DEVELOPMENT OF THE AGRICULTURAL CROPS TRADE SECTOR OF SUDAN UNDER THE INCREASING WORLD FOOD PRICES

The agricultural trade of the Sudan is expected to develop under the recent dramatic increase of world food prices. Sudan as one of the developing countries and as price taker on the world agricultural market has been affected greatly by the world price increase. This paper aims at studying the impact of the increasing world food prices on developments of the agricultural crops trade sector of Sudan. In this paper a multimarket model is used as the main tool to estimate the increase of the world food prices on the crop trade sector. Multi-market analysis is a tool for simulating the effects of agricultural price policies on outcomes considered of interest to policy makers. The model under consideration takes the normal specification of a standard partial equilibrium model; it is static and consists of a set of demand and supply equations for each commodity with the level of production and demand determined by factors including prices, income, and demand and supply-shift variables, in addition to various other assumptions about policies. Price transmission equations in the model establish links between the domestic price, the producer price (for producers of exportable products and of import-substitute products), the consumer price and the world market price. The model has been developed to calculate the impact of high food prices on the main economy variables including supply and demand of the major agricultural commodities. The scenario of high world food prices showed on one hand, an increase in farmers' incentives resulting in higher levels of production of agricultural commodities, on the other hand, consumers demand has decreased significantly, and trade indicators reflect a positive effect on the agricultural crop trade sector.