Trends and fluctuations in agricultural price distortions

Abstract

For decades, earnings from farming in many developing countries have been depressed by a pro-urban bias in own-country policies, as well as by farm trade and subsidy policies of richer countries. Both sets of policies had reduced global economic welfare and agricultural trade and almost certainly have added to global inequality and poverty. Progress has been made over the past three decades in reducing agricultural protection in high income countries and agricultural disincentives in developing countries. However, some large distortions to agricultural prices within farm sectors and between countries remain, and governments continue to have a propensity to insulate their domestic food market from fluctuations in international prices. Thus much scope remains to improve economic welfare and reduce poverty by removing remaining trade distortions. This chapter summarizes indicators of these trade barrier patterns before pointing to changes in trade policies, together with complementary domestic measures, that could improve global food security.