Assessing the Impact of National Marketing Boards on Consumers and Producers’ Welfare
Food production in Swaziland has historically been insufficient, even after the introduction of National Marketing Boards. This is despite their mandate emphasised in the National Development Strategy (NDS) and Agriculture Sector Policy to develop smallholder agriculture through commercialisation, value addition and market access. The low food production coupled with high food prices and dependency on food imports increases the food-insecure population in the country. Hence, the study uses a Partial Equilibrium Model to assess the welfare impact of National Marketing Boards, in particular the National Maize Corporation (NMC) and Swaziland Dairy Board (SBD), on consumers and producers.
The results show that over the five-year period, on average, the loss in maize per consumer was E94.22 per year, resulting in an average consumer loss of E116,975,312.30 per year. However, the average producer gains were E35,651,178.21; indicating that highly commercialised maize producers were benefiting from the NMC while consumers were losing through higher maize prices compared to what they would have received in a competitive environment. In the same period, on average, the milk producer gains were E35,545,181.85 while the consumer losses were E243,676,441.51 per year. This implies that commercial farmers are gaining at the expense of consumers. The average individual maize consumer losses amount to E197.90 per year. The study concludes that National Marketing Boards do contribute to low food production, high consumer prices, and economic losses. Therefore, it is recommended that policy makers need to design policies and strategies that comply with the heterogeneous markets in order to benefit consumers and producers.Download PDF