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| Title | Producer Support Estimates (PSEs) for agriculture in developing countries |
| Subtitle | measurement issues and illustrations from India and China |
| Author |
Mullen, Kathleen Sun, Dongsheng Orden, David Gulati, Ashok |
| ORCID | http://orcid.org/0000-0003-0677-6099 Orden, David |
| Year | 2004 |
| Abstract | In many developing countries, governments rely on price-based measures (including border protection and subsidies on inputs and outputs) more than on budgetary payments to achieve agricultural policy objectives defined to include price stabilization or food self-sufficiency. Assessing the effects of these price-based measures is thus important to evaluating whether agriculture is being protected or disprotected by commodity or in the aggregate. This aspect of producer support estimates (PSEs) is simple to describe conceptually but difficult to evaluate well empirically. Developing countries may face higher international transport and port costs for imports and exports than developed countries or may have substantial internal handling, transportation and processing costs. Separating these structural effects on farmers from agricultural policy effects that drive a wedge between the domestic farmgate price and an adjusted international reference price requires extensive data and judgments. In this paper, we describe the PSE measurement issues and illustrate their importance. We estimate product-specific market price support, budget expenditures and PSEs for three important agricultural commodities (wheat, rice and corn) in India (1985-2002), using representative disaggregated state-level results, and for five commodities (wheat, rice, corn, soybeans and sugar) in China (1995-2001). The results for India suggest that ignoring factors such as internal transport costs, marketing margins and quality differences can result in inaccurate price support estimates and PSEs that may be of the wrong sign. We also explore how relaxing or changing certain standard PSE assumptions (such as altering the “scaling up” procedure or computing the PSE as a percentage of value of production at world reference prices) can have large impacts on the results. Finally, for commodities that are near self-sufficiency, we follow Byerlee and Morris (1993) and define a relevant adjusted reference price based on the relationship between an estimated autarky price and the import and export prices. We discuss this procedure and use the resulting reference prices to compute the market price support component of the PSE for India. Based on our three-commodity PSEs for India, support is largely counter-cyclical, rising when world prices are low (as in the late 1980s and 1990s) and falling when world prices strengthen (as in the mid 1990s). From our more preliminary five-commodity PSE estimates for China, a trend decline in disprotection is more evident. Further research is needed to confirm and elaborate on these results. |
| Series Name | MTID Discussion Paper |
| Series Number | 74 |
| Publisher | International Food Policy Research Institute (IFPRI) |
| Place of publication | Washington, D.C. |
| Language | English |
| Record Type | Discussion paper |
| Peer Reviewed - PR or Non-PR | Non-PR |
| Subject - country location |
INDIA CHINA SOUTH ASIA EAST ASIA ASIA |
| Subject - keywords |
Prices Policies producer prices self sufficiency Price stabilization analysis Costs trade |
| IFPRI Descriptors | IFPRI1 |
| IFPRI Division | MTID |
| Access Rights | Open Access |
| LOC call number | MTID DP74 |
| Physical description | 86 pages |
| IFPRI Web link | http://www.ifpri.org/divs/mtid/dp/mtidp74.htm |
| Requests | mailto:ifpri-library@cgiar.org |
| CONTENTdm file name | 80338.cpd |
| Date cataloged | 2017-08-05 |
| Date modified | 2017-08-05 |
| OCLC number | 780396670 |
| CONTENTdm number | 80337 |
Description
| Title | mtidp74 1 |
| Access Rights | Open Access |
| CONTENTdm file name | 80243.pdfpage |
| Date cataloged | 2017-08-05 |
| Date modified | 2017-08-05 |
| CONTENTdm number | 80242 |
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