Transcript 2010 Template AGRICULTURE FR - Brussels Development Briefings

Food Price Volatility – Implications
for ACP Countries
Ttitre
Tackling volatility through improved markets and
trade policies
Carmel Cahill
OECD Trade and Agriculture Directorate
Brussels Policy Briefing No 25
CTA, IFPRI, NEPAD
Support to agriculture varies across countries
Producer support as % of farm receipts
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Most distorting forms of support still important in
most countries
Producer support estimate 2010 as % of farm receipts
Most distorting: price- and output linked support and payments
based on (unconstrained) input use
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Salient features of trade policy measures in food and agriculture
(OECD and major emerging /developing economies)
•
Bound and applied tariffs on agricultural products almost always
higher and sometimes much higher than on non-agricultural
products
•
Gap between bound and applied agricultural tariffs is often very
large (notable exceptions are China, EU, Japan, Korea, US)
•
High incidence of exceptionally high tariffs, (≥ 15% applied MFN), in
agriculture (notably China, EU, India, Korea, Mexico)
•
No or weak disciplines on export restricting measures
•
Wide range of non-tariff measures
Source: WTO World Tariff Profiles, 2010
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The potential of trade to contribute to food security
• Allowing food to move from surplus to deficit
areas, from well endowed regions to less well
endowed regions
• Providing choice and quality as income grows
• Absorbing shocks from weather or other events
• Coping with the effects of climate change –
permanent shifts in production patterns as well
as anticipated increased incidence of extreme
events
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Policy factors contributing to recent high and
volatile prices
Underlying/longer term
• Policy reforms that have
reduced/dismantled public
stocks
•
Policy induced demand for
agricultural commodities
for biofuel feedstocks
Short term/policy shocks
• Pro-cyclical trade policy
reactions
•
Reducing/removing tariffs
•
Export taxes and restrictions
•
Panic buying/hoarding by
governments or state
owned entreprises
•
Attempts at price controls
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Pro-cyclical trade measures during the 2008/09 crisis
- imports
•
Tariffs have been operated like variable levies –
coming down when prices are high and increasing when
prices are low – this added to volatility
•
The uncertainty created is disruptive to markets and
impedes the development of smooth, deep, international
markets that can supply reliably
•
But the impacts on domestic prices were short-lived as
the potential to reduce tariffs was quickly exhausted.
•
Some countries experienced fiscal problems that
reduced their “policy space”
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Pro-cyclical trade measures during the 2008/09 crisis
– exports
•
Between 2007 and end March 2011, 33 countries
implemented 87 export restricting measures. (Database in
development at OECD)
•
Domestic effectiveness varied but impacts were often
relatively minor
•
Major destabilising effects on international markets and
domino effects leading to
•
Higher prices
•
Panic buying by governments and state owned enterprises
•
Poorest countries and humanitarian organisations were hard
hit
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RICE!!!!!!
An entirely policy-induced crisis
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Consequences
•
Prices were driven higher and volatility increased
•
A crisis of confidence in international trade as a reliable
source of food
•
Increasing resort to self –sufficiency targets and policies
which may prove detrimental to growth and welfare
•
Vicious circle – countries retreat behind protective
barriers and aggravate the volatility on international
markets by their actions
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Solutions
• Agree to refrain from pro-cyclical trade
measures on both the import and export side
• Strengthen disciplines and consultation on
export restrictions
• Conclude the DDA
• Direct domestic policy effort to developing
market institutions, infrastructure, productivity
and competitiveness
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OECD Trade and Agriculture Directorate
www.oecd.org/agriculture
E-mail: [email protected]
Follow us on Twitter: @OECDagriculture
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