The relative importance of global agricultural subsidies and market access

Kym Anderson (), Will J Martin () and Ernesto Valenzuela ()

World Trade Review, 2006, vol. 5, issue 03, pages 357-376

Abstract: The claim by global trade modelers that the potential contribution to global economic welfare of removing agricultural subsidies is less than one-tenth of that from removing agricultural tariffs puzzles many observers. To help explain that result, this paper first compares the OECD and model-based estimates of the extent of the producer distortions (leaving aside consumer distortions), and shows that 75% of total support is provided by market access barriers when account is taken of all forms of support to farmers and to agricultural processors globally, and only 19% to domestic farm subsidies. We then provide a back-of-the-envelope (BOTE) calculation of the welfare cost of those distortions. Assuming unitary supply and demand elasticities, that BOTE analysis suggests 86% of the welfare cost is due to tariffs and only 6% to domestic farm subsidies. When the higher costs associated with the greater variability of trade measures relative to domestic support are accounted for, the BOTE estimate of the latter s share falls to 4%. This is close to the 5% generated by the most commonly used global model (GTAP) and reported in the paper s final section.

Date: 2006
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Working Paper: The Relative Importance of Global Agricultural Subsidies and Market Access (2006)
Working Paper: The Relative Importance of Global Agricultural Subsidies and Market Access (2006)
Working Paper: The relative importance of global agricultural subsidies and market access (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:cup:wotrrv:v:5:y:2006:i:03:p:357-376_00

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