Taxonomy of Agricultural Policies

Given the diversity of agricultural policies, it can be helpful to review policy needs from the viewpoint of the requirements of a producer. In order to operate successfully, a producer needs three basic things, i.e. adequate incentives to produce, a secure resource base (farmland and water) and access to markets for outputs and inputs, including technology. Accordingly, agricultural policy comprises the following three broad components:

• Pricing policy, which in a market economy is determined in large part, but not entirely, by macroeconomic policies.

• Resource policy, including land tenure policy and policies for management of resources (land, water, forests and fisheries).

• Access policy, including access to agricultural inputs, output markets and technology. Rural financial policy is an important part of access policy, since finance in many cases is a prerequisite for obtaining inputs and marketing products.

The divisions among these three broad classes of policies are not cut and dried. For example, policy measures designed to improve marketing channels (improve access) are likely also to raise farmgate prices (and hence are part of pricing policy). A broader conception of resource policy includes the basic resource of human capital, for which rural education and training programs are vital. The role of land tenure policy is to provide security of access to land resources, which can be as important as physical access to land.

Most classes of policies are relevant to the entire sector, or most of it, and generally are not specific to particular crops. In this sense, there is not a cassava policy or a corn policy or a groundnut policy, or a millet policy or a plantain policy. Good policies facilitate the work of the farmer, part of which is the selection of the crop and livestock mix. Differentiating policies by product runs the risk of creating greater incentives for some than for others, and governments usually are not in the best position to designate which crops have the best future possibilities. The combination of markets and farmers' judgments can make such choices more reliably.

However, it is common to establish government-supported programs for important products: a program for the renovation of coffee plantations, a dairy development program and a rice-improvement program. Such programs represent one of the means of implementing policies.

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