Agricultural Economics Policy and Implications.pptx

AGRICULTURAL POLICY
AND GOVERNMENT
PROGRAMS, POLICY
INSTRUMENTS, POLICY
ANALYSIS
BY: HAIDEE B. MEJORADA

AGRICULTURAL POLICY
• Governments have influenced agriculture directly
through the following mechanisms; health
regulation programs; price support laws and
production controls; and the collection and
distribution of agricultural statistics.
• In addition to the general policies of the nation as
a whole, agriculture is a specifically affected by
inflation, unemployment, and foreign policy.

AGRICULTURAL POLICY
• Agricultural policy describes a set of laws relating to
domestic agriculture and imports of foreign
agricultural products.
• Governments usually implement agricultural policies
with the goal of achieving a specific outcome in the
domestic agricultural product markets.
• Outcomes can involve, for example, a guaranteed
supply level, price stability, product quality, product
selection, land use or employment.

AGRICULTURAL POLICY
• Agricultural policy outlines the steps that
will be taken to reach certain goals in the
food and fiber economy.
• Typically, such policies affect the resources,
production, and market related to
agricultural products and services.
.

AGRICULTURAL POLICY
• They often are concerned with the safety,
consumption, and nutritional value of food.
Agricultural policy like most national-level
policies is influenced by economic, foreign, and
environmental policies and considerations.

GOALS OF AGRICULTURAL POLICY
• Maintaining a profitable, viable, efficient
and environmentally safe agricultural
production sector capable of meeting
demands for food and fibre while providing
satisfactory incomes to producers for use of
their land, labor, capital and management.

• Providing for an efficient, profitable, and
dynamic agribusiness sector, including
input suppliers and agricultural output
sector.
• Providing consumers with an abundant,
varied and safe supply of food and fibre at
the lowest possible cost consistent with
other goals.

• Operating a food and fibre economy within
the framework of democratic society,
relying on the free market system as much
as possible consistent with other goals.
• Maintaining and enhancing the
competitiveness of the country’s
agricultural product in the global market.

FORCES THAT CAUSE POLICY CHANGE
1. Price Instability
One major problem faced by producers is
instability of prices and incomes. Changes
in supply and demand can do affects farm
prices.

2. Globalization
The cultures, politics, and economies
of countries around the world have
become more interdependent.

3. Technology
Advances in technology have forced
changes in agricultural policy

4. Food Safety
Most countries are concerned with the
safety of their nation’s food supply.

5. Environment
Agricultural policy is often changed to
respond to issues related to the
environment.

6. Agricultural Industrialization
Policy focus in this area is on how the
traditional family farm is affected by
these sweeping changes.

7. Politics
Politics plays a significant role in
determining all policies, including
agricultural policy.

DIFFERENT POLICY TOOLS
1. Agricultural subsidies
- Is a governmental subsidy paid to farmers
and agribusiness to manage the agricultural
industry.
- The conditions for payment and the reasons
vary with farm product, size of farm, nature of
ownership, and country among other factors.

1. Agricultural subsidies
- Enriching peanut farmers for political
purposes, keeping the price of a staple low to
keep the poor from rebelling, stabilizing the
production of a crop to avoid famine years,
encouraging diversification and many other
purposes.

2. Direct Payments
- are cash subsidies for producers of crops
such as: wheat, corn, sorghum, barley, oats,
cotton, rice, soybeans, minor oilseeds, and
peanuts.

3. Marketing Loans
- The marketing loan program provides large
subsidies by paying guaranteed minimum
prices for crops.

4. Countercyclical Payments
- Provides larger subsidies when market
prices are low like marketing loan. However,
countercyclical payments are tied to a measure
of historical production, whereas marketing
loan subsidies are tied to current production.

5. Conservation Subsidies
- Farmers are paid not to grow crops, but to
cultivate ground cover such as grass or trees on
retired acres. A large share of land idled under
the CRP in America are owned by retired
farmers, thus one does not even have to be a
working farmer to get these subsidies.

6. Insurance
- Also in developed countries, both “yield”
and “revenue” insurance are available to
farmers to protect against adverse weather,
pests, and low market prices.

TYPES OF FARM SUBSIDY
1. Disaster Aid
- In case of crop damage, millions of
dollars given to farmers, whether or
not particular farmers actually
sustained substantial damage.

TYPES OF FARM SUBSIDY
2. Export Subsidies
- Subsidies on exports are any payment,
direct or indirect, to producers resulting in
export prices that are below domestic prices.
Used in this sense we can say that exports of
a number of American farm commodities are
subsidized.

IMPACT OF SUBSIDIES
- Farm subsidies have the direct effect
transferring income from the general tax
payers to farm owners. The justification
for this transfer and its effects are
complex and often controversial.

IMPACT OF SUBSIDIES
a. Global food prices and international trade
b. Poverty in Developing Countries
c. Impact on nutrition
d. Corporate Farms
e. Non-Farming companies
f. Public Economic Implications

Agricultural Economics Policy and Implications.pptx

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