AAMP Briefing Packet 1.2.c. Import and Export Parity Prices

Transcription

1 AAMP Briefing Packet 1.2.c. Import and Export Parity Prices (i) Introduction to import and export parity prices (ii) Mechanics of computing border prices (iii) Computing border prices: three exercises (iv) Can domestic prices ever exceed import parity?

2 (i) introduction to import and export parity prices Domestic price Import parity price Export parity price

3 Domestic price Price $/ton D S0 Quantity

4 Domestic price Price $/ton D S0 Quantity

5 Drought Price $/ton D S1 S0 Quantity

6 Drought: closed borders Price $/ton D S1 S0 Quantity

7 Drought: closed borders Price $/ton D S1 S0 Pm Quantity

8 Drought: open borders Price $/ton D S1 S0 Pm Quantity

9 Domestic price Price $/ton D S0 Quantity

10 Bumper harvest Price $/ton D S0 S2 Quantity

11 Bumper harvest: closed border Price $/ton D S0 S2 Quantity

12 Bumper harvest: closed border Price $/ton D S0 S2 Pe Quantity

13 Bumper harvest: open border Price $/ton D S0 S2 Pe Quantity

14 Border prices contain price volatility Price $/ton D S1 S0 S2 Pm Pe Quantity

15 Discussion questions When will IPP influence domestic price? When will EPP influence domestic price?

16 South Africa, domestic and border prices for white maize, SAFEX Price Import Parity Price Export Parity

17 Rice Prices and Quantity of Private Rice Imports in Bangladesh, Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Price (Taka/kg) Imports ('000 MT) 50 0 Private Sector Imports Import Parity(ex: Bongaon) Dhaka Wholesale Price Import Parity(ex: Delhi) Source : Dorosh (1).

18 Rice Prices and Quantity of Private Rice Imports in Bangladesh, Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Price (Taka/kg) Imports ('000 MT) 50 0 Private Sector Imports Import Parity(ex: Bongaon) Dhaka Wholesale Price Import Parity(ex: Delhi) Source : Dorosh (1).

19 Saudi Arabia, domestic and border prices for wheat, $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 import parity price domestic price

20 (ii) mechanics of computing border prices Domestic reference price = price in Location 1 Import parity price, Location 2 Export parity price, Location 3

21 (ii) mechanics of computing border prices Domestic reference price = price in Location 1 Import parity price, Location 2= price at which purchases in Location 2 can be delivered to market in Location 1 Export parity price, Location 3 = price at which commodity would have to be purchased in Location 1 in order to be sold at market price in Location 3

22 (ii) Mechanics of computing border prices IPP, Location 2 = price at which purchases in City 2 can be delivered to market in Location 1 = price in Location 2 + transport to Location 1 + duties and fees + handling costs

23 (ii) Mechanics of computing border prices IPP, Location 2 = price at which purchases in Location 2 can be delivered to wholesale market in Location 1 = price in L2 $ + transport to L1 $ + duties and fees $ 50 + handling costs $ 34 = IPP from L2 to L1 $

24 (ii) Mechanics of computing border prices IPP, Location 2 = price at which purchases in Location 2 can be delivered to wholesale market in Location 1 = price in L2 $ + transport to L1 $ + duties and fees $ 50 + handling costs $ 34 = IPP from L2 to L1 $384

25 (ii) Mechanics of computing border prices EPP, L3 = price at which purchases would have to be purchased in L1 in order to be sold at market price in L3 = price in L3 - transport to L1 - duties and fees - handling costs = EPP from L3 to L1

26 (ii) Mechanics of computing border prices EPP, L3 = price at which purchases would have to be purchased in L1 in order to be sold at market price in L3 = price in L3 $275 - transport to L1 $ 60 - duties and fees $ 0 - handling costs $ 25 = EPP from L3 to L1 $

27 (ii) Mechanics of computing border prices EPP, L3 = price at which purchases would have to be purchased in L1 in order to be sold at market price in L3 = price in L3 $275 - transport to L1 $ 60 - duties and fees $ 0 - handling costs $ 25 = EPP from L3 to L1 $ 190

28 (iii) Computing border prices: three exercises Nairobi: mechanics of computing IPP, EPP: domestic maize price, IPP Durban, EPP Durban (kenya data.xls) Nairobi: graph domestic maize price, IPP & EPP Durban, IPP & EPP Uganda (east africa data.xls) Blantyre: domestic maize price, IPP Nampula, EPP Nampula (south east data.xls)

29 (iv) Discussion Questions When, if ever, has import parity capped domestic price increases? Can domestic price ever exceed import parity? If so, when and why can this happen? If not, why?

30 Nairobi, domestic and border prices for white maize, Price (US$/ton) Nairobi Export parity, Durban Export parity, Mbale Uganda Import parity, Durban Import parity, Mbale Uganda

31 Malawi, domestic and border prices for white maize, Wholesale price (US$ per ton) Import Parity Northern Mozambiique Export Parity, Northern Mozambique Southern Malawi

32 Lusaka, domestic and border prices for white maize, price ($/ton) $400 $350 $ $250 $ $150 $ $50 $0 Lusaka wholesale price import parity

33 Ethiopia Wheat Price (Birr/quintal) Month/Year White wheat wholesale Addis Import Parity Revised Import Sales Price

34 Ethiopia Maize Price (Birr (6)/quintal) Month/Year White Wheat Wholesale Addis Export parity (FOB Djibouti) Import Parity