The Effects of Trade Liberalization on Groundnut Market in Myanmar

Groundnut has been enjoying a larger share in the domestic oilseed market and assuming a significant role in the livelihood of farmers and processors as well as consumers. However, oilseeds and oilseed product markets in Myanmar have been distorted by the government's trade and agricultural policies. In order to achieve self-sufficiency in edible oil, groundnut seed export has been frequently banned even though the commodity has price competitiveness in the international market. Opening the market for groundnut would benefit the growers and processors under the multimarket aspects of this commodity. This study examines the impacts of trade liberalization of groundnut by constructing the supply and demand of groundnut seed market using simultaneous equations system. The partial equilibrium framework describes the welfare impacts on producers, consumers and society by measuring alternative scenarios of export demand. The results show that welfare gains of farmers are larger than the consumer surplus losses in both direct consumption and crushing sectors and consequently leading to a net gain for society.