Does trade protectionism promote domestic food security? Evidence from Tanzanian edible oil imports

Abstract

As many African countries adopt tariffs and other trade barriers to stem the rising tide of food imports, we ask, when are these policies effective? Our focus is on edible oils, for which African imports grew over 10% per year between 2006 to 2015, and which accounted for 34% of the growth in food imports for the continent over the period — the highest share of any food group. In the same period, several African countries experienced a boom in the local production and processing of oil-seeds. The combination of import growth and domestic production booms points to a gap in the literature on edible oils and food security in Africa. We begin to fill this gap by estimating the price-responses of households, and how they substitute between palm and sunflower oils, using a QUAIDS model on Tanzanian household level data. For Tanzania, the two leading edible oil varieties – imported palm and domestically produced sunflower oil – accounted for more than 70% of edible oil use. We find a surprisingly low level of substitution between domestic and imported edible oils. Simulated budget shares from our estimates suggest that a 10% tariff increase on palm oil leads to less than a 0.06% change in the budget share of sunflower oil. The main implication of our finding is that other policy initiatives are required to stimulate demand for domestic food options that appear to be substitutes for imports, beyond tariffs.