metadata: authors: 0: author: Weaver, Robert D.
1: author: Shire, Saad Ali
count: Ethiopia
docna: 0: docna: Price and tax policy for semi-subsistence
            agriculture in Ethiopia
docty: Policy Research Working Paper
subtopic: Climate Change and Agriculture,Tax Administration,Macro-Fiscal Policy,Taxation & Subsidies,Economic Adjustment and Lending,Tax Law,Crops and Crop Management Systems,Public Sector Economics,Tax Policy,Food Security,Public Finance Decentralization and
            Poverty Reduction,Transport Services
teratopic: Agriculture
abstracts: cdata!: In the case of semi-subsistence
            agriculture where wage employment is not available, the role
            played by prices and taxes in determining production and
            consumption decisions is not clearly established by economic
            theories of household choice.  This study demonstrates that
            where choices in production, consumption, and leisure can be
            made independently, farmers will decide what to grow on the
            basis of their preferences for marketed goods. The paper
            also points out that the choice will be affected by the
            level and type of taxation imposed. The paper shows the
            impact of four taxes -- agricultural revenue, land,
            production and marketed goods consumption -- on crop
            production and tax revenues. This paper also reports on a
            model of production in Ethiopia. The results of this study
            give strong evidence of the role of producer and consumer
            prices in semi-subsistence agriculture. In addition, the
            results show the importance of production capacity,
            household and climatic factors in agricultural development.
geo_reg_key: 517191
repnme: repnme: Price and tax policy for semi-subsistence
            agriculture in Ethiopia
display_title: Price and tax policy for
            semi-subsistence agriculture in Ethiopia
listing_relative_url: /research/1988/08/700664/price-tax-policy-semi-subsistence-agriculture-ethiopia
topicv3: Agriculture and Food Security m1326205 435,Crop Production m1326627 174,Transport m1326661 135,Taxation m1327615 1121,Tax Policy m1327616 983
publishtoextweb_dt: 2010-07-01T00:00:00Z
historic_topic: Agriculture
origu: Policy Plan & Prog Review Dept
no_of_pages: 38
model_extractions: Po, Plnnft n _Am_ **Inamtwntnal Commodity Mfiarkets** In the case of semi-subsistence agdculture where wage employment is not available, the role played by prices and taxes in determining production and consumption decisions is not clearly established by economic theories of household choice. This study demonstrates that where choices in production, consumption, and leisure can be made independently, farmers will decide what to grow on the basis of their preferences for marketed goods, and will also be affected by the level and type of taxation.

The model shows the impact of four taxes agricultural revenue, land (either a head tax or a tax based on land area), pro'iuction, and marketed goods consumption - on crop production and tax revenues. The results demonstrated that a production tax curailed output while a lump-sum land tax expanded production. The impact of a tax on agricultural revenue or on products sold in the market depends on the faTners' preferences for marketed goods.

For Ethiopia, a model of production was estimated for eight food crops for semi-subsistence households. In general, production responded to changes in relative expected prices, iand availability, level of household demand, and sowing period rainfalL Production of teff, wheat, chick peas, and sorghum was found to increase with higher prices, and production of field peas was found to fall. Evidence suggests that expandinf the amount of arable land will raise farmers' output of wheat, chick peas, maize, and sorghum.

These results give strong evidence of the role of producer and consumer prices in semisubsistence agriculture. In additior, the results show the importance of production capacity, household demand, and climatic factors, supporting a balanced approach to agricultural development that recognizes the joint roles of prices, production capacity, and demand.

This paper is a product of the Intemational Commodity Markets Division, Intemational Economics Department. Copies are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Dawn Gustafson, room S7-044, extension 33714.

The PPR Working Paper Series disseniinates the findings of work under way in the Bank's Policy, Plamuing, and Research Complex. An objective of the series is to get these fmdings out quickly, even if presentations are less than fully polished. The findings, interpretations, and conclusions in these papers do not necessarily represent official policy of the Bank.

Copyright 0 1988 by the Iternational Bank for Reconstruction and Development/the World Bank