Tioning of product and factor markets in rural

areas, with special attention to poor families' access to these markets and the conditions of their participation in them. In some cases, this requires infrastructure investment, but it almost always requires good policies as well. Factor markets include those for land, financial capital, labor and, in some cases, irrigation water and environmental characteristics. Rural families' participation in labor markets, for example, is enhanced by programs of training and agricultural extension.

Today more than ever agricultural policy must be co-ordinated with other areas of policy and the agencies in charge of them: for example, with the Central Bank and Ministry of Finance in the case of rural financial policy, with the Ministry of Economy or Trade for agricultural trade policy, with the Ministry of Finance for expenditure programs on irrigation and research, and with a Ministry of the Environment or Natural Resources for irrigation policy. In the sphere of government, agricultural development policy is increasingly a topic that concerns many Ministries and agencies.

Equally, good design and implementation of agricultural policy require participation from local governments, producers' associations, water users' associations, NGOs, regional offices of the Ministry of Agriculture and other decentralized organizations. The policy coordination role of the Ministry of Agriculture increasingly occupies center stage.

One of the main tasks of modern agricultural policy is to promote the development of adequate institutions to fulfill the requirements of a growing rural economy, from marketing to provision of farm services to supplying production finance. Even though many such activities may logically belong to the private sector in the long run, the public sector has a large responsibility in fostering the development of the needed capacities, and in overseeing the launching of those capacities and ensuring their functioning in an initial period. In economies in which the government has been managing trade in food products, for example, it often is found that the private sector is not necessarily prepared to step in and take over that responsibility at short notice. It may lack the financial capacity and the technical commercial expertise, and it may hesitate to enter the field because it is not convinced that the government will not intervene again.

Developing institutional capacity includes developing and refining the rules of the game for a market economy and fostering respect for those rules. In societies in which the rule of law is shaky in rural areas or judicial systems are weak, and there are not sufficient means for adequate enforcement of contracts, this vital task can be very difficult. It can be an undertaking of many years if not decades. However, that is all the more reason to emphasize it.

Another broad task of policy is to ensure that the legislative framework is appropriate for the sector's development, that it encourages economic activity rather than inhibiting it, and at the same time provides the right measure of protection to the interests of producers, consumers and the environment. This task can involve an extensive review of existing legislation, ranging from the labor code, the commercial code and consumer protection laws to land tenure laws, resource management decrees and many other kinds of legislation.

A few concrete examples of agricultural policy instruments in a market economy include import tariffs, rebates on tariffs on inputs for exporting industries, farm support prices, certificates of deposit to finance grain storage by small farmers, food quality regulations, regulations mandating public auction of forestry concessions, fishery licenses, statutes for land funds, regulations for land registry systems, legislation concerning land tenure, policies on the structure and functioning of agricultural extension services, policies for devolving ownership and management responsibilities for irrigation systems to users' associations, policies for privatization of other State assets, laws for the protection of the rural environment, policies for providing food assistance to the poor, and legislation governing rural financial systems. The list can be extended very considerably, and it will necessarily differ from country to country, since in the final analysis each country's approach to agricultural policy has to be consistent with its own history, traditions and overall economic policy.

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