Types of Agricultural Policies

After the why of agricultural policy, the next major question is what does it consist of? The content of macroeconomic policy is unambiguous: the fiscal deficit, the money supply, instruments required to move those variables to their target levels, such as government spending and revenue collection, bond issuance, monetary targets, interest rates, reserve requirements, banking regulations and the like, and, in many economies, the exchange rate. In spite of the great antiquity of agriculture, and of government interventions in agriculture, there is not a similar consensus about the substance of agricultural policy.

The conception of what constitutes agricultural policy is undergoing change in all parts of the world. Historically, one of the major instruments of agricultural policy has been government expenditure. In all countries, fiscal outlays have been made for a variety of purposes in the sector. A few of the more prominent forms of expenditure have been investment in infrastructure for purposes such as irrigation, crop storage, transportation and marketing, direct provision of credit to producers and subsidization of private credit, the funding of research, extension and seed production, financing the deficits incurred by programs of purchasing grains from farmers at high prices and selling them to consumers at lower prices, and direct payments under land set-aside programs or other support programs.

The second major class of policy interventions often has consisted of controls, primarily on prices and trade, but sometimes also on access to land and irrigation water and on production levels themselves. The use of support prices, and administered prices for both consumers and producers, has been widespread in all regions of the world, but while it remains common practice in Europe and East and South Asia, it is being phased out in most of Latin America and Africa and reduced in the Middle East. The third main class of policy instrument in many countries has been direct management of production and marketing through State-owned enterprises which have spanned a wide range, from production collectives, sawmills and fisheries corporations to banks and marketing enterprises. The tendency in most parts of the world has been to reduce State ownership of assets in the sector, although the pace of those changes varies from region to region.

Now that there is a growing international consensus that direct government interventions in the economy generally should be reduced, along with fiscal expenditures, the question of what is agricultural policy (and what is the role of a Ministry of Agriculture) comes more sharply into focus. It is put into even higher relief by the fact that price levels and trade volumes respond essentially to macroeconomic policy and international market conditions. What remains in the purview of a Minister of Agriculture except perhaps to run a research and extension service and administer phytosanitary controls? More to the point, how can a constellation of agricultural policies be defined that will boost the growth rate of the sector, or raise income levels of the rural poor? Are there any constructive degrees of freedom left at the sector level, between macroeconomic policy and field-level programs? In a liberal economy, is agricultural policy an oxymoron?

In summary form, the answer is that there is a great deal for agricultural policy to do in all countries, but for the most part it requires different approaches than those of the past. A principal task of agricultural policy is to improve the func-

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