Agricultural trade and food policy
1985
Bale, Malcolm D.
This essay reviews and generalizes the recent experience of the World Bank in studies undertaken on pricing and trade policy in agriculture in developing countries. Five archetypical countries are used as the basis for comment: Nigeria, Colombia, Philippines, Jamaica, and Pakistan. The motivation behind each of the studies was to gain an understanding of the incentive or disincentive environment in which agriculture operates. Five issues are addressed: (i) structure of the incentive system; (ii) effect of trade and policy interventions on output, farm income, consumer income, and government revenue; (iii) synchronization of agricultural policy with industrial policy and other macroeconomic policies; (iv) relationship of domestic prices to border prices of similar goods; and (v) possible restructuring of agricultural pricing policies and mechanisms to achieve stated goals. The paper finds that direct government intervention in the production, pricing, and distribution of foods on a massive scale is common; there is a profound distrust of the ability of the market to value and allocate resources. However, little thought is given the type of instrument selected, resulting in price distortions with serious allocative and efficiency effects.
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