Effect of Rice Trade Policy on Household Welfare in Nigeria

Abstract

Inconsistence in the use of trade policy reform has characterized Nigeria’s rice imports over the years and little is known about the welfare implications of these reforms on the Nigerian households. This study uses a static computable general equilibrium model to assess the effect of rice trade policies of an import ban, 80% tariff increase, 5% tariff reduction and 0% rice import tariff on the welfare of households in the country. Simulation results show that no rice trade policy improved social welfare, although producing households’ incomes increased under protectionist policies of ban and tariff increase. All households lost welfare with 0% tariff while only the major producing and consuming households lost welfare with the 5% reduction in tariffs. The least loss to social welfare also occurred in this scenario, hence this policy was recommended for adoption in order to minimize welfare losses to households.

Keywords: Rice; trade policy; tariff; households; welfare; computable general equilibrium