Government intervention in the maize market in the Democratic Republic of Congo

Abstract

Political economics concentrates on the specific set of social relations organised around the power or the ability to control other people, process and things even in the face of resistance. It commonly refers to interdisciplinary studies in economics, law and political science in explaining how political institutions, the political environment and the economic system influence each other. Important amount of money is spent in agricultural support in the world as well as in The Democratic Republic of Congo each year. This is increasing the pressure on government intervention in price and trade. The DRC as a member of GATT must quantify all forms of agricultural support levels in their schedule of concession. Over the years several instruments were developed to quantify the effect of government policy changes on the economy. These instruments play a significant role in displaying the impact of the intervention and policy on the market as well as advising strategic decision regarding agricultural industries. The aim of this study was to evaluate the impact of government intervention on the maize market in the DRC within a partial equilibrium framework, according to well defined principle of price formation (price discovery). It will enable identification and analysis of the best policy practice for solving the problem concerning market failure in the maize sector. Additionally, it will evaluate the efficiency of the role played by government interventions in the maize sector, concerning issues relating to increased food security and reduction of poverty in the Democratic Republic of Congo which is one of the Millennium Development Goals. The key findings of the study are: _ An increase in the yield has a positive impact on the production, therefore, this has led to a decrease in the wholesale price of maize. The area harvested decline as well as the consumption increased due to the lower price of maize; _ The government should promote the production of smallholder farmers and encourage agricultural innovation: given the low yield for most crops; _ The production is there but it has many problems to have access to the market, especially big cities like Kinshasa and Lubumbashi, therefore the import more; The government should not only stabilize the exchange rate as it has an important influence on food price but also include an effective implementation of decentralization for strategies better adapted to local realities.