**_Production and Trade_** .  Figure 3 shows production and recorded imports of sugar in Senegal (there are no exports) over 2000-2012.<sup>9</sup> Production has held steady at about 100,000 tons of year, about 85 percent of which is in the cheaper crystalized form rather than in cubes.  Imports, as recorded by Senegalese statistics, have trended upwards and increased sharply since 2008, suggesting rising consumption and possibly declining smuggling, but the domestic price still greatly exceeded the world price, although to a lesser extent than a few years earlier.  However, consumption data from household surveys do not show such a substantial increase in per capita consumption since 2008. Some of these imports may reflect a substitution of legal imports for illegal smuggling as the price differential has narrowed. CSS management implausibly claims that sugar is now being smuggled out of Senegal into neighboring countries, but CSS also revealed that in May 2013 it had a large stock of unsold sugar.  So what is the reason for these additional imports contributing to excess supply?  The rise in sugar imports coincides with the liberalization of the CSS monopsony, with the CSS and the UNACOIS traders now competing in the import market, and together importing more than the market will bear.  Such an outcome of liberalization is not surprising given the very high price differentials between domestic and world markets seen in Figure 2.

# **4.3. Vegetable oil.**<sup>**10**</sup>

**_Market structure._** Senegal produces and exports peanut oil, while importing cheaper palm and soybean oil for domestic consumption.  Peanuts have been Senegal’s predominant cash crop since the colonial era, and Senegal is a major producer of groundnut oil.  As in other African economies, in the first decades after independence, control of the cash crop switched from the colonial power to a government-operated marketing board.  In Senegal, the _Office National de Coopération et d'Assistance au Développement (_ ONCAD _)_ oversaw all stages of production and distribution in the first decades after independence, including providing inputs and credit to smallholder farmers, then purchasing, transporting, processing and marketing the output.  Until the middle of the 1970s, groundnuts were the mainstay of the Senegalese economy: the sector’s contribution to GDP was about 20 percent, and it accounted for more than 70 percent of employment and was by far the most important export commodity.   Towards the end of the 1970s, however, a steady decline set in, in part due to declining rainfall and desertification.  Poor management of the sector also played a major role (Golub and Mbaye 2002). Declining performance and the need for more investment led the government to gradually disengage from the sector, culminating in the privatization of SONACOS in 2005.  Unfortunately, the reforms failed to improve the sector’s performance: low yields, distribution problems, poor access to credit and other basic services to producers, industrial losses, etc. Combined with increased informal processing, this led to a dramatic decrease in exports.

Although the market was partially liberalized in the 1990s, until 2005 the government retained a near monopoly on the purchase and processing of groundnuts through the

> 9 Production data are from the Senegalese statistical agency ANSD.  Trade data is from Senegalese customs.

> 10 This section draws heavily on World Bank, « Etude diagnostique de la chaine de valeurs arachide au Sénégal : Propositions de réformes », 2015.

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