price increase. This paper aims at studying the impact of the increasing food price on the agricultural crop sector of the Sudan. In this paper a multi"=market model is used as the main tool to assess the increase of the world food prices on the cereal sector. Multi"=market analysis is a tool for simulating the effects of agricultural price policies on outcomes considered of interest to policy makers. The model under consideration takes the normal specification of a standard partial equilibrium model; it is static and consists of a set of demand and supply equations for each commodity with the level of production and demand determined by factors including prices, income, demand and supply"=shift variables and various other assumptions about policies. Price transmission equations in the model establish links between the domestic price, the producer price (for producers of exportable products and of import"=substitute products), the consumer price and the world market price. The model has been extended to calculate the impact of high food prices on the main economy variables which include supply and demand of cereal; in addition it estimates major national food security indicators. Different scenarios of the high food prices showed an increase in farmers incentives resulting in higher levels of production of agricultural crops, on the other hand, consumers demand has decreased significantly, and the national food indicators reflect a positive effect on the food self sufficiency ratio and a significant decrease in per capita consumption.
Keywords: Food security, multi-market model, Sudan