How much does it hurt? Measuring the impact of agricultural trade policies on developing nations

This issue briefing from IFPRI documents an attempt to quantify the economic cost of agricultural trade policies of industrialised countries on developing nations economies using an economic model based upon data from the Global Trade Analysis Project (GTAP). The report, prepared in the run up to the Cancún Ministerial, also looks at the policy changes necessary to make agricultural trade more equitable.

The analysis finds that:

• at a low estimate, protectionism and subsidies by industrialised nations cost developing countries about US$24 billion annually in lost agricultural income annually.
• regionally Latin America and the Caribbean lose about US$8.3 billion, developing countries in Asia lose some US$6.6 billion and sub-Saharan Africa, close to US$2 billion
• in smaller countries in South America, Central America, and the Caribbean, as well as several countries in sub-Saharan Africa losses can amount to about 10-15 percent of total agricultural incomes
• Sub-Saharan Africa suffers disproportionately as a result of these polices because of those countries greater dependence on agricultural income and the higher rural population

The report then reviews research into the multiplier effects of these losses in other areas such as employment and technology.

The authors argue that developing countries should not counter protectionism from industrialised nations with their own protectionist policies as this will lead to increased food costs which will impact most severely on the poor. Instead they argue that developing countries should shift budget priorities to invest in rural development and take advantage of WTO transition periods to boost investment in health, education, agricultural research, roads, land reform access to water, communications, non farm enterprises, farmers' organisations, and other forms of social capital and political participation for the poor and vulnerable.

The report urges industrialised nations to increase aid and investment in human development and agriculture and finally agree to reductions in their own tariffs and subsidies.