Reforming agricultural subsidy policies to facilitate the transformation of agrifood systems: insights from China and Africa

Exploring the role of agricultural subsidy policies for sustainable agriculture Based on Chinese agricultural big data

农业作为弱质产业，在世界各国均由政府采取补贴政策扶持其发展。在全球生态意识普遍觉醒的当今，农业发展须应对其可持续性和生态安全形势的挑战，发展绿色(生态)农业是必然选择。由此，需要调整传统的农业补贴政策，突出其生态保护功能。鉴于中国现阶段农业补贴基本上没同生态保护挂钩，改善农业补贴政策机制的路径在于创设农业补贴生态化即绿色农业补贴法律制度。借鉴发达国家农业生态补偿政策与法制实践，中国农业补贴生态化法治保障机制的构建，重在以农业环保为支点建立财政投入长效机制，并改善财政转移支付制度，构建环境资源成本核算体系和绿色GDP核算机制，健全生态补偿组织管理体系，通过“项目支持”提高补偿资金利用效率等。 Being a weak industry, agriculture is subsidized around the world by many governments to support its development. With the general awakening of ecological consciousness, agricultural developments must react to the challenges from ecological security situation as well as its sustainability. Thus the development of green (ecological) agriculture is an inevitable choice. As a result, the traditional agricultural subsidy policies need adjustments in order to highlight its ecological protection function. Given the fact that China’s current agricultural subsidies policies are virtually not linked with ecological protection, the way to them is to adopt eco-agricultural subsidies, i.e., green agricultural subsidy mechanism. Learning from developed countries’ agro-ecological subsidy policy and legal practices, China’s agricultural subsidy policy shall focus on the long-term financial mechanisms based on the agricultural environment protection, improve the fiscal transfer payment system, establish the environmental resource cost-accounting system, and perfect the ecological compensation administration system as well as to lift the compensation capital efficiency through “project support”.Being a weak industry, agriculture is subsidized around the world by many governments to support its development. With the general awakening of ecological consciousness, agricultural developments must react to the challenges from ecological security situation as well as its sustainability. Thus the development of green (ecological) agriculture is an inevitable choice. As a result, the traditional agricultural subsidy policies need adjustments in order to highlight its ecological protection function. Given the fact that China’s current agricultural subsidies policies are virtually not linked with ecological protection, the way to them is to adopt eco-agricultural subsidies, i.e., green agricultural subsidy mechanism. Learning from developed countries’ agro-ecological subsidy policy and legal practices, China’s agricultural subsidy policy shall focus on the long-term financial mechanisms based on the agricultural environment protection, improve the fiscal transfer payment system, establish the environmental resource cost-accounting system, and perfect the ecological compensation administration system as well as to lift the compensation capital efficiency through “project support”.

List of Tables and Figures. Preface. List of Abbreviations. Prologue . Chapter 1: Introduction: The Problem of Agricultural Subsidies . Benin. Western Agricultural Subsidies. Organization of the Book. Chapter 2: The Economics of Government Intervention . Introduction. The Invisible Hand. Market Failures. Violation of the Basic Conditions: Imperfect Competition, Information and Risk. Public Goods and Externalities. Income Distribution, Poverty and Inequality. Conclusion. Appendix 2-1: The Theory of the Invisible Hand. Appendix 2-2: The Prisoners' Dilemma. Chapter 3: The Structure of the World Food System . Introduction. Historical Perspectives. The World Food System. Agribusiness, Government and Science. Conclusion. Appendix 3-1: Country and Commodity Classifications used in Statistical Tables. Chapter 4: Global Institutions and the World Trade Organization . Introduction. The World Trade Organization. Agriculture in the WTO. Trade and Development. Appendix 4-1: Comparative Advantage. Chapter 5: The Nature and Scope of Agricultural Subsidies in High-Income Countries . Introduction. Agricultural Policy Objectives and Tools. Agricultural Subsidies in OECD Countries. Effects of OECD Agricultural Subsidies. Conclusion. Chapter 6: U.S. Agricultural Policy: How Not to Save the Family Farm. Introduction. Historical Overview of U.S. Farm Policy. The Impacts of U.S. Farm Subsidies. The Politics of U.S. Agricultural Policy. Appendix 6-1: ERS Farm Typology. Chapter 7: Agricultural Policy in the European Union: Europe's Sacred Cows . Introduction. Agricultural Policy in the European Union. The Impact of the Common Agricultural Policy. Appendix 7-1: Green Currencies and the Re-Nationalization of the CAP. Chapter 8: Agricultural Policy on the Pacific Rim: Non-Trade Concerns Versus Comparative Advantage. Introduction. Japan and Korea. Australia and New Zealand. Conclusion. Chapter 9: Agricultural Policy in Developing Countries: Cheap Food . Introduction. The Developing World. Agricultural Policy in Developing Countries. The Impacts of Agricultural and Trade Policy Reforms. Conclusion. Appendix 9-1: Country Lists. Chapter 10: Conclusion: Whither Agricultural Policy? . References. Index

