Generally the prices of any commodity is determined by the equilibrium between supply and demand in the global market. It indicates that the prices of commodities should also be same in different countries across the world. On the contrary, they vary from country to country mainly because of the government intervention through various schemes and policies regarding trade aspects. Owing to this reason, the domestic prices deviate from the international prices generating either incentives or disincentives to the actors in the supply chain. The measurement of this gap in the domestic and international prices as incentive or disincentive to the players is the main aim of the MAFAP methodology. Ordinarily price incentives are the external prompts such as subsidies, Minimum Support Prices (MSP), etc., provided to the producers to encourage their production despite the price fluctuations. Nevertheless, in accordance to MAFAP methodology, price incentives are the effects of food and agricultural policies that have an impact on domestic prices at different levels across the globe.
Monitoring and Analysing Food and Agricultural Policies, abbreviated as MAFAP was developed by FAO in the year 2009 to monitor and analyse African country policies. The application of MAFAP to analyse policies in the member countries of Food and Agricultural Organisation (FAO) upon their request was also observed in the later years. The major focus of the MAFAP analysis is on policy measuring and monitoring, systematic analysis of government policies and their effects. The frame work of MAFAP methodology for price incentive analysis comprises of identifying the type of policies that are supporting production and marketing of the commodities taken for analysis, identifying the factors that causes difference between domestic and international prices for the commodities, measuring the effect of policies on prices at different points of value chain and knowing the level and type of inefficiencies in the agricultural markets.
MAFAP Method, Price Incentive Analysis
