50 years of measuring support to agriculture in canada
TRANSCRIPT
50 years of measuring support to agriculture in Canada:
Overview and interpretation
Lars Brink
Focus on Fellows SymposiumThe Evolution of Policy Directions for Agriculture in CanadaAnnual meeting, Canadian Agricultural Economics Society CAES28-30 June 2015 Newport, Rhode Island, USA
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– Origin of (payments + price gap) measurements
– Major measurements of support for Canada
– Evolution of support over time
– The world is changing – what does it mean for measuring support?
Outline
Lars Brink
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– Because you are an ag producer, government policy has particular provisions for you and your products• Support, protection, transfers, subsidies, benefits, assistance
…– Many names for same basic idea– Different contexts and purposes
– Why measure policy support?• Compare size and composition of support
– Commodities, time, provinces, countries, commitments …
• Estimate effects: welfare, trade, prices, income …– Represent support policies one by one in models, or add them up
Policy affects farmers’ businesses
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– Structure of government expenditures– How much goes to whom and where and for what purpose? – Sort accounting expenditures under labels to analyze and discuss
– Payments to producers and for government services – Turner’s articles in Journal of Farm Economics 1956 & 1959– Government Involvement in Agriculture 1968
» For Federal Task Force on Agriculture– All about expenditures and government cost 386 pages
– No mention of price gaps from market regulations or trade policies
Early emphasis: Government expenditures
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– Idea is obvious today but was not obvious then• Expenditures and border protection • Payments and price gaps
– Price gap: compare domestic price to reference price» E.g., border price
– Where does price gap interest come from?• Countries’ history of support through border measures only
– Supplemented occasionally with some subsidies
• International trade frictions• Economic analysis of policies for agriculture
Evolution from early years
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– Haberler 1958 • “Best way” to measure “total protection”
– Difference between price, including subsidy, and border price» That is: add payments and price gap
– Compared 1954–55 wheat, barley, egg prices in Canada to world price» Early use of reference prices
– GATT and FAO to measure more products and countries• First GATT effort, with FAO participation, failed
– GATT Tokyo Round 1973-79
Not just payments, not just price gap
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– International Agricultural Adjustment program• 1972 - …• Agricultural protection
– Josling “domestic policy and international trade”• 1973• PSE Producer Subsidy Equivalent; CTE Consumer Tax Equivalent or “consumer burden”
– PSE adds payments and price gap » First operational use of (payments + price gap) in one indicator» 1968-70; wheat, barley, maize, sugar, milk» Canada, US, UK, France, Germany
FAO
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– OECD trade mandate 1982• Quantitative modelling• Payments + price wedge from border measures• Adopted PSE • 1979-81, then 1979-86, then 1986- …
– Parallel work in USDA on PSEs• First for US negotiators
– And “to facilitate the public debate about liberalizing agricultural trade”
• 1981-85 PSEs for 13 products in Canada
OECD and USDA
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– World Development Report 1986– Nominal Protection Coefficients 1980-82
– CUSTA 1988 Canada-US Free Trade Agreement
– PSE comparison triggers removal of import licensing requirement
– Uruguay Round 1986-94– PSE-related measurements; SMU Support Measurement Unit– AMS Aggregate Measurement of Support– TDE Trade Distortion Equivalent (green-box-like idea)
» International Agricultural Trade Research Consortium IATRC
• 1990 “Country lists” with 1988 data• 1992-94 AMSs and green box with 1986-88 data
Time of GATT Uruguay Round
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– Expenditure data in 1950s and 1960s
– Direct payments• Statistics Canada data from 1971
– Price gaps and payments in 1970s and 1980s• Economic analysis of welfare effects
– Several initiatives for data and measurements in 1980s• Government expenditures• Net benefits from 1981 for NTSP National Tripartite Stabilization Program
Canada-specific measurements
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– 1984: Input to OECD PSE and CSE data base• Payments and price gaps; data from 1986 (originally 1979)
– 1987: Government expenditures in support of the agriculture and agri-food sector• Operating, capital, program, tax; some data from 1981
– Evolution over time in coverage and presentation
– 1995: Notifications to the WTO• Payments and certain price gaps
Ongoing yearly measurements for Canada
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• Australia (not Canada!)
