AEF362 AGRICULTURAL POLICY
Notes from Introductory Class
Why do we have Agricultural Policies?
- History - the processes of economic development tends to
leave farmers
(as peasants) behind as poorer (see below), though numerous =
politically important (aggrevated in EU and Japanese case by war
experiences
- Geography - especially the land per person (density of
population)
will affect the extent to which history is important
- Economics -
- agricultural share of total income tends to decline
with
economic
development - hence, unless there are fewer farmers trying to earn a
full
time living from farming - farmers will become relatively poorer - they
need to leave farming and do something else. But if there are a
lot
of them, this is difficult, and (especially in democracies) they can be
expected to raise political pressure for support and protection.
- agricultural markets characterised by inelastic demands for
foods -
which
means that small changes in supplies (weather, over-optimistic
expansion
by farmers) will tend to have severe effects on prices -> volatile
markets,
prices, revenues and incomes.
- Sociology - social concerns about the environment,
animal
welfare,
food safety and health, tend to become more important as societies
become
richer, more leisured and more separated from the original sources of
food
- so policy pressures begin to change
- Politics - the particular policy patterns will also
depend
critically
on the political balances, networks and mechanisms at work in the
particular
case - as should become evident as we look at specific policies.
General historical development of Agricultural Policies tends to
progress through three major phases:
FOOD PROBLEM (Food Security) -> FARM PROBLEM (farm incomes and
structure) -> RESOURCE PROBLEM (concern over proper use and care of
natural resources)
See here for a recent paper outlining the
consequences
of this sort of approach for policy reform (pdf file of paper
entiltled:
"Policy Dependency and Reform: Economic Gains versus Political Pains",
presented at the International Association of Agricultural Economists
triennial
conference
- Durban, S.A., August, 2003 - forthcoming in Agricultural Economics, 2004)
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