On the background of extensive government interventions in grain markets and the direct payment schemes of subsidy policies, the subsidy policies may hardly show negative impacts on grain prices through increasing grain supply. In this study, we investigate the relationship between China's agricultural subsidy policies and market prices for grain and construct autoregressive distributed lag (ARDL) models to evaluate the impacts of agricultural subsidies on grain prices. The estimated results indicate that the subsidy variable is highly significant in the grain price model for each grain type, while the general impacts of subsidies are positive. This suggests that agricultural subsidy policies contribute to increases in market prices for grain. Statistically, the overall elasticities of subsidies to the prices of rice, wheat, and corn are 0.077, 0.094, and 0.180, respectively. Both the theoretical and empirical analyses suggest that these subsidies show positive rather than negative impacts on grain market prices under the current situations in China.

The impact of China’s new agricultural subsidy policy on grain crop acreage

Southwest China's weak economic development has been the focus of China's rural revitalization strategy; exploring the impact of implementing an agricultural machinery purchase subsidy policy can impetus the economic development of Southwest China. Since its introduction in 2004, the policy of subsidizing the purchase of agricultural machinery has been mainly used to support the purchase of advanced and applicable agricultural machinery. The implementation of this policy has promoted China's socioeconomic development and, until now, has been an indispensable supportive policy in the rural revitalization strategy. As the province with the most poverty-reducing people in the country, Guizhou's achievements cannot be attributed to the conscientious implementation of the central government's decisions and deployments. However, Guizhou's practice of subsidizing the purchase of agricultural machinery also requires improvement. The Smith Model is the theoretical framework for this research. This paper lists the problem Guizhou's agricultural machinery purchase subsidy policy needs to fix with stakeholder analysis. It then uses the Smith Model to look into the reasons for the "irrational agricultural machinery structure" gap in Guizhou's application of the agricultural machinery purchase subsidy policy and makes suggestions for how to make things better. This study's main contribution is to enrich existing literature by analyzing Guizhou's policy implication in addressing the problem of insufficient production of agricultural machinery and providing a direction for the future implementation of Guizhou's agricultural machinery purchase subsidy policy.

China's agricultural subsidy policy experiences three development stages. Detailed summing up is carried out for achievements of each stage. On the basis of this, this paper discusses problems existing in current agricultural subsidy policy, including high operational cost, out of balance of subsidy structure, little subsidy effort, lack of effective supervision and vacancy of benefit safeguarding mechanism. Finally, it presents suggestions for optimizing China's agricultural subsidy policy, such as regulating direction of agricultural policy, strengthening subsidy effort, taking full advantage of WTO rules, perfecting agriculture-related systems, and establishing and perfecting legal system to support agriculture.

