Agricultural producer support estimates for developing countries : measurement issues and evidence from India, Indonesia, China, and Vietnam

The levels of support that trade and domestic farm policies afford to agriculture, and the related processes of policy reform intended to improve the economic efficiency of agricultural production, processing, and marketing, are important issues for developing countries. The effects of policy on agriculture are well documented for wealthy countries, especially by the established and respected studies from the Organisation for Economic Cooperation and Development. However, systematic analysis is often lacking for poor countries because of the difficulty and cost of measuring policy effects consistently over time and across commodities. This study contributes to filling the existing research gap by examining the impacts of agricultural policies and policy reforms on the incentives of agricultural producers in India, Indonesia, China, and Vietnam. It investigates critical measurement issues and analyzes the levels of market price support and producer support estimates for key commodities and in aggregate for each country. The results show a range of outcomes. In India a countercyclical support policy is evident despite market-oriented institutional reforms; in Indonesia high levels of support for agriculture have persisted; while China and Vietnam have moved away from past disprotection toward modest support for agriculture. The results demonstrate the importance of tracking the transitions of agricultural policy that improve farmers’ incentives as economic growth occurs, as well as the difficulty of making reforms in cases of entrenched policy interventions. The report is part of a series of recent studies carried out by researchers at the International Food Policy Research Institute and their partners on the impact of domestic support policies, trade policy, and trade agreements on the poor in developing countries. These include studies of the impact of alternative outcomes from the World Trade Organization Doha Development Round, the effects of global cotton markets on poverty in Benin and Pakistan, the impact of rice policy on poverty in the Philippines, and analysis of the potential effects of trade liberalization in the Near East and North Africa region. These studies provide policymakers with objective, empirically based analyses to inform pro-poor policies related to agricultural support and trade. We hope the report will contribute to informed policy discussions both at the domestic level and in international negotiations.