The Economics of Bolivian Self-Sufficiency in Wheat Production

Extract

The primary purpose of this paper is to provide estimates of the government subsidy that would have to be paid to wheat producers if Bolivia is to reach self-sufficiency in wheat. These estimates are then utilized in a producer's surplus analysis to determine whether or not such a policy would enhance the economic welfare of the country.

Bolivia has a chronic deficit in wheat production. Imports composed about 80 percent of consumption in 1971, the last year of our data series (Table 1). Domestic production in 1971 was roughly the same as 14 years earlier, while imports have steadily increased. A linear regression of imports on time revealed an annual increment of imports of 7,748 metric tons (MT), whereas total annual consumption increased by 8,833 MT. (Thus increases in imports have supplied about 88 percent of the estimated increases in consumption.) Requirements of foreign exchange for wheat purchases have been heavy, especially as Public Law 480 concessional sales have been winding down and Bolivia has had to turn to purely commercial transactions to satisfy her consumption requirements.