This study aims to analyze the effect of agricultural subsidy policies on farmer productivity in Tebing Tinggi City, Sumatra. The method used is simple linear regression with independent variables of agricultural subsidy policies and dependent variables of farmer productivity. The research sample was 370 respondents determined using the Slovin formula. Data were collected through a google form survey and analyzed using SPSS 25. The results showed that agricultural subsidy policies have a positive and significant effect on farmer productivity with a regression coefficient of 0.865 and a significance level of 0.000. The Beta value of 0.930 indicates that subsidy policies have a very strong impact on increasing farmer productivity. These findings indicate that agricultural subsidies can be an important instrument in improving farmer welfare and supporting food security in the area. Therefore, a more optimal and sustainable subsidy policy is needed to increase the productivity of the agricultural sector in Tebing Tinggi City.

Subsidies under uncertainty: Modeling of input- and output-oriented policies

Agricultural development in China has commanded much attention in the new era. This paper uses the DID model to analysis the relationship between agricultural subsidy policy and grain planting structure in China from two perspectives of macro and micro. The novelty of this paper is that we have developed a theoretical model to estimate effect of agricultural subsidy policy on the grain planting structure and explore its path of action. The empirical results of this paper show that the agricultural subsidy policy mainly changes the input of grain production of farmers from the aspects of technology and cost, which greatly motivates the farmers to increase the land input in grain production, and its grain planting area and its proportion will both increase.

The interest of scientists, policy makers, and the general public in the concept of ‘multifunctional’ landscapes has increased enormously in recent years. The fact that landscapes provide a large number of beneficial functions and services to human beings, which go far beyond agriand silvicultural production, is now widely accepted (Foley et al. 2005). Non-commodity outputs as well as a wide array of ecosystem functions are considered to be indispensable properties of landscapes, and decision-makers are challenged by the need to consider all relevant landscape functions in management decisions at all spatial scales and each administrative level (Pinto-Correia et al. 2006). The concept of landscape multifunctionality is obviously closely related with landscape sustainability, but emphasizes more strongly the land user’s and stakeholder’s perspective. In the European Union, the ‘multifunctionality of agriculture’ has become the key concept of the Common Agricultural Policy (CAP) (Tait 2001). Multifunctionality is promoted by the EU in response to liberalisation pressures, and is seen as a way to address social and ecological concerns such as farm abandonment and biodiversity loss through agricultural subsidy policies (Potter and Burney 2002; Hollander 2004; Potter 2006). The benefits of agriculture to rural development, regulation functions and biodiversity are currently rewarded with an increasing share of EU-agricultural subsidies being transferred towards the production of ecosystem goods and services. The resulting regional agrienvironmental schemes of the member states pursue to secure the conservation and sustainable development of the old cultural landscapes (Vos and Meekes 1999; Deuffic and Candau 2006; Holloway et al. 2006; Potter 2006). However, while the concept of ‘multifunctionality’ receives also recognition outside the EU (USA: Hollander 2004; Bills and Gross 2005, Canada: Maxey 2006; Robinson 2006, Australia: Anderson 2000; Cocklin et al. 2006), it becomes increasingly evident that there is often a gap between the claim and reality of environmental (e.g., Kleijn et al. 2001), economic (e.g., Brunstad et al. 2005) or social effects (e.g., Gafsi et al. 2006) of agricultural policies. Thus, to create effective policies for the sustainable development of multifunctional landscapes, there is a demand of society and A. Otte (&) D. Simmering Division of Landscape Ecology and Landscape Planning, Interdisciplinary Research Centre for Biosystems, Land Use, and Nutrition (IFZ), Justus-Liebig-University Giessen, Heinrich-Buff-Ring 26-32, Giessen D-35392, Germany e-mail: annette.otte@agrar.uni-giessen.de

