Transcript Huisstijltemplate voor ‘beamer’

DEVELOPING COUNTRIES,
AGRICULTURAL TRADE AND THE NEED FOR
REFORM
ARIE KUYVENHOVEN 2004
Man does not bear much reality .… and
politics is the best proof thereof.
Arthur Miller
CONTENTS
1. LDCs: characteristics and structure of trade
2. Agricultural policies in OECD countries
3. Impact on LDCs
4. What happens under liberalization?
5. How are LDCs affected?
6. Agricultural policies in LDCs
7. Policy implications and misunderstandings

Agricultural support in rich countries is
substantial: over $350 billion
Market access for LDCs is limited (tariff
escalation, NTBs)
Export subsidies lower prices for LDCs

But:
LDC policies have often neglected agriculture


Ag Liberalization for LDCs
(Negative protection, Pa/Pna )
Ag
Non-ag
E
M
Urban
na
-
Rural
non-ag
±
±
Rural
ag
+
+
+
Estimates of global welfare gains of removing agricultural
trade distortions world wide, in billion dollars.
Study
GDP
IMF and World Bank, 2002
World Bank, 2002, static scenario
World Bank, 2002, dynamic scenario
USDA/ERS, 2000, static scenario
USDA/ERS, 2000, dynamic scenario
Anderson, 1999
Francois en LEI, 2002
Total
as % of world
128
248
587
31
56
165
109
0,4
0,8
1,9
0,1
0,2
0,5
0,4
EXAMPLE 1: MILK

In 1992 Jamaica produced 38 million liters

In 2002 just over 18 million

Imports of milk powder from EU multiplied

Why? EU support is $17 billion, or over $2 per
cow per day
EXAMPLE 2: COTTON

USA has 25,000 cotton farmers

Support is $3,5 billion (more than US aid to
Africa)

Depresses world prices by one-quarter

Affects 10 million people in West Africa
WHY LIBERALIZE?

International trade distortions and welfare losses

Effectiveness domestic interventions questioned

Market and government failures
IMPACT STRUCTURAL ADJUSTMENT AND
TRADE LIBERALIZATION MODEST:

Supply response

Weak institutions and regulatory framework

Partial nature reforms
THE BEAT GOES ON:

Traditional trade barriers continue to fall

Other trade impediments become visible, like
rocks in an ebbing tide (Tim Josling)
RISING TECHNICAL STANDARDS FOR
PRODUCTS AND PROCESSES:

Changing consumer preferences

Product differentiation

Increasing credence attributes
DIFFERENTIAL RESPONSE IN LDCs





Public sector ill-prepared
Large-scale agri-business acts as standardsetter in monopolist fashion
Medium-scale firms standard-takers and lobby
for government support
Smaller firms and farms risk exclusion and
continued poverty
Public ag research system needs reform and
conversion
IMPLICATIONS FOR PUBLIC AG RESEARCH




National ag research and extension systems are
traditionally supply-driven: higher yields, more food,
better seeds and agronomic practices
Transition needed towards demand-driven with emphasis
on diversification, consumer, food safety standards,
niche markets
Chain reversal implications; decentralization,
participation
Transition more difficult for small landholders in often
less-favoured areas
CONCLUSIONS

Do not deny the freedom to set private technical
standards, but

Only endorse public minimum standards in
combination with labeling

Important role for joint assistance of
development agencies and professional bodies
to strengthen LDC institutions