**Table 13. Groundnut trade policies distortions in India, China and Argentina (%)**

|**Country**|**Product**|**Description**|**1999/2002**|
|---|---|---|---|
||Edible groundnuts|Import tariff|45<br>|
|India|Groundnut oil|Import tariff|35'<sup>1</sup>|
||Groundnut meal|Import tariff|45|
||Raw edible groundnuts|Import tariff|15|
|China|Processed edible groundnut|Import tariff|30|
||Groundnut oil|Import tariff|10|
||Groundnut meal|Import tariff|5|
||VAT on ediblegroundnuts andgr. oil|VAT|17|
||Edible groundnuts|Import tariff|5|
||Groundnut oil|Import tariff|13|
|Argentina|Groundnut meal|Import tariff|8|
||Edible groundnuts|Export tax|3.5|
||Groundnut meal|Export rebate|3.2|
||groundnut oil (refined)|Export rebate|2.3|

Source: WTO, WITS. USDA GAINS Report 1. Note: (1) India raised its tariff on oil to 65% in 2002 and 85% in 2003 Raw edib. gr. =raw, not roasted or cooked, in shell or shelled gr. Processed groundnuts = Bleached, preserved or otherwise prepared gr., incl. Roasted, salted. gr. butter Argentina’s groundnut trade policy contrasts sharply with that of India and China, as almost all the distortions are associated with exports, with a 3.5 percent tax on exported raw groundnuts. With the peso devaluation of 2001, export retention on groundnut increased to 20 percent. This export tax may countervail the positive signal sent to groundnut exporters through the peso devaluation. Argentina maintains import tariffs on groundnut products, which exhibit some escalation (5, 8 and 13 percent on edible groundnut, meal, and oil, respectively). These tariffs are frequently redundant since the country is a net exporter of groundnut products.

# **Groundnut Policies of Key African Exporters**

After decades of extensive intervention in the groundnut sector, African countries have, to a varying degree, undergone market reforms in the 1980s under structural adjustment plans (SAP). One of the main objectives of market reforms was to eliminate direct and indirect taxation of farmers that had undermined production incentives in the 1970s and early 1980s, and that led to underutilized processing capacities in many groundnut producing countries (Badiane and Kinteh 1994). Reforms have been piecemeal and partial. Governments have generally withdrawn from input markets, leading to difficult access to inputs (chiefly certified seeds and fertilizer) where important market failures (e.g., in the credit market) and high transaction costs prevailed, as in Senegal and Gambia (Akobundu 1998). Governments have however been reluctant to liberalize groundnut processing, for which privatization efforts started only recently (Senegal, Gambia). In Senegal and Gambia, producer prices are still set by governments.

African governments have traditionally used pricing policies as levers to conveniently tax or subsidize farmers based on countries’ industrial policy and political circumstances<sup>10</sup> . Taxation of groundnut farmers was high in the 1970’s but has been reversed since the early 1990’s in most countries while real world prices have trended downward (Badiane and Kinteh 1994). In Senegal

> 10 Taxation of producers was direct, i.e., when marketing boards or similar agencies captured the rent equals to the difference between net world price and producer price, or indirect, via real exchange rate appreciation. This taxation was generally mitigated by input subsidies and border protection.

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