OECD agricultural trade reforms: impact on India's prices and producers' welfare
2007
S. Mittal
This paper examines the possible impact of liberalisation of agriculture trade on small holder farmers in India. The paper analyses the impacts of removing agriculture subsidies in the European Union and United States and of import trade tariffs in India. The paper finds that, even if product specific subsidies are reduced or eliminated, the price transmission mechanism is so poor that it will be difficult to pass on to Indian farmers. Findings from the analysis include: the elimination of subsidies in OECD countries would result in an increase in crop prices the domestic price response to this world price change is very small for rice and wheat and slightly better for cotton and sugar the production in OECD countries would decline, but it is not very clear if this would have a discernable effect on India’s production the welfare of Indian farmers producing cotton and sugar would improve with no negative consequences for food security The paper concludes that agriculture liberalisation would have an almost negligible impact on India’s production for rice and wheat and a marginal increase in the production of cotton and sugar. However, the paper concludes that the welfare impacts of these changes would have positive implications for poverty reduction in India. <br />
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