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Glossary - Incentives and Disincentives

Commodity Trade Status A commodity is classified as an export (x) if the exported volume exceeds the imported volume. It is classified as a imported commodity (m) if the imported volume exceeds the exported volume.
Commodity MAFAP Status A commodity is classified as a "Thinly traded" if the trade intensity is less that 2.5% or as a "Food security" commodity if it represents a significant share of the country's daily calorie intake.
Benchmark Price Unit Indicate the currency and units in which the benchmark price is given as well as the type of commodity it refers.
Observed Benchmark Price The observed benchmark price is the price of a commodity at the border of a country. It is the price at which a commodity arrives at a country (if imported) or leaves a county (if exported). This price reflects the opportunity cost for domestic market participants and represents a price free of domestic policy interventions (for imports) or including all policy interventions and the impact of market functioning (for exports).
Adjusted Benchmark Price The adjusted benchmark price is the observed benchmark price adjusted to control effects of international policies and/or international market performance.
Observed Exchange Rate The exchange rate is the price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.
Adjusted Exchange Rate Observed exchange rate adjusted to consider artificial overvaluation or undervaluation of the local currency.
Units from Border to Point of Competition Indicate the currency and units used between the border and the point of competition as well as the type of commodity.
Observed Access Costs from Border to Point of Competition All costs that need to be incurred in order to move a commodity throughout the value chain between the border and the point of competition. Also referred to transaction costs, they should include all concepts related to market access such as processing, storage, handling, transport and the different margins applied by the economic agents.
Adjusted Access Costs from Border to Point of Competition Observed access costs between the border and the point of competition adjusted by omitting any non-tariff cost and informal tax or subsidy and by adjusting other marketing costs and margins if perceived to be excessive.
Price at Point of Competition Domestic price at the point of competition refers to the price of a commodity in the market in which the domestically produced commodity competes with the internationally traded commodity.
Units from Point of Competition to Farm Gate Indicate the currency and units used between the point of competition and the farm gate as well as the type of commodity.
Observed Access Costs from Point of Competition to Farm Gate All costs that need to be incurred in order to move a commodity throughout the value chain between the farm gate and the point of competition. Also referred to transaction costs, they should include all concepts related to market access such as processing, storage, handling, transport and the different margins applied by the economic agents.
Adjusted Access Costs from Point of Competition to Farm Gate Observed access costs between the farm gate and the point of competition adjusted by omitting any non-tariff cost and informal tax or subsidy and by adjusting other marketing costs and margins if perceived to be excessive.
Price at Farm Gate Farm gate prices, sometimes referred to as producer prices, are defined as the amount received by the producer from the purchaser for a unit of a good or service produced as output minus any VAT, or similar deductible tax, invoiced to the purchaser; it excludes any transport charges invoiced separately by the producer.
Externalities An externality is a cost (negative externality) or a benefit (positive externality) accruing to an agent who does not pay-a-price/receive-compensation for it and who is not involved in the decision process regarding the generation of such cost or benefit.
Budget and Other Transfers Budgetary transfer to producers specific to a commodity and a year.
Quantity Conversion Factor between the Border and the Point of Competition Quantity adjustment factor to account for shrinkage and losses between border and point of competition or technical conversion factor to take into account the transformation needed for commodity traded at the point of competition to be comparable with the one internationally traded.
Quality Conversion Factor between the Border and the Point of Competition Quality adjustment factor to make the commodity traded at point of competition and the internationally traded one comparable.
Quantity Conversion Factor between the Point of Competition and Farm Gate Quantity adjustment factor to account for shrinkage and losses between point of competition and the farm gate or technical conversion factor to take into account the transformation needed for commodity sold at the farm gate to be comparable with commodity traded at the point of competition.
Quality Conversion Factor between the Point of Competition and Farm Gate Quality adjustment factor to make the commodity sold by the farmer and the one traded at point of competition comparable.
Observed Benchmark Price in LCU Observed benchmark price in local currency units using the observed or official exchange rate.
