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Comparative Advantages

The comparative advantages study was carried out by six NAPC researchers, namely H. Al Ashkar, B. Atiya, R. Snoubar, R. Sheikh, N. Amouri and M. Al Shareef, with the assistance provided by FAO, especially through Projects GCP/SYR/006/ITA and TCP/SYR/2906, which financed and coordinated the establishment of a cooperative relationship with CIRAD (Centre de Coopération Internationale en Recherche Agronomique Pour le Développement) in the person of two international experts, F. Lançon and M. Fok, and recruited three national experts, M. Khazma, Y. Kassem, and Y. Ismail.

The study assumes that an economic activity has a comparative advantage as far as it can compete with alternative sources of supply from import, without benefiting from any specific support from the rest of the economy under the form of transfer of resources.

Products were classified according to main categories: strategic crops, vegetables, perennials, and livestock. Within each category, relevant products were chosen by the NAPC in consultation with members of the Ministerial Price Committee. Cotton and wheat were selected as strategic crops, orange and olive as perennials, beef meat and cow milk as livestock production.

The 6 above-mentioned products were then divided into 28 representative commodity chain systems on the basis of type of raw material, cropping technique, processing technique, and export targeted market. These chains and their related final outputs under the form of processed agro-food products were selected in order to provide a first set of indications about the capacity of the agricultural sector to continue fulfilling its expected contribution to economic development in a new policy environment.

The Policy Analysis Matrix (PAM) was used as the analytical framework to estimate the comparative advantages of the given productive systems. The PAM allows to compare Income, Input cost, Factors cost, and Profit under private prices (level of price observed under the current economic conditions) and social prices (price that would prevail under perfect market conditions leading to an optimal allocation of resources within the economic system).

The results of this study show that all the systems achieved a positive profit at private price, the highest profit per hectare being achieved by tomato, followed by orange - with the exception of Fresh Orange Juice Concentrate (FOJC) - and olive oil production. Field crops, cotton, and wheat achieved a much lower return per hectare compared to the tomato and perennial production systems. However, cotton still generates a profit that is more than the profit per hectare obtained by wheat-based systems, where flour production gets the lowest profit per hectare while pasta production is more profitable on a per hectare basis.

Looking at the profit obtained at social price, the group which achieved the highest profit at private price, i.e. tomato, fresh oranges and olive oil, maintains its profitability in absence of support or protection, while, for the field crops group, only systems producing pasta, hard wheat flour and some of the systems producing soft wheat maintain their profitability. In the livestock group, only the production of packed milk is profitable at social price while meat production becomes unprofitable under live animal form or fresh meat form. Cotton production is also not profitable at social price and the same applies to the production of Fresh Orange Juice Concentrate. It is worth noting that, with the exception of cotton, systems targeting foreign markets have a comparative advantage, while systems targeting the domestic market do not have a comparative advantage, with the exception of the milk system.

With the important exception of cotton, these results indicate that the current structure of trade flow is not significantly affected by the current Syrian agricultural policy; in other words, systems such as oranges, tomato, or pasta, which are already exporting a share of their output, will do so even without any policy or market induced distortion.

Overall, the study aims at assisting policy maker in formulating policy options and priorities on a commodity basis with the most cost-effective compromise between economic efficiency and social equity.

 

Summary of the Comparative Advantages Study (PDF 308KB)

Power Point Presentation (PPS 2.3MB)

Assistance for Capacity Building Through Enhancing Operation of the Study. (PDF )

Comparative Advantage Study, technical study (PDF)

Comparative Advantages of Selected Syrian agro-food chains Study (PDF)

Lessons Drawn From the Implementation of the Study (PDF)

Methodological Guidelines for PAM Analysis Study (PDF)

 
 
 
 
 
 
 
   
     

 

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Last update: 25.08.2005