With the recent contraction in economic growth in Cameroon, displaced urban or formal sector workers have been falling back on agriculture for employment, thereby becoming more dependent on trade and transport services; also, because of a policy change affecting the agricultural marketing structure, farmers in remote areas have been badly hurt by high transportation costs. This paper uses a computable general equilibrium (CGE) model to examine the potential effects on farmers of various tax, public investment, and exchange rate policies that Cameroon could choose to adopt as part of its structural adjustment strategy. The paper begins by examining the structural adjustment and income distribution issues to be explored with the CGE model and by describing the Cameroon data and model. It then presents model simulations of various adjustment strategies. The paper concludes that the income of poor farmers can best be improved by lowering the costs of trade and transport services. Improvements in infrastructure are also needed to lessen the isolation of certain regions. Exchange rate changes could benefit farmers by expanding the market for cash crops. All farmers would benefit from a reduction in the gap between wholesale and retail prices.
