Policy responses

Reduction or suspension of import tariffs and VAT: e.g. Bangladesh, Egypt, India, Indonesia, Mali, Mexico, Morocco, Pakistan, Pery, Philippines, Senegal Turkey
- Morocco cut tariffs on wheat imports from 130 to 2.5%
- Nigeria cut tariffs on rice imports from 100 to 2.7%
- India removed a 36% import tariff on wheat flour
- Indonesia eliminated duties on wheat and soybeans (although they were relatively lower, to begin with)
- Burkino Faso suspended import taxes on four food staples
- Brazil reduced domestic taxes on wheat, wheat flour, and bread
- Mongolia eliminated its VAT on imported wheat and flour
- Republic of Congo reduced VAT levied on a range of basic foodstuffs and other goods from 18 to 5%
- Madagascar reduced VAT on rice from 20 to 5%;
- Kenya removed VAT (16%) on grains and flour
- Ethiopia removed VAT and turnover taxes (15%) on food grains and flour

Links and references

http://www.fao.org/fileadmin/user_upload/ISFP/pdf_for_site_Country_Response_to_the_Food_Security.pdf

Pros *Short run: lower import tariffs facilitate imports and therefore helps to address the immediate concern about low food supplies in the markets and rising food prices

Cons *Short-run: when put in place by several countries simultaneously, reduction in import barriers leads to greater global demand, which together with export restrictions, can put upward pressure on prices *Medium to long run: implementation as a short-term emergency measure ( not part of a broader tariff scheduled reform) leaves uncertainty over what will happen in the future, implying lower incentives for the private sector to invest in the sector * Medium to long run: may be difficult to return to previous levels of tariffs (if part of a broader agro-industrial policy package) as it will result in price increases

Minimum conditions For domestic market: impacts depend on the pre-existent level of the tariff For global market: impacts depend on the size/ share of world imports