International trade and agricultural development in developing countries: Significance of the Uruguay Round of GATT negotiations

Liberalization of world trade in agricultural products ranks high on the agenda of the Uruguay Round. After a period of more than six years, however, the negotiations have not been concluded. Nevertheless, an outcome seems to be in sight. The agreement will most likely not result in a move to freer trade. It seems that domestic policies will become even more regulative than in the past in an attempt to cut exportable surpluses and to ease trade tensions among the main exporting nations. This paper explores possible impacts of the GATT Round on agricultural development in developing countries. Agricultural development is more than only growth in agricultural production or productivity. However, it is argued in the paper that other variables which also indicate agricultural development are often closely correlated with growth in production and productivity. Trade in agricultural products is not always an engine for agricultural development. If internal divergences are not accounted for by appropriate domestic policies, trade may be even harmful to agricultural development. Hence, empirical research based on cross-country analysis does not provide a clear answer about the role of trade for development. Past policies in industrialized countries have most likely had a negative effect on developing countries as a group; however, the effects differ widely across countries. Liberalization policies in industrialized countries would not just reverse these negative effects for developing countries. Price reduction in industrialized countries may not result in the often-cited production decline in the short term. Present X-inefficiency in agriculture will be reduced by liberalization, leading to an outward shift of the supply curve. Hence, liberalization may not lead to higher world market prices for temperate-zone products in the short and medium term. Apart from this, empirical models differ widely in the price effects they predict. The expected outcome of the Uruguay Round – increased regulation of domestic policies – is likely both more negative for developing countries than past protectionist policies and worse than an overall liberalization. World market prices will increase, uncertainty and instability can be expected to grow, and food aid may become less available. There will be a need to react to these challenges with measures on the international and national level. Initiatives to deal with food crises in developing countries and to stimulate liberalization in developing countries should be considered. Finally, developing countries should be made aware that their own domestic policies have a much greater economic impact than policies in other countries, even if the latter are as protectionist as current agricultural policies in the industrialized world.     

日本与欧美农业环境支持政策对中国的启示

农业政策中与环境相关的支付政策越来越多。发达国家将WTO绿箱政策、农业直接支付政策与农业环境支持政策结合起来,这样既可以从根本上解决农业生产所带来的安全问题,也可以加深消费者对相关政策的理解与支持,同时从产业链的上游解决食品安全及农业的可持续发展问题。欧盟的Greening政策和日本实施的农业直接支付政策均以农户遵守农药化肥及农业废弃物处理的相关规范为前提,通过合理使用肥料及各种防治措施从不同程度上达到农业可持续发展、农业的多功能性及降低温室气体排放的目的,并由此获取政府的支持。文章通过对发达国家,特别是与中国农业形态类似的日本农业环境政策取向的分析及与欧美相关政策比较分析,认为中国首先应该完善循环农业的相关法律法规和标准,加强对农民的培训以及明确其应遵守的基本义务,对采取环境友好型农业生产方式的农民给予支持。     

Agriculture's 'multifunctionality' and the WTO

Are the agricultural policy reforms embodied in the Uruguay Round consistent with meeting domestic policy objectives such as providing adequate food security, environmental protection and viability of rural areas? This article examines the claim that agriculture deserves more price support and import protection than other sectors because of the non‐marketed externalities and public goods it produces jointly with marketable food and fibre (agriculture’s so‐called ‘multifunctionality’). Do these unrewarded positive externalities exceed the negative externalities from farming by more than the net positive externalities produced by other sectors? To what extent are those farmer‐produced spillovers under‐supplied, and what are the most efficient ways to boost their production to the socially optimal levels? The article concludes that there is little trade‐off required to meet domestic policy objectives on the one hand and agricultural protection reform objectives as embodied in WTO rules on the other.     

A POST-KENNEDY ROUND LOOK AT SOME PROBLEMS IN AGRICULTURAL TRADE

The Kennedy Round, concluded in 1967, ws the most far-reaching in the series of trade negotiations. The United States insisted on the inclusion of agricultural products, with the support of other foodexporting countries. The results for agriculture should not be underestimated. The agreement on cereals gave practical recognition of joint responsibility in food aid. There were also many agricultural tariff concessions. However, it is domestic agricultural policies, not tariffs, which really hamper agricultural trade. The cost of these policies and the extent to which they achieve their objectives are questionable. Competition becomes fiercer for the remaining accessible markets, and export subsidies multiply. The Kennedy Round left the basis problems untouched. It did, however, strengthen the “global” or comprehensive, multilateral approach.     

