Government intervention in food grain markets. An econometric study of Tanzania

Government intervention in food grain markets is a common feature of LDC development efforts. This paper investigates the motivation for and the consequences of such intervention for the case of maize, wheat, and rice markets in Tanzania. The authors formulate and estimate an econometric model for each crop, comprising four government behavioral equations in addition to domestic demand and supply equations and the social accounting identity, that succeeds in explaining government interventions in both the long and short run. The results suggest that the government has been following a policy of relative food grain self-sufficiency that has insulated the domestic market from the international market. A simulation analysis shows that this policy has had a substantial impact on food grain production and external trade.