– Nominal Rate of Assistance 1903-1945, -2010 • Lloyd & MacLaren 2014, 2015
• Canada – Expenditures 1868-1983
• Berthelet 1985– Payments, price gaps 1947-81
• Lattimore 1983– Revealed comparative advantage 1961-2011
• Sarker & Ratnasena 2014
• World Bank – Nominal Rate of Assistance 1955-2011
» Distortions to agricultural incentives; Anderson et al. 2013
Long term series on price gaps and payments: More than curiosity value
Lars Brink
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19611963
19651967
19691971
19731975
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
0
5
10
15
20
25
30
35
40
45
50
55
60
NRA wheat
Wheat Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
%
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19611963
19651967
19691971
19731975
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
0
5
10
15
20
25
30
35
40
45
50
55
60
NRA pigmeat
NRA wheat
%
Pigmeat, Wheat Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
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19611963
19651967
19691971
19731975
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
0
5
10
15
20
25
30
35
40
45
50
55
60
Non-product-specificNRA pigmeatNRA wheat
Non-product-specific, Pigmeat, Wheat
Nominal Rate of Assistance %, CanadaWorld Bank “Distortions to Agricultural Incentives”
%
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19611963
19651967
19691971
19731975
19771979
19811983
19851987
19891991
19931995
19971999
20012003
20052007
20092011
020406080100120140160180200220240260280300320340360380400
NRA milk
NRA agriculture
Non-product-specific
NRA pigmeat
NRA wheat
MilkAgriculture
Nominal Rate of Assistance %, CanadaWorld Bank “Distortions to Agricultural Incentives”
%
17Lars Brink
Source: Bonti-Akomah, S., J. Vignola, and M. Cahoon. 2015. An overview of the Canadian agriculture and agri-food system 2015. Research and Analysis Directorate, Agriculture and Agri-Food Canada, April.
18Lars Brink
Source: Bonti-Akomah, S., J. Vignola, and M. Cahoon. 2015. An overview of the Canadian agriculture and agri-food system 2015. Research and Analysis Directorate, Agriculture and Agri-Food Canada, April.
1919951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Mkt price supportBound Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2019951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Prod spec paymt'sMkt price supportBound Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2119951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Prod spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2219951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
NPS not de minProd spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2319951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
NPS de minimisNPS not de minProd spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2419951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
PS de minimisNPS de minimisNPS not de minProd spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2519951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Green paymentsPS de minimisNPS de minimisNPS not de minProd spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
2619951996
19971998
19992000
20012002
20032004
20052006
20072008
20092010
20112012
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
Green gen serv.Green paymentsPS de minimisNPS de minimisNPS not de minProd spec paymt'sMkt price supportBound Total AMSCurrent Total AMS
CAD bill. Current Total AMS and Green Box 1995-2012
Lars Brink
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– Measuring distortion differs from measuring support
– Analysis of policy effect needs data on policy effort• Analyst builds own “data set” on policy effort
– Usefulness of data set for others is incidental
• Analyst draws on comprehensive “data base” on policy effort– User selects and sorts for own use in analysis
» User wants to know what is captured in data• Implementation criteria and detailed documentation
Measuring policy effect is different from measuring policy effort
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– Policy effort now more stable– Agricultural Policy Framework 2003, Growing Forward I and II
– International context• Changing focus in trade policy
– Negotiate new market access; enforce existing discipline on support; negotiate tightening for some, loosening for some
• Size and nature of producer support in other countries– Subsidy envy: not only about EU and US but also emerging producers
– “Structure, conduct and performance”, value chains– Particular commodity sectors
Shifting needs for data on policy effort
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– Today’s interests in agriculture and agri-food, such as
– Can governments keep up data work on support and on new important topics?
– Would there be public data on size and composition of PSE if it was not required from Canada as OECD member?
– Does data base work get enough resources to prevent deterioration?– If not government, who could collect & supply data on policy effort?
– Potential consequences for future policy analysis?
Where does measurement of support fit?
Lars Brink
• Innovation and research • Food safety
• Environment, water, sustainability • Pest and disease control
• Climate change: adapt and mitigate • Food and health
Thank [email protected]