The impact of OECD biofuels policies on developing countries

OECD countries’ biofuels policies, derived from energy and environmental legislation and activated by high oil prices, were the primary cause of not only the sudden spike in grain and oilseed prices in 2007–2008 but also of the ensuing price volatility. Even though developing countries have a comparative advantage in biofuels production, they were shut out of rich countries’ biofuel markets by trade discriminating biofuels policies. Developing countries would not have been able to take full advantage of the price spike in the short run anyway given the low supply elasticities and the long time required for biofuel production to come online, unlike for corn‐ethanol. The controversy over the right price of food is misplaced and policy makers should instead focus on improving biofuels policies, which like their counterpart agricultural policies in previous decades, have damaged the welfare of developing countries.     

Impacts of trade liberalizations under the Uruguay Round on the world sugar market

The impacts of the Uruguay Round policy provisions on the world sugar market show that these policies will stabilize the world sugar price at slightly higher levels than in the baseline. Global sugar consumption will increase as a result of the income growth caused by the Uruguay Round. Economic resources will be allocated more efficiently among the sugar industries of the various countries. However, the impacts on the sugar industries in countries with strong producer supports will be rather small because the negotiation process of the Uruguay Round has accommodated the changes in sugar policies already implemented by individual countries in the past few years. Low-cost sugar producing countries will benefit from the higher world sugar price, and consumers in countries with protected markets will benefit from lower domestic prices.     

Impact and implications of price policy and land degradation on agricultural growth in developing countries

In many developing countries, a high proportion of the population resides and works in rural areas. Agriculture is the dominant sector in rural areas and has the greatest concentration of poverty: landless workers, small tenant farmers, and small farm owners. Thus, any development strategy that is directed towards increasing employment and alleviating a country's hunger must concentrate on sustainable agricultural growth. Historically, economic development in most countries has been based on exploitation of natural resources, particularly land resources. Soil erosion and land degradation have been serious worldwide. Due to reasons such as high population pressure on land and limited fossil energy supplies, land degradation is generally more serious in the developing world. Empirical studies show that soil erosion and degradation of agricultural land not only decrease the land productivity but they can also result in major downstream or off-site damage which may be several times that of on-site damage. In promoting industrialization, governments of many developing countries adopt a package of price and other policies that reduce agricultural production incentives and encourage a flow of resources out of agriculture. Increasing evidence shows that these policies cause a substantial efficiency or social welfare loss, and a great loss in foreign exchange earnings. In addition, a World Bank study on the effect of price distortions on economic growth rates concluded that neither rich resource endowments, nor a high stage of economic development, nor privatization are able to make up the adverse effects caused by high price distortions. This analysis is primarily concerned with identifying the factors that determine the agricultural production growth rate and in testing the effects these factors have on agricultural growth in developing countries. Specifically, this study involves statistical estimation of an aggregate agricultural growth function based on cross-country data for 28 developing countries. Special attention is devoted to land degradation and agricultural pricing policy, and to the policy implications resulting from the effects these variables have on agricultural and food production growth. The overall results of this study show that price distortions in the economy and land degradation had statistically significant negative impacts while the change in arable and permanent land was positively related to the growth of agricultural production and food production in 28 developing countries from 1971 to 1980. These results emphasize the importance of ‘getting prices right’ and implementation of sustainable land and water management practices if future growth in food and agricultural output is to be realized and sustained in developing countries.     

Post–Uruguay Round price linkages between developed and developing countries: the case of rice and wheat markets

The Uruguay Round Agreement on agriculture attempted to lower distortions in global agricultural markets. However, the significant fall in commodity prices in the late 1990s may have reduced the incentives for both developed and developing countries to better integrate into world markets. This study analyzes price linkages and adjustment between developed and developing countries during the post–Uruguay Round period. Prices of two key commodities, long‐grain rice and medium‐hard wheat, are assembled for major exporters and producers. Results of multivariate cointegration analysis suggest partial market integration between developed and developing countries in the post–Uruguay Round period. Developed countries are found to be price leaders in these two markets, and in most cases, changes in their prices have relatively large impacts on those of the developing countries. Developing countries (e.g., Vietnam and Argentina) have faced considerable price adjustment due to changes in the developed countries' prices.     

