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What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture?

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  • Kym Anderson
  • Ernesto Valenzuela

Abstract

This paper provides new estimates of the extent and economic effects of agricultural policies that provide domestic support or import protection to farmers in countries that compete in the global marketplace with unsubsidized farmers. Analyses earlier this century found that import market access barriers accounted for more than 90% of the global welfare cost of all assistance to farmers, with domestic support measures providing as little as 5%. Since then the share contributed by domestic support has grown greatly in some high-income and emerging economies, thanks to policy reinstrumentation. Using the latest version of the GTAP model and database of the global economy, this paper estimates the economic effects of direct farmer subsidies, and of the producer subsidy and consumer tax equivalents of farm trade policies, on farmers in three lightly assisting countries. The estimates adjusted for country size suggest the effects on agricultural exports, net farm income, and national economic welfare of such policies are far more adverse for Australia, Brazil and especially New Zealand than for the rest of the world, and that domestic supports abroad are much more important contributors to those losses now than they were at the start of this century.

Suggested Citation

  • Kym Anderson & Ernesto Valenzuela, 2020. "What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture?," Departmental Working Papers 2020-25, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2020-25
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    References listed on IDEAS

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    1. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, October.
    2. Kym Anderson & Hans Grinsted Jensen & Signe Nelgen & Anna Strutt, 2016. "What is the Appropriate Counterfactual When Estimating Effects of Multilateral Trade Policy Reform?," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 764-778, September.
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    4. Bhaskar, Arathi & Beghin, John C., 2009. "How Coupled Are Decoupled Farm Payments? A Review of the Evidence," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), pages 1-24, April.
    5. Kym Anderson & Will Martin, 2009. "Distortions to Agricultural Incentives in Asia," World Bank Publications, The World Bank, number 2611, July.
    6. Kym Anderson & William A. Masters, 2009. "Distortions to Agricultural Incentives in Africa," World Bank Publications, The World Bank, number 2607, July.
    7. Anderson, Kym & Kurzweil, Marianne & Martin, Will & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Measuring distortions to agricultural incentives, revisited," World Trade Review, Cambridge University Press, vol. 7(4), pages 675-704, October.
    8. Kym Anderson, 2009. "Distortions to Agricultural Versus Nonagricultural Producer Incentives," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 55-74, September.
    9. Anderson, Kym, 2009. "Krueger/Schiff/Valdés Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since 1960," CEPR Discussion Papers 7601, C.E.P.R. Discussion Papers.
    10. Kym Anderson, 2010. "Krueger, Schiff, and Valdés Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since 1960," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 32(2), pages 195-231.
    11. Anderson, Kym, 2009. "Five Decades of Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48742, World Bank.
    12. Urban, Kirsten & Jensen, Hans G. & Brockmeier, Martina, 2016. "How decoupled is the Single Farm Payment and does it matter for international trade?," Food Policy, Elsevier, vol. 59(C), pages 126-138.
    13. Joseph P. Janzen & Nathan P. Hendricks, 2020. "Are Farmers Made Whole by Trade Aid?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(2), pages 205-226, June.
    14. Anderson, Kym & Swinnen, Johan F.M., 2009. "Distortions to Agricultural Incentives in Eastern Europe and Central Asia," Agricultural Distortions Working Paper Series 48624, World Bank.
    15. Kym Anderson, 2009. "Distortions to Agricultural Incentives : A Global Perspective, 1955-2007," World Bank Publications, The World Bank, number 9436, July.
    16. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-271, September.
    17. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
    18. Anderson, Kym & Kurzweil, Marianne & Martin, William J. & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Methodology for Measuring Distortions to Agricultural Incentives," Agricultural Distortions Working Paper Series 48326, World Bank.
    19. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    20. Anderson, Kym, 2009. "Political Economy of Distortions to Agricultural Incentives: Introduction and Summary," Agricultural Distortions Working Paper Series 50306, World Bank.
    21. Angel Aguiar & Maksym Chepeliev & Erwin L. Corong & Robert McDougall & Dominique van der Mensbrugghe, 2019. "The GTAP Data Base: Version 10," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 4(1), pages 1-27, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Agricultural trade distortions; domestic supports; farm subsidies; market access; trade negotiations.;
    All these keywords.

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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