The Paradox of Agricultural Trade Liberalization in Bangladesh and Tanzania

Abstract

This paper examines the contradictions and theoretical ambiguities of agricultural trade liberalization on the welfare of smallholder farmers. It analyses the correlation between domestic and international prices of rice in Bangladesh and maize in Tanzania. Data was obtained from published international sources particularly Food and Agricultural Organization [FAO] statistics and United States Department of Agriculture (USDA) and the Bangladesh Bureau of Statistics [BBS]. Coefficient of variation of the level of prices (CV) and corrected coefficient of variation (CCV) were used in the analysis. Findings show that the values of both CV and CCV for consumer price in the post-liberalization were quite large suggesting greater volatility of consumer price of rice in Bangladesh and maize in Tanzania. it is concluded that price volatility diminishes the potential benefits of agricultural trade liberalization for smallholder farmers who are net-deficit producers, net-deficit sellers. The study recommends supplementary policy interventions to achieve enhanced welfare from trade liberalization.