Abstract:

Since Senegal's independence in 1960, groundnuts (peanuts) have been the dominant agricultural export crop. Currently, groundnut output levels are on the decline and no clear reason for the downward trend has been found. Privatization efforts are underway as the government explores ways to breathe some life into the ailing sector, particularly as it relates to groundnut production. The 50 percent currency devaluation of 1994 constituted a major exogenous shock to the sector. Much research has been done about the macro-level impact of the changes that are taking place. However, little work has been done recently (i.e. since the devaluation) at the micro-level. This work addressed this lack by studying the micro-level dynamics of groundnut production. Elasticities were generated and used in the analysis of policy impacts on production. The own-price elasticity of supply groundnut indicated that supply response should be positive following an increase in producer price. The increase in producer prices following the devaluation did not occasion the expected supply response. Possible reasons for this failure were explored. It is hoped that the information revealed will complement the store of information on production in the Groundnut Basin that is already available. Thus, the present work will prove useful to public and private researchers and policy makers seeking to increase their understanding of the sector.

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