The Elimination of Madagascar's Vanilla Marketing Board, 10 Years on

Abstract

This paper explores how the elimination of Madagascar's Vanilla Marketing Board (VMB) in 1993 affected prices paid to farmers, incentives and indicators of poverty and inequality using household survey data and simulation analysis. Following the reforms, margins between FOB and farmgate prices have narrowed down, and the analysis of changes in poverty and inequality based on household surveys suggests a reduction in poverty and a muted supply response. A counterfactual analysis based on the observed reduction in intermediation margins shows that, however limited, increase in competition among intermediaries has contributed to raise purchase prices and the cash income of vanilla farmers. After taking into account the reduction in Madagascar's monopoly power on the world vanilla market implied by the elimination of the VMB, the induced rise in producer prices is estimated to have lifted about 20,000 individuals out of poverty.

Market Competition in Export Cash Crops and Farm Income

“…In short, the addition of those supply responses is unlikely to affect our welfare and poverty analysis. This feature of the analysis is a general result, not a property of our data (see for example Cadot et al (2009), McMillan et al (2003), Heltberg and Tarp (2002), Key et al (2000), and Lopez et al (1995)).…”

Land Competition under Telecoupling: Distant Actors’ Environmental versus Economic Claims on Land in North-Eastern Madagascar

“…With this in mind, we found that regulation of the commodities trade and conservation activities in Madagascar officially remain the responsibility of the public sector, i.e., the local and national Malagasy government. This regulating role is smaller than in times past [30], as the vanilla market was a state-run monopoly prior to 1993 [77]. Today, states appear to be reasserting their regulatory power, such as in the case of forest and agricultural certification in Indonesia [78] or "land grabbing" governance [79] globally.…”

The Price is Not Always Right: On the Impacts of Commodity Prices on Households (and Countries)

“…It is perhaps not really surprising to learn that supply responses are somewhat feeble in developing countries. The body of literature is too large for a comprehensive review, but some of most fascinating recent examples include Cadot, Dutoit, and de Melo (2009), who examined vanilla-market reforms in Madagascar, and McMillan, Welch, and Rodrik (2003), who studied cashews in Mozambique.…”