The impacts of trade and agricultural policies in the Dominican Republic: a sector programming approach

A sector-wide programming model of the Dominican agriculture is developed and used to analyze the impacts of trade and agricultural policies in the Dominican Republic. The model includes ten agricultural commodities which accounted for 75 percent of the total value of agricultural production in 1988. Linear demand functions for the commodities are included and the model is solved in its quadratic form using the GAMS/MINOS package. A competitive market is assumed where consumer and producer surplus is maximized. Quantities and prices are obtained endogenously.

Nominal and Effective Rates of Protection were estimated for selected crops. Results indicated negative protection for most of the crops.

Two sets of policy changes and market condition changes were evaluated using the sector programming model. Inward--oriented policies included a policy of self-sufficiency and a penalty on traditional export crops through an exchange rate differential. Outward-oriented policies consisted of a change in the fertilizer price to reflect the border price and the elimination of government subsidies in the agricultural sector. External market condition changes included the elimination of the US sugar quota and an increase in the US sugar quota up to the level assigned in 1990.

Agricultural production, income and employment are increased by a policy of food self-sufficiency, a reduction in fertilizer price and an increase in the US sugar quota. A policy of food self-sufficiency requires more government spending given the input subsidies available from the government.