农业支持政策结构变迁的国际比较分析

[目的]在多哈回合谈判再次要求削减黄箱政策背景下,通过量化比较分析典型发达国家和地区在多哈回合谈判前后农业支持政策结构变化趋势,为中国农业供给侧结构性改革背景下农业支持政策改革提供方向借鉴。[方法]使用OECD农业政策评价指标对比分析欧盟、美国、日本和中国4个国家和地区农业支持力度、支持结构的变化趋势。[结果]发达国家和地区积极创新农业支持手段以替代市场价格支持,加快农业支持政策的市场化转变,强调支持政策与资源环境保护的交互作用,注重对农业知识和创新体系的资金投入。[结论]我国应持续加大对农业的支持力度,逐渐减少市场价格支持比重,创新支持工具并强化政策间的协调性,优化一般服务支持结构,加大对农业知识和创新体系的财政投入。     

LIBERALISING OECD AGRICULTURAL POLICIES IN THE URUGUAY ROUND: EFFECTS ON TRADE AND WELFARE

A dynamic, stochastic, multi-commodity model of world food markets is used to estimate the effects of liberalising agricultural policies in industrial countries. The effects on international and domestic prices, on trade volumes and on economic welfare of a phased liberalisation of industrial-country policies between 1988 and 1992 are compared with the effects of a similar hypothetical liberalisation in the early 1980s. The results suggest that, because of the dramatic increase in agricultural protection during the 1980s, the effects of a liberalisation under the Uruguay Round would be, in real terms, more than double those that would have resulted from a similar liberalisation a decade earlier. Major gainers are consumers in Western Europe and Japan and farmers in developing countries. But the cost to tax-payers in Western Europe is also escalating, not to mention the burden on non-agricultural producers in those countries whose competitiveness is reduced by farm policies. These domestic pressures from treasuries and from producers of non-farm products, together with greater international pressure for reform from agricultural-exporting countries, have raised the probability of at least some liberalisation during the Uruguay Round of multilateral trade negotiations.     

IMPACTS OF TAXES TO REDUCE AGRICHEMICAL USE WHEN FARM POLICY IS ENDOGENOUS

The economic impacts of policies to reduce water pollution from agriculture have been explored in a number of studies. A standard assumption in this literature is that farm income support policies are given. However, the modern public choice view of agricultural policy suggests that significant environmental initiatives in agriculture would likely be accompanied by changes in farm income policies to protect those with a significant stake in agriculture. We explore the potential effects of such compensating adjustments on the costs and effectiveness of taxes on polluting chemical inputs in US corn production. We find that compensating farm policy adjustments can greatly increase the costs and reduce the effectiveness of the environmental protection measure. The results also indicate the potentially high costs of poor policy co-ordination.     

Conceptualising multifunctional agriculture from a global perspective: Implications for governing agricultural trade in the post-Doha Round era

The notion of multifunctional agriculture has been researched from diverse disciplines including economics, sociology, political economy, and geography since the URAA. In particular, the economics approach represents an attempt to tailor the concept of multifunctional agriculture to market- oriented WTO trade regime. The approach has been fundamentally troubled by the lack of concord among WTO member countries on the question of what constitutes multifunctional agriculture. This article redefines multifunctional agriculture as a concept encompassing six components that are extremely heterogeneous in their nature of external benefits. Upon examining different positions taken by the US, the EU, the Cairns group, LDCs, and the G10, this article develops a conceptual model explaining why the notion of multifunctional agriculture is conceived so differently across countries. The model posits that institutions, natural resources endowment, ecological conditions, farm policies, and culture/history unique to each country would determine the state of economic development and agricultural competitiveness in a country, which in turn shape the pattern of social demand for various components of multifunctional agriculture. The theorizing undertakes to overcome the Euro- centrism that has dictated the discourse of multifunctional agriculture since the URAA. Implications are discussed for the governance of agricultural trade in the post-Doha Round era.     

Protecting farm land near cities : Trade-offs with affordable housing in Hawaii

In protecting farm land near cities, policy makers must balance the interests of farmers against affordable housing demands of the urban population. This article examines land use competition between agriculture and housing on the Hawaiian island of Oahu. Land suitability ratings for farming and urban development are compared, and future urban expansion onto agricultural land is simulated under different land use policies. Results indicate severe tradeoffs for affordable housing if all high quality farm lands are strictly preserved. Achieving farmland protection goals will require further policy support to transform the local farm structure from plantation to diversified agriculture.     