Agricultural subsidies have long been a consistent concern of government policies; they influence the use of resources for pursuing different goals in this sector. In this research, we are making a comparison study of the agricultural subsidy policies of Ecuador and Hungary in the last ten years by a comparative analysis applied for empirical generalization to explain and get a better understanding of the subsidies used in the two countries. The results show an enormous advantage for Hungary compared to Ecuador regarding the agricultural subsidies. Since they are part of the Common Agricultural Policy of the European Union, Hungary's subsidies are institutionalized and planned in the long term within a series of programs financed by the EU and national funds. While in Ecuador, agricultural policies exist as a general framework, and the governing body manages the subsidies through programs and projects that do not remain over time and depend on the current political situation in the country. In the same way, the data collected reflects that although the share of the agricultural sector in Ecuador's GDP is higher than in Hungary, the subsidy amounts for this sector are 36% lower than in Hungary. JEL CODE: Q13

Rather than treating symptoms of a destructive agri-food system, agricultural policy, research, and advocacy need both to address the root causes of dysfunction and to learn from longstanding interventions to counter it. Specifically, this paper focuses on agricultural parity policies – farmer-led, government-enacted programs to secure a price floor and manage supply to prevent the economic and ecological devastation of unfettered corporate agro-capitalism. Though these programs remain off the radar in dominant policy, scholarship, and civil society activism, but in the past few years, vast swaths of humanity have mobilized in India to call for agri-food systems transformation through farmgate pricing and market protections. This paper asks what constitutes true farm justice and how it could be updated and expanded as an avenue for radically reimagining agriculture and thus food systems at large. Parity refers to both a pricing ratio to ensure livelihood, but also a broader farm justice movement built on principles of fair farmgate prices and cooperatively coordinated supply management. The programs and principles are now mostly considered “radical,” deemed inefficient, irrelevant, obsolete, and grievous government overeach—but from the vantage, we argue, of a system that profits from commodity crop overproduction and agroindustry consolidation. However, by examining parity through a producer-centric lens cognizant of farmers‘ ability, desire, and need to care for the land, ideas of price protection and supply coordination become foundational, so that farmers can make a dignified livelihood stewarding land and water while producing nourishing food. This paradox—that an agricultural governance principle can seem both radical and common sense, far-fetched and pragmatic—deserves attention and analysis. As overall numbers of farmers decline in Global North contexts, their voices dwindle from these conversations, leaving space for worldviews favoring de-agrarianization altogether. In Global South contexts maintaining robust farming populations, such policies for deliberate de-agrarianization bely an aggression toward rural and peasant ways of life and land tenure. Alongside the history of parity programs, principles, and movements in U.S., the paper will examine a vast version of a parity program in India – the Minimum Support Price (MSP) system, which Indian farmers defended and now struggle to expand into a legal right. From East India to the plains of the United States and beyond, parity principles and programs have the potential to offer a pragmatic direction for countering global agro-industrial corporate capture, along with its de-agrarianization, and environmental destruction. The paper explores what and why of parity programs and movements, even as it addresses the complexity of how international parity agreements would unfold. It ends with the need for global supply coordination grounded in food sovereignty and solidarity, and thus the methodological urgency of centering farm justice and agrarian expertise.

