Impacts of Trade Liberalization on Kenya's Maize Sector: a Partial Equilibrium Analysis

Kenya like most other developing countries has been reforming her staple grain markets since 1986. The reforms were envisaged to improve the sectors terms of trade as a means of stimulating food production. However, the impacts of trade reforms on Kenya¿s maize sector remain controversial. This book evaluates the welfare impacts of trade liberalization and their distributional effects on stakeholders in Kenya¿s maize sectorusing a partial equilibrium model (PEM) of trade, which accounts for market interrelationships at the farm, wholesale and retail levels is developed. The simulations results suggest that tariff reductions yield price decreases across the three market levels. The declining prices increase maize consumption but reduce domestic production. Consequently, consumer surplus increases while producer surplus decreases. However, the gain in consumer surplus is not sufficient to compensate the loss in producer surplus. Kenya¿s implementation of the Uruguay Round trade liberalization commitments leaves the maize sector worse off and cannot be considered as a viable policy based on Herberger¿s postulates.