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Journal of African Economies Advance Access originally published online on December 4, 2008
Journal of African Economies 2009 18(3):388-430; doi:10.1093/jae/ejn025
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© The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

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

Olivier Cadota, Laure Dutoitb and Jaime de Meloc,*

a HEC Lausanne, CERDI and CEPR
b Economic Commission for Latin America
c Department of Economics, University of Geneva, CERDI and CEPR

* Corresponding author: Jaime de Melo. E-mail: demelo{at}unige.ch

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.

JEL classification: F14, O11, O12


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