Can economic incentives encourage actual reductions in pesticide use and environmental spillovers?

Chemical pesticides constitute an important input in crop production. But their indiscriminate use can impact negatively agricultural productivity, human health, and the environment. Recently, attention is focused on the use of economic incentives to reduce pesticide use and its related indirect effects. The aim of this work is to assess the effectiveness of different economic instruments such as taxes and levies in encouraging farmers to decrease pesticide use and their environmental spillovers. A policy simulation model is employed using data from Dutch cash crop producers including two pesticide categories that differ in terms of toxicity and pesticides’ environmental spillovers. Four different instruments were selected for evaluation: pesticide taxes, price penalties on pesticides’ environmental spillovers, subsidies, and quotas. The results of the study indicate that even high taxes and penalties would result in a small decrease in pesticide use and environmental spillovers. Taxes that differentiate according to toxicity do not lead to substitution of high‐ with low‐toxicity pesticides. Subsidies on low‐toxicity products are not able to affect the use of high‐toxicity products. Pesticide quotas are more effective in reducing pesticide use and environmental spillovers.     

Characteristics of Agricultural Marketing in Hungary During the Formation of Market Economy

Although the central planning system of the Hungarian economy changed after 1968, there was not any considerable decrease of state interference nor was there any significant increase in the role of the market. It was the system of state interference which changed: instead of direct methods the emphasis was primarily put on indirect methods (price subsidies, taxes, loans). The role of the market continued to remain of secondary importance, which was mainly indicated by the low level of market competition. In addition, the economic system fundamentally affected agricultural marketing. The role of the market started to be valued significantly from 1989-1990. In this article I shall describe the initial situation of a market-oriented economy as well as the major trends and the steps of the new programme.     

Multifunctionality and Agricultural Trade Negotiations

Differing views of multifunctionality—attributing nonmarket benefits to agricultural production—continue to be an obstacle in World Trade Organization (WTO) negotiations. Some nations see multifunctionality as justifying subsidies to agricultural production; others see it as disguised protection. This paper shows that while multifunctionality never justifies trade interventions, it can justify production subsidies or taxes. Recognizing that the subsidies or taxes can be economically efficient policies, nations must precisely define and value the externalities in order to design policies and defend those interventions in the WTO. Trade rules are developed that accommodate domestic policy intervention while preventing disguised protection.     

Economics of export subsidies under costly and imperfect enforcement

The present paper builds on the published literature on agricultural policy analysis under costly and imperfect enforcement by introducing enforcement costs and misrepresentation into the economic analysis of export subsidies. Specifically, the present paper examines the economic causes of cheating on export subsidies and the consequences of enforcement costs and misrepresentation for the welfare effects and the transfer efficiency of this policy instrument. Policy design and implementation is modelled as a sequential game between a government that designs and enforces the policy and the recipients of the payments. Two alternative policy implementation scenarios are considered. In the first scenario, export subsidies are paid to private trading firms while in the second scenario subsidies are paid directly to the producers of the subsidised commodity. Analytical results show that the introduction of enforcement costs and cheating changes the welfare effects of export subsidies and their efficiency in redistributing income to producers. The analysis also shows that, contrary to what is traditionally believed, the incidence of export subsidies depends on the group that is subsidised to export the surplus quantity – the way the policy is implemented. The results provide additional support for the contention that the economic consequences of cheating are highly policy-specific. Finally, the analysis reveals that when the government faces restrictions on either the volume or the value of export subsidies, cheating reduces the distortionary effects of the policy on international markets. This is true irrespective of whether subsidies are paid to trading firms or to producers.     

Agricultural taxation in developing countries: a survey of issues and policy

This study surveys the experience of agricultural taxation in developing countries in the context of the ongoing policy debate about the tax structure and administration affecting agricultural producers. Using the examples of a number of countries, it analyzes the conceptual and practical problems associated with different tax regimes. Governments in most countries have reduced indirect (export) taxes on agricultural producers. However, the revenue from direct taxes on farmers has not increased. A major problem in most countries has been the measurement of (actual) agricultural income. Different measures for presumed income have been used with varying success. They seem to have the most potential for increased revenue in many countries, but their effective implementation is constrained by the political and administrative considerations.     

