- 39 -

regressions in table 1, only about one-third of the differences in export growth between the two groups or countries can be attributed to differences in rainfall. 27/ The comparisons in table 9 also indicate that both food and total agricultural production grew faster - since 1982 in countries with favorable agricultural policies with food production growing nearly four times as fast in FPE countries as in UPE countries. Again, based on the coefficients estimated for their response to better weather, only about one-third of the difference can be attributed to the different weather patterns.

It is noteworthy that for those countries where producer food price data are available (excluding official prices where they are not enforced) there has been very little change in the real prices paid to producers for food crops. Again the earlier results are confirmed: improved prices for export crops tend **to** benefit food production as well.

# County diversity: policy and response

While the patterns in many individual countries support the aggregate results and grouped comparisons above, performance and responsiveness varies across countries within the two groups. Aside from differentiation between annual and tree crops, two major reasons can account for differing responsiveness to price signals: first, if price changes are viewed as temporary fluctuations rather than permanent shifts in the price policy regime, farmers will not respond; second, nonprice constraints may obstruct producers from responding to incentives.

The experience of several countries provides eviderce of both responsive and nonresponsive agriculture. Ghana is a striking example of both how deleterious the effects of bad economnic policies can be, and how changing those poor policies can have a dramau^-. effect for agriculture and for the economy overall. GDP has grown by 6 percent per year since 1983, led by rhe agriculural sector. Agricultural exports (essentially cocoa), which had been falling since the 1960s, have finally rebounded, 3-4 years after real producer prices were nearly doubled (figure 17).

There are many reasons for the inpressive response of Ghana's economy. Included among these are the return of expelled workers from Nigeria at the time of the reforms bringing additional labor to the rural sector, high levels of international assistance which enabled the government to persevere in the difficult adjustment programs, and the ostensible perception that the reforms represented a permanent change in Ghana's policy regime. A survey carried out in early 1988 showed a substantial amount of new cocoa planting was taking place, an investment whose return will depend on producer prices at least four years hence. The credibility of the change in price level had been perceived (accurately thus far) to be a permanent change and thus led to revision of the prices exocte by farmers in the future, not just current prices.

In addition, though, despite a long period of deteriorating economic conditions, the physical and institutional infrastructure needed to service the cocoa sector had remained reasonably intact.

22/ Using the estimate of the export supply response to changes in the weather variable, only 4 percentage points of the 22 percent growth over the period can be explained by more favorable weather. Similarly, for the UPE group which experience poor weather during part of the period, their exports could have been 3 percentage points better than the 1 percent rise between the two periods if weather had remained favorable in the second period. Therefore, 7 of the 21 percentage point difference in growth between the two groups is accounted for by different weather. (Similar results are obtained by comparing the differences :n total production and food production.)