Agrimonitor: PSE Agricultural Policy Monitoring System in LAC INE/RND

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1 Agrimonitor: PSE Agricultural Policy Monitoring System in LAC INE/RND

2 WHAT POLICY MONITORING IS,WHY IS IMPORTANT AND WHAT HAS ALREADY BEEN DONE IN OUR COUNTRIES? Monitor and evaluate developments in agricultural policy The extend of policy reforms achieved by countries, both over time and through specific reform efforts (e.g. 90s policy reforms in Mexico after TLCAN) PSE Database Development used to quantify and monitor the structure of support over time. Establish a common base for policy dialogue among countries The international comparability of the indicators and wide country coverage makes a useful tool for policy dialogue. IDB has calculated estimators for 18 LAC countries. Currently OECD analysis include 3 of LAC countries ME, BR, CH. Provide economic data to assess the effectiveness and efficiency of policies Indicator database may be used in further research on policy impacts as a input into modeling, to assess the effectiveness and efficiency of policies in delivering outcomes.

3 Agrimonitor PSE Data Base The Bank has applied the Product Support Estimates methodology (PSE) in 18 countries Argentina, Belize, Bolivia, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Haiti, Honduras, Jamaica, Nicaragua, El Salvador, Panama, Paraguay, Peru, Suriname and Uruguay. In addition, OECD calculates in regular base estimators for Mexico, Chile and Brazil-OECD 3-. In 2013, 11 LAC countries plus OECD 3 were uploaded to a preliminary data base located in an external server The design, operation and analytical functions of the web-based LAC PSE Database system have been implemented and the Data base will be released soon

4 Agricultural sector in LAC 5 % of LAC s total GDP 2.7% annual agriculture growth Important source of labor force in agriculture Regional Support: from extracting S$10 billion in annual revenue from the sector in the 1980 s to supporting farmers with more than US$5 billion annually after the reforms (Anderson and Valdés, 2008).

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6 Key Results of PSE Analysis 1. High uneven distribution and level of support in LAC Region. 2. High levels of Market Price Supports (MPS) are a major inhibitor of regional integration. 3. Very low level of support for GSSE, which are limiting productivity and competitiveness. 4. Most countries do not provide significant levels of direct support payments to farmers. 5. Consumer Support Estimate (CSE) shows that consumers pay higher prices for food, with a greater impact on medium and low income consumers.

7 High uneven distribution and level of support in LAC Region

8 High levels of Market Price Supports (MPS) are a major inhibitor of regional integration.

9 Very low level of support for GSSE, which are limiting productivity and competitiveness

10 Consumer Support Estimate (CSE) shows the burden on consumers from price policies affecting medium and low income consumers

11 Public expenditure on rural public goods has greater economic returns than that spent on private goods

12 Public expenditure on private goods has a low social return and is regressive Guatemala, Public investment in programs for the purchase and direct distribution of inputs- fertilizer programs showed a negative cost/benefit ratio (Valdés, 2012) Paraguay, between 2003 and 2004, 60% of the direct fiscal supports allocated for the purchase of cotton seeds benefited only 9% of the producers, the largest but in a process of its transitory reorientation toward public goods, smart subsidies can do better than the purchase and direct distribution of inputs by the State Dominican Republic, subsidies for the adoption of technologies had positive impacts on producers yields of rice and beef cattle, at the same time that they fostered the development of private suppliers (González et al., 2009)

13 SECTOR FRAMEWORK DOCUMENT ON AGRICULTURE AND NATURAL RESOURCES MANAGEMENT Improve the quality of rural public expenditures, emphasizing allocations for public goods. The Bank Current strategy in the agriculture sector is focused on prioritize the following activities in its country dialogues, among others: a. Country-level studies on agricultural support estimates as an instrument for sector dialogue with the countries. b. Modernization of national systems for agricultural health and food safety c. Modernization of national systems for agricultural innovation d. Investment to improve producers access to rural infrastructure e. Modernization of information systems for producers f. Carrying out and disseminating impact evaluations

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