The political economy of quality measurement: a case study of the USA slaughter cattle market

As agricultural products move from being economic commodities to quality–differentiated goods, price dispersion within specific markets increases and implicit subsidies from high quality producers to low quality producers are removed. The present paper examines how these distributional effects can influence patterns of support and opposition to changes in marketing arrangements. The simple model developed is calibrated using data from the USA slaughter cattle market. Estimates of the impact on prices of measuring quality more accurately are found to be similar in size to previous estimates of market power price suppression in the market.     

AGRICULTURAL EXPORTS OF DEVELOPING COUNTRIES: ESTIMATES OF INCOME AND PRICE ELASTICITIES OF DEMAND AND SUPPLY

This paper provides new evidence on income and price elasticities of demand and supply of agricultural exports from developing countries, on the basis of (a) a consistent and fully specified supply and demand model, and (b) statistical estimation procedures not frequently used in the estimation of agricultural export functions. Estimates of price and income elasticities of demand for aggregate agricultural exports for all developing countries taken together — as distinct from individual exporting countries — are found to be low; moreover, export price as distinguished from non-price factors plays a relatively insignificant role in increasing export supply. Hence, an attempt by all developing countries to expand traditional agricultural exports with low price elasticity of demand may not yield rising earnings for all; but in fact may result in falling export revenues. Insofar as individual exports of all developing countries (not individual countries) are concerned, income and price elasticities of demand for such tropical commodities as tea, coffee, cocoa and bananas are also found to be low, except for new, non-traditional exports like pineapples. This indicates the importance of diversification of agricultural exports as a vehicle for their future growth.     

Domestic support and the WTO negotiations

In their attempt to maximise trade benefits, agricultural trade negotiators must allocate scarce resources and consider trade-offs across issues such as liberalising foreign border measures or reducing foreign domestic subsidies. Analysis and examples support the notion that more liberalisation will be achieved in the new WTO round by emphasis on lowering border barriers and export subsidies rather than attempting to discipline domestic farm subsidies directly. Analyses of EU grain policy, Korean rice policy and US sugar policy show how reduced export subsidy or more import access have substantial trade benefits, even if farmers are compensated with payments or price supports.     

Welfare Impacts of Alternative Public Policies for Agricultural Pollution Control in an Open Economy: A General Equilibrium Framework

A general equilibrium approach is used to evaluate the welfare impacts of alternative policies for reducing agricultural pollution in an open economy with preexisting distortions caused by income taxes and agricultural subsidies. The policies examined here include the removal of distortionary agricultural subsidies. We find that even though these distortions are small compared to others in the economy, removing them and imposing nitrogen reduction subsidies and/or output taxes can enhance welfare and reduce nitrogen pollution; thereby leading to a substantial double dividend. The relative efficiency of the alternative policies examined here depends on the level of the nitrogen reduction target.     

Economic issues in tariffication: an overview

The agricultural trade liberalization proposal known as ‘ tariffication’ aims at converting all existing non-tariff barriers (NTBs) to trade into bound tariffs, and to reduce these tariffs over time. This is in tune with the original philosophy of the General Agreement on Tariffs and Trade (GATT) and it calls for a dramatic overhaul of existing agricultural policies in many developed countries. The main economic issues that arise with tariffication stem from the non-equivalence of tariffs and NTBs in a number of scenarios. This paper analyzes non-equivalence arising from the existence of: imperfect competition in importing countries; price instability in importing and exporting countries; and, inefficient allocation of quantitative restrictions. It is shown that in all these cases the definition of an appropriate 'equivalent tariff to be used in tariffication is not straightforward, and that in general this equivalent tariff cannot be computed on the basis of only observed price differences between countries. Tariff-rate quotas, which are meant to be the main tool of implementation of tariffication according to the existing proposal, are analyzed in some detail. Concerning the relationship between tariffication and the other elements of the trade liberalization package, it is shown that tariffication would limit the scope of export subsidy policies. It is also shown that the existence of production and export subsidies makes observed price gaps between countries of questionable value in setting equivalent tariff levels. Finally, it is argued that the main focus of tariffication should be the conversion of NTBs to acceptable long-run (bound) tariffs rates, and considerable flexibility in this conversion process could be exercised in the transition period.     

