HOUSEHOLD WELFARE AND THE PRICING OF COCOA AND COFFEE IN COTE-DIVOIRE- LESSONS FROM THE LIVING STANDARDS SURVEYS

Cocoa and coffee are the most important crops in Cote d'Ivoire. Until recently, difference between world and administered producer prices pr ovided an important source of government revenue. As a result of a con tinued decline of world prices of both crops, however, the Ivoirien go vernment was forced to cut producer prices in half. Because 40 percent of Ivoirien households grow either cocoa or coffee, this cut can be e xpected to have a considerable impact on the welfare level of these ho useholds. We use the 1985 Living Standards Measurement Survey to estim ate the welfare effects of producer price changes for Ivoirien househo lds, permitting an evaluation of the probable consequences of the rece nt price cut. Using nonparametric econometric techniques, we find that , although many households will suffer losses of income, the cuts will not have adverse distributional effects: cocoa and coffee farmers are scattered throughout the income distribution, but most are concentrat ed in the middle.