Adjusted Benchmark Price in LCU Adjusted benchmark price in local currency units using the adjusted exchange rate.
Observed Reference Price at Point of Competition Maximum price at point of competition that could be obtained if policies were removed and overall market performance enhanced. It is calculated using observed data.
Adjusted Reference Price at  Point of Competition The adjusted reference price at point of competition is the maximum price that could be obtained if policies were removed, overall market performance enhanced, policy or market policy distortions in international markets removed, exchange rate policy removed and excessive access costs between the border and the point of competition in the commodity specific value chain removed. It is calculated using adjusted data.
Observed Reference Price at Farm Gate Maximum price at farm gate that could be obtained if policies were removed and overall market performance enhanced. It is calculated using observed data.
Adjusted Reference Price at Farm Gate The adjusted reference price at farm gate is the maximum price that could be obtained if policies were removed, overall market performance enhanced, policy or market policy distortions in international markets removed, exchange rate policy removed and excessive access costs between the border and the farm gate in the commodity specific value chain removed. It is calculated using adjusted data.
Observed Price Gap at Point of Competition Difference between the domestic price at point of competition and the observed reference price at point of competition. It measures the effect on prices perceived by agents in the value chain of trade and market policies, and overall market functioning between the border and the point of competition.
Adjusted Price Gap at Point of Competition Difference between the domestic price at point of competition and the adjusted reference price at point of competition. It measures the effect on prices perceived by agents in the value chain of trade and market policies, overall market functioning, distortions in international markets, exchange rate policy and commodity specific value chain functioning from the border to the point of competition.
Observed Price Gap at Farm Gate Difference between the domestic price at farm gate and the observed reference price at farm gate. It measures the effect on prices perceived by agents in the value chain of trade and market policies, and overall market functioning between the border and the farm gate.
Adjusted Price Gap at Farm Gate Difference between the domestic price at farm gate and the adjusted reference price at farm gate. It measures the effect on prices perceived by agents in the value chain of trade and market policies, overall market functioning, distortions in international markets, exchange rate policy and commodity specific value chain functioning from the border to the point of competition and from the point of competition to the farm gate.
Observed Nominal Rate of Protection at Point of Competition Ratio of the observed price gap at point of competition in relation to the observed reference price at the same level.
Adjusted Nominal Rate of Protection at Point of Competition Ratio of the adjusted price gap at point of competition in relation to the adjusted reference price at the same level.
Observed Nominal Rate of Protection at Farm Gate Ratio of the observed price gap at farm gate in relation to the observed reference price at the same level.
Adjusted Nominal Rate of Protection at Farm Gate Ratio of the adjusted price gap at farm gate in relation to the adjusted reference price at the same level.
Observed Nominal Rate of Assistance at Farm Gate Ratio of the observed price gap at farm gate (including budget and other transfers to producers) in relation to the observed reference price at the same level.
Adjusted Nominal Rate of Assistance at Farm Gate Ratio of the adjusted price gap at farm gate (including budget and other transfers to producers) in relation to the adjusted reference price at the same level.
International Market Gap The international market gap is the impact on incentives or disincentives of the effect of international market or policy distortions.
Exchange Rate Policy Gap The exchange rate policy gap is the impact on incentives or disincentives of the effect of market or policy distortions from the exchange rate policies.
Access Costs Gap to Point of Competition The externality gap absolute impact on incentives or disincentives of the effect of excessive access costs in the domestic value chain between the border and the point of competition.
Access costs Gap to Farm Gate The externality gap absolute impact on incentives or disincentives of the effect of excessive access costs in the domestic value chain between the border and the farm gate.
Market Development Gap The market development gap is the aggregated impact on incentives or disincentives of the effect of market or policy distortions in the international markets; exchange rate policies; and excessive access costs in the domestic value chain between the border and the point of competition and between the point of competition and the farm gate.
National  Production Total volume of national production of a given commodity
Observed Market Price Support Price Gap * Volume of Production
Observed value of production National production * Observed Reference Price at Farm Gate
Adjusted value of production National production * Adjusted Reference Price at Farm Gate