Relative assistance to Australian agriculture and manufacturing since Federation

This paper quantifies the levels of assistance received by producers of the major agricultural crops and animal products in Australia since Federation and compares this with the level of assistance provided to manufacturing producers. First, we construct a series of the production‐weighted average nominal rate of assistance for the whole sector. Then, we compute a measure of the level of assistance received by the Agriculture sector relative to that received by the Manufacturing sector, the Relative Rate of Assistance. Our results show that, from the time of Federation until the 1990s, the economy‐wide pattern of industry assistance discriminated persistently and heavily against the Agriculture sector. The policy of ‘protection all round’ pursued by the Country/National Party did not prevent this discrimination. In particular, producers of exportables, such as wool and wheat, were heavily discriminated against. Both the intersectoral bias and the differences in assistance among agricultural producers lowered the incomes of the Agriculture sector and the national income.     

A MODEL OF THE COMMON AGRICULTURAL POLICY

Several efforts have been made since 1980 to estimate the costs and benefits of the European Community's Common Agricultural Policy (CAP). This paper summarises the approach and method adopted in developing one such effort, which aims to provide results at country, commodity and interest group level both for the CAP as a whole, and for changes in it. Economic analysis of the effects of price changes in the CAP is carried out with the use of direct and crossprice elasticities of supply and demand for sixteen major commodities, using base levels of production, consumption, and gross trade flows in each member state, along with rest-of-world data. A number of CAP instruments, such as subsidies, levies, quotas and ‘green’ exchange rates, are built into the calculations and can be varied, along with support prices, to produce new situations in domestic markets and in world price levels. Both financial (budgetary) and welfare (economic surplus) effects of such exogenous price changes can be calculated. Certain policy changes, such as a move to ‘free’ markets, involve endogenous calculation of equilibrium prices. Trend projections subject to a priori constraints are used to produce results for years beyond the extent of data currently available. The types of model run commonly carried out are discussed, along with several strategic judgments that became necessary in carrying out the research. Finally, questions concerning the future development and use of the model are addressed.     

山东省农业支持政策调查

主要调查研究入世以来山东省农业支持政策中的国内支持和市场准入问题;对国内支持的调查研究包括农业财政补贴政策、农村税费改革、农业保险制度,对市场准入的调查研究主要围绕农产品的进出口而展开;提出若干建设性思考。     

加快推进新疆巴州农业产业结构优化升级的思考和建议

新疆巴音郭楞蒙古自治州历史悠久,素有"华夏第一州"美誉,地处新疆东南部,"丝绸之路经济带"核心区,区位优势明显,发展现代农业的经济、社会和自然等基础条件相对优越,是新疆重要的棉花、粮食等农产品生产基地。近年来巴州经济社会保持了良好的发展势头,特别是农业领域,全州棉花、粮食、特色农产品、设施农业等产业发展迅速,农业产业结构呈现出多样化发展的态势,农业农村发展持续向好,农民收入水平稳步提高。但受自然生态脆弱、国内外市场波动、成本不断提高、自身结构不合理等因素影响,现代农业发展仍存在诸多不确定因素,严重制约了农业产业优化升级。文章梳理总结巴州发展现代农业的一系列优势,系统分析当前农业产业结构及主要特征,粮食、棉花、油塘、特色经济作物等主要产业的发展趋势和现状,指出制约现代农业发展和结构调整的因素,从管理、生态保护、促进产业发展、加工产业升级、创新产业化经营模式等角度提出加快农业产业结构优化升级的总体思路和合理化建议,从而加快推进巴州现代农业发展。     

扩大农业对外投资 加快实施“走出去”战略

本文通过对我国农业对外直接投资的总体状况及其特点分析发现,农业对外直接投资对我国产业转型升级、出口业绩改善、国民收入提高、就业机会增加等方面产生积极影响,但也存在一些潜在的风险。通过剖析我国农业对外直接投资面临的机遇与挑战,对农业对外直接投资的战略选择进行了初步设计,并提出了相关政策建议。     

PORTUGAL ON THE BRINK OF EUROPE: THE CAP AND PORTUGUESE AGRICULTURE

Portuguese policy-makers assumed an active interest in agricultural sector development after the 1974 Revolution. However, the policy instruments used-output price supports, input subsidies, land market regulations, and agricultural credit programmes-have done little to facilitate technical or structural change in much of the sector. This pattern of development may have adverse medium-term impacts on agriculture, because for most commodities, accession to the CAP will substantially reduce farm profitability. If Portugal is to avoid sharp declines in income for a sector that is already relatively low in income terms, reform of factor market policies and investment in research and development are essential.     

Is Passive Farming A Problem for Agriculture in the EU?