Abstract: We analyze the linkage between trade policy and invasive species (IS) hazard in the context of two-way trade and multilateral trade liberalization. Both intra-industry trade and multilateral trade liberalization are actual features of agricultural trade patterns and policies in the real world. We revisit the reciprocal-dumping model with differentiated products, adding trade and agricultural policies into the framework in the presence of invasive-species risk associated with agriculture. We look at multilateral trade liberalization, with countries jointly reducing their agricultural tariffs. This type of multilateral trade integration is much more likely to increase the damage from IS than predicted by unilateral trade liberalization under the HOS framework. We document the non-monotonic relationship between policy reforms including trade liberalization and farm policy and the damages from exotic species introductions. Relevance and Motivations: The links between international trade and the environment, are multiple, complex and have been a topic of continuing heated debate. International trade can be an important driver of environmental change. Recent literature has been focusing on accidental introductions of exotic or invasive species (IS) like pests, weeds, and viruses, by way of international transport of commodities, which is an important aspect of this complex nexus (Perrings, Williamson and Dalmazzone; Mumford). The trade and environment interface is almost inherent to the economics of IS since trade is a major vector of propagation of these species, although it is not the only one. “Natural” invasions occur because of natural vectors (weather related ones, animal migration). The current economic literature is mostly focused on the “right” criteria to use or the optimal environmental policy response to the hazard of IS (Sumner; Binder). A related debate evolves around quarantine as a legitimate policy response to phyto-sanitary risk (Cook and Frazer; Anderson et al.) Agricultural imports have always been an important conduit for biological invasions. The agricultural tariff structure, because of its strong influence on trade flows, is therefore an important issue to understand the hazards of IS introductions. In a standard one-way trade Hechsher-Ohlin-Samuelson (HOS) model, Costello and McAusland show that lowering agricultural tariffs could lower the damage from exotic species, even though the volume of trade rises, because an increase in imports results in a reduced domestic agricultural output, and thus the quantity of crops susceptible and available for damage and the amount of land that is disturbed and thereby aiding the propagation of exotic species. What we do: The objective of our paper is to expand and build upon the analysis of Costello and McAusland which was based on the HOS model and unilateral trade liberalization. We study the linkage between trade distortions and damages associated with IS risk in the context of two-way trade. We believe that two-way trade or intra-industry trade characterizes agricultural trade patterns in the real world, and that the one-way trade framework has a limited empirical relevance in this context (e.g., two-way trade in grains, or more specifically in wheat). We also depart with the previous analysis by considering multilateral trade liberalization. Trade integration has been occurring mostly in the context of WTO multilateral or multilateral reforms (e.g., The Uruguay Round Agreement on Agriculture, Free Trade of the Americas). Seldom do countries engage in unilateral trade liberalization but rather commit to jointly reduce their protection through regional or multilateral agreements. Another argument to consider joint reforms is that transaction costs have been falling in most countries for both exports and imports through cheaper transportation, cheaper refrigeration and insurance and the joint tariff reforms also mimic the lower transaction costs on both sides of any border. Approach and Methodology: We revisit the reciprocal dumping model with differentiated products by adding the trade and agricultural policies into the framework. We also consider joint tariff reductions and their effect on expected IS damage. We characterize damages from IS as in Costello and McAusland. We find that this type of trade integration is much more likely to increase expected damage from exotic species especially in a two-way trade model as compared to unilateral liberalization in a one-way trade context. We also consider domestic farm subsidies. OECD agriculture is characterized by generous agricultural subsidies which have to a large extent, substituted for the lower border protection (OECD 2003). We consider this second best dimension of domestic subsidies in integrated markets and their role on IS risk. Increasing farm subsidies exacerbate IS risk as expected by maintaining large agricultural land bases. Finally we document the non-monotonic relationship between trade reforms including trade liberalization and production subsidy adjustment and the damages from exotic species introductions.

SummaryThe farm bill is the primary legislative vehicle for federal food and agricultural policies in the United States that is renewed roughly once every five years. Most current farm bill subsidy and other domestic support programmes for agriculture have their origins in legislation introduced in the 1930s to alleviate poverty among farm households during the Great Depression. Although US farm households have enjoyed higher incomes and wealth than the average US family for many years, legislation to support agricultural commodity prices and to increase farm incomes has persisted. A new farm bill offers the US Congress an opportunity to reform agricultural subsidy policies. But if recent history is a guide, what will emerge is likely to resemble much of what was in the 2014 bill. As was the case with that bill, maintaining the status quo will represent a missed opportunity to cut farm subsidies and make agricultural programmes more market oriented, and be unlikely to improve trade relations for the United States in the context of its commitments under current World Trade Organization agreements. In many ways, agricultural policy in the United States seems to be firmly marching back to the past rather than looking to the future.