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From Prices to Incomes: Agricultural Subsidization without Protection?

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  • Baffes, John
  • Meerman, Jacob

Abstract

Drawing from the experience of the direct income support programs recently introduced in the European Union, Mexico, and the United States, this article highlights problems that may arise when the agricultural sector of a developing economy moves from price-based subsidization to less distorted income support. Such programs are a step in the right direction, but as currently implemented, they have many shortcomings. Moreover, developing countries may lack the necessary supporting arrangements needed to make such programs effective. The article argues that the programs should not restrict the use of land, that the programs should last for a stipulated period of time, and that the fiscal costs should be contained by linking income support payments to world prices. Copyright 1998 by Oxford University Press.

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Bibliographic Info

Article provided by World Bank Group in its journal World Bank Research Observer.

Volume (Year): 13 (1998)
Issue (Month): 2 (August)
Pages: 191-211

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Handle: RePEc:oup:wbrobs:v:13:y:1998:i:2:p:191-211

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  1. Knudsen, O. & Nash, J., 1990. "Redefinig The Role Of Governement In Agriculture For The 1990s," World Bank - Discussion Papers 105, World Bank.
  2. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
  3. Brooks, Karen M., 1993. "Challenges of trade and agricultural development for East/Central Europe and states of the former USSR," Agricultural Economics, Blackwell, vol. 8(4), pages 401-420, June.
  4. Ingco, Merlinda D., 1995. "Agricultural trade liberalization in the Uruguay Round : one step forward, one step back?," Policy Research Working Paper Series 1500, The World Bank.
  5. Tyers,Rod & Anderson,Kym, 1992. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521351058.
  6. Junichi Goto, 1997. "Regional Economic Integration and Agricultural Trade," Discussion Paper Series 76, Research Institute for Economics & Business Administration, Kobe University.
  7. Brooks, Karen M., 1993. "Challenges of trade and agricultural development for East/Central Europe and states of the former USSR," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 8(4), June.
  8. Winters, L Alan, 1987. "The Political Economy of the Agricultural Policy of Industrial," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 14(3), pages 285-304.
  9. Varangis, Panos & Larson, Don, 1996. "Dealing with commodity price uncertainty," Policy Research Working Paper Series 1667, The World Bank.
  10. Junichi Goto, 1997. "Regional Economic Integration and Agricultural Trade," Discussion Paper Series 76, Research Institute for Economics & Business Administration, Kobe University.
  11. Goto, Junichi, 1997. "Regional economic integration and agricultural trade," Policy Research Working Paper Series 1805, The World Bank.
  12. Valdes, A, 1996. "Surveillance of Agricultural Price and Trade Policy in Latin America during Major Policy Reform," World Bank - Discussion Papers 349, World Bank.
  13. Levy, Santiago & Wijnbergen, Sweder van, 1994. "Labor markets, migration and welfare Agriculture in the North-American Free Trade Agreement," Journal of Development Economics, Elsevier, vol. 43(2), pages 263-278, April.
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Cited by:
  1. Baffes, John & De Gorter, Harry, 2005. "Disciplining agricultural support through decoupling," Policy Research Working Paper Series 3533, The World Bank.
  2. John Baffes & Bruce Gardner, 2003. "The transmission of world commodity prices to domestic markets under policy reforms in developing countries," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 6(3), pages 159-180.
  3. Soloaga, Isidro & Lara, Gabriel, 2007. "Distortions to Agricultural Incentives in Mexico," Agricultural Distortions Working Paper 48432, World Bank.

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