International Supply Response

Long-run aggregate agricultural supply elasticities obtained from conventional supply functions fitted to time series data tend to be relatively inelastic in the range of 0.1 to 0.4. I argue that these estimates substantially understate the true long-run supply response in agriculture. Because of the lack of international input price data, implicit output/input price ratios are estimated from a production function assuming profit maximization. The estimation of an aggregate supply function utilizing these price ratios yields long run aggregate supply elasticities in the range of 0.90 to 1.19. These figures are substantially larger than those obtained from conventional supply functions fitted to time series data, but correspond closely to estimates reported in an earlier crosscountry study that used different price data for different points in time. The results imply that policies which distort domestic and/or world market prices of agricultural products cause greater output distortions in both the DCs and LDCs than are predicted by the small supply elasticities obtained from conventional supply estimation.     

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。     

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.     

Modeling and Extrapolating Wheat Producer Support Using Income and Other Factors

Using wheat market support data from 55 countries for 1961–2011 from the World Bank Agricultural Distortion database, we develop a fixed effect model that shows a more complicated, nonlinear relationship between income and wheat support and its components than previously realised. We find that income generally has a greater effect on border market price support than on domestic price support. Moreover, the difference between these types of support is greater for net importers than for net exporters and has increased with the URAA or WTO accession. Holding other variables constant, the wheat support level of China, driven mainly by border market price support, is projected to rise with future income growth. Meanwhile, Japan is projected to maintain its high level of support, while the US and EU are projected to maintain their lower levels of support. These results are relevant in the context of multilateral trade negotiations, arguing against a narrow focus on past or current policy profiles and for long‐run analyses that might mistakenly rest on the inconsistent assumptions of constant agricultural policies against the backdrop of rising incomes.     

Structure of Public Support for National Agricultural Research Systems: A Political Economy Perspective

This paper initiates development of a set of stylized facts concerning the structure of public support for national agricultural research systems (NARS) within a neoclassical political economy framework. The aim is to place public funding of NARS in the broader context of the overall level of direct government assistance to agriculture. Using a newly constructed data set on NARS expenditures over the 1970-85 period, we observe a growing disparity in agricultural research intensity ratios, which measure the level of public support for NARS in relation to agricultural gross domestic production (Aggdp ) between low and high-income countries. This growing disparity appears to be driven by much larger increases in support for agricultural research by high-income countries, coupled with a significantly slower growth in the size of their agricultural sector, despite the propensity of low and middle-income countries to increase real support to agricultural research. As per-capita incomes rise the public agricultural expenditure ratio, which measures public expenditures on agriculture relative to the size of the agricultural sector, Aggdp , increases substantially. Public expenditures on agriculture were indexed on agricultural and non-agricultural populations to give a rough indication of the increasing incentives for rural 'distributional coalitions' to seek a redistribution of public expenditures in their favor. A relative research expenditure (rre ) ratio is developed, which measures the proportion of total public expenditure on agriculture spent on agricultural research. It provides an indication of the relative importance given to research on agriculture within the constraints imposed by overall public spending on agriculture. In contrast to the agricultural research intensity ratios, the rre ratios suggest that agricultural research appears to command as large a share of the public purse devoted to agriculture in low and middle-income countries as it does in high-income countries. Expectations derived from the neoclassical political economy literature that research may have fared relatively better in high compared with low-income countries were not supported by the data.     

Problems and prospects of grain production in China

Abstract

The success of agricultural reforms in China has been widely recognized but the problems of, and constraints to, food production have not been well debated. This paper argues that there are impediments to sustainable growth of grain production. The major problems identified include long term state bias against the rural population and agriculture, lack of investment and low price incentives. The major constraints include a continuous decline in crop area and low profitability. However, China still has comparative advantage in cereal production. If consistent and effective policies were adopted, China could manage to maintain a high degree of food self‐sufficiency even in the long run.     

Externalities in the agricultural export sector and economic growth: a developing country perspective

For years economists have ignored the diversity in agriculture and its potential to increase long run growth rates by enhancing a country's knowledge base. Non-traditional agriculture requires significant investments in the infrastructure and knowledge; and therefore, has the potential to increase long run growth rates. Policy makers in developing countries have tended to enact macroeconomic policies designed to enhance the manufacturing sector at the expense of the agricultural sector. A theoretical model is developed to explain the dynamics between two non-traditional export sectors and the long run economic growth of the country. The model illustrates that growth in highly perishable agricultural exports, not domestic production of manufactured goods, can potentially lead to higher long run growth rates. The model is applied to the fruit and flower industries in Colombia to bring forth an example with real world relevance.