Agriculture Reform and Food Crisis in Syria: Impacts on Poverty and Inequality

The paper pursues a two-fold objective. From a methodological viewpoint it shows how to carry out an impacts evaluation of exogenous shocks on poverty and inequality in a context characterized by out-of-equilibrium, poorly-adjusting markets, as it is the case in many developing countries, using a social account matrix framework. From an empirical viewpoint it provides an assessment of how the cereal price spikes of 2007- 2008 and the global recession of 2008-2009 have impacted the welfare of Syrian households and how did they compound with the on-going agricultural sector liberalisation implemented by the Government of Syria over the last decade. This will contribute to shed some lights on the economic background behind the spreading of unrest across the country over the last year or so. The results show that liberalisation impacts are very different and largely affected by the adopted budget closure rules. While reforms aiming at reducing agricultural market distortions (such as production subsidies and price support for strategic crops) could generally have a positive effect on both growth and poverty and inequality, the elimination of food security interventions (such as food stamp schemes) determines an adverse distributional impact against rural household and an increase of poverty. The recent macroeconomic shocks (food price crisis and the global recession) determined a generalized poverty increase and showed an income distribution bias against rural households. Two fundamental policy implications can be drawn by this study. First, the liberalisation of agricultural sector shows a significant growth potential and is likely to determine positive effects on poverty through a generalised increase of incomes as well as public budget savings that could be used for pursuing other policy goals. Second, in the short-run there is a structural trade-off between equity improvements and poverty alleviation: the policy options that will more likely reduce absolute poverty show undesirable distributive biases (both on overall inequality and on rural households vis-à-vis urban households). This calls for a careful targeting of how to use budget savings generated by agriculture liberalisation.