Welfare and incentive effects of possible changes in the regulatory environment of the maize market in Swaziland - Institutional Constraints to Small Farmer Development in Southern Africa - page 132

period 1998/1999 to 2003/2004. The domestic price P d represents the actual price that
producers receive, while the border price P b represents the import prices.

By means of a set of nine variables, the social impact of the current regulatory regime in
the maize market is assessed, looking specifically at efficiency losses in production and
consumption, changes in producer and consumer surpluses, and revenue over a six-year
period, 1998-2004. The variables and their derivations are set out in Table 7.5 while the
analytical procedures to determine the welfare effects are shown in Table 7.6.

In this structure, supply and demand elasticities and price data are used to calculate the
financial implications of a change in commodity price, the welfare transfers between
producers and consumers and the net gains and losses in economic efficiency. In line

Table 7.5. Variables for assessment of social impact of maize market regulation in Swaziland.

Variable Definition Formulae

P d Domestic price for maize

P b Border price for maize

e s Price elasticity of supply

n d Price elasticity of demand

NPC Nominal Protection Coefficient P d /P b

t Implicit tariff NPC-1

t' Nominal tariff rate tP b /P d

V' Value of domestic production at domestic price P d ×dom. Prod.

W' Value of domestic consumption at domestic price P d ×total supply

Table 7.6. Specification of welfare effects of maize market regulation in Swaziland.

Welfare effects Definition Formulae

0.5×e s ×t 2 ×V'

NEL p Deadweight loss in production

0.5×n d ×t' 2 ×W'

NEL c Deadweight in consumption

WG p Change in producer surplus t'V'- NEL p

WG c Change in consumer surplus -(t'W'+NEL c )

^GR Change in revenue t'(W'-V')

Loss/capita Loss per capita WGc/total.pop