We address a new agricultural policy concern following the decoupling of CAP direct payments in 2005: passive farming, whereby landowners maintain their agricultural area to collect payments without producing commodities. It is claimed that passive farming is hindering agricultural development by ‘blocking’ access to farmland for expanding farmers. We evaluate the links between the EU's Single Payment Scheme (SPS), passive farming, land use and agricultural development. Following identification of the rational landowners’ optimal land‐use choice, we evaluate the effects of the SPS using a spatial, agent‐based model that simulates farmers’ competition for land in a case‐study region of Sweden. We show that passive farming does not constrain land from being used in production; on the contrary more land is used than would be the case without the SPS. We conclude that passive farming is not a problem for agriculture, but provides public goods that would otherwise be under provided: preservation of marginal farmland and future food security. However SPS payments on highly productive land inflate land values (capitalisation) and slow structural change, which hinder agricultural development. Consequently CAP goals could be better served by targeting payments on marginal land and phasing out payments to highly productive land.     

Economy-wide reform and agricultural recovery: Observations of economic Darwinism among transition economies

The fitness of an economy and its prospects for continued prosperity will be measured and determined by its robustness and its ability to adapt to changing circumstances. Some countries in transition are adapting much more easily than others to rapid changes in the orientation of their economy, the common objective of which is to achieve economic growth through the adoption of a range of characteristics generally associated with a market economy. Economic growth does not have to be very fast, but it must be efficient and sustainable. Policy adjustments must address political economy concerns, while seeking to achieve macroeconomic equilibrium and price stabilization, competitiveness, efficiency and flexibility, and the protection of the living standards of the most vulnerable population The process of agricultural sector reform will be determined both by economy-wide policies and sector-specific policies. This paper first outlines a taxonomy of the objectives of agricultural sector reform, and then discusses the way in which indirect price interventions (specifically exchange rate and interest rate policies, expansive fiscal policies and industrial protection policies), influence agricultural growth. Lessons of experience drawn from the UNDP/World Bank Trade Expansion Program structural and sectoral adjustment operations in Poland, and the cases of New Zealand and Chile are employed to illustrate not only the constraints that countries face in this regard, but also in identifying targets for further action. The third section presents what is called the architecture of incentives for agriculture'. In defining a strategy of agricultural sector reform, experience has shown that a structure of incentives can be developed that creates an environment ripe for agricultural growth-incentives relating, for example, to taxation, prices, foreign investment, privatization and demonopolization, decentralization and institutional reform. Special considerations that will require additional attention by policy-makers outside of this structure include the maintenance of GATT-legal principles in trade policies, issues relating to tariffication (including concerns about price risk management, food supply, and the role of food aid), input and credit subsidies as a means to correct for market failures, and the role of regional trading blocks in world trade.     

Domestic Crop Booms,Livelihood Pathways and Nested Transitions: Charting the Implications of Bangladesh's Pangasius Boom

Rapidly transforming Asian food systems are oriented largely towards domestic markets, yet literature on Asian crop booms deals almost exclusively with commodities produced for export. With reference to pangasius aquaculture in Bangladesh, we argue that ‘domestic crop booms’ – agricultural booms driven by domestic demand – are contributing to rapid social and ecological transformations in Asia and across the globe. We adopt a comparative multi‐scalar approach, and develop the concept of ‘livelihood pathways’ as a means of understanding agrarian change associated with crop booms. The study reveals sharply divergent patterns of social change resulting from the pangasius boom, as experienced in two different village settings, despite underlying similarities in the processes of commodification evident in both. In addition to drawing attention to domestic crop booms and the diversity of transitions in which they result, the paper demonstrates the value of comparative multi‐scalar analytical approaches and the importance of livelihood pathways in processes of agrarian change.     

Assessing the Impact of the ‘Decoupling’ Reform of the Common Agricultural Policy on Irish Farmers’ Off‐farm Labour Market Participation Decisions

This paper assesses the impact of the ‘decoupling’ reform of the Common Agricultural Policy on the labour allocation decisions of Irish farmers. The agricultural household decision‐making model provides the conceptual and theoretical framework to examine the interaction between government subsidies and farmers’ time allocation decisions. The relationship postulated is that ‘decoupling’ of agricultural support from production would probably result in a decline in the return to farm labour but it would also lead to an increase in household wealth. The effect of these factors on how farmers allocate their time is tested empirically using labour participation and labour supply models. The models developed are sufficiently general for application elsewhere. The main findings for the Irish situation are that the decoupling of direct payments is likely to increase the probability of farmers participating in the off‐farm employment market and that the amount of time allocated to off‐farm work will increase.