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What are Farm Policies?

In this reading, an adapted executive summary from the chapter
“Farm Policy” written by Tim Josling and published in “Global Social
Issues: An Encyclopedia. Volume 1”, you will learn what farm policies
(or agricultural policies) are exactly. You will discover the history of
these policies, their impact on small farmers and consumers, as well
as their relationship with international trade. The objective of the
reading is to give you a general background regarding farm policies
and their importance in developed and developing countries.

Did you know that most governments take an active Another way that governments can influence
interest in the economic and social conditions in agriculture indirectly is through investments in
their rural areas and, in particular, in the agricultural infrastructure, education and health in rural areas,
sector? As Tim Josling explains, the term “farm and by implementing land tenure policies and
policies” (also known as agricultural or agrarian taxation laws. Such political measures also fall
policies) is used to refer to “the set of policy measures within the “broad heading of farm policies”.
that governments at the national and subnational
level employ to influence the economic environment Farm policies are narrowly related to food policies
of the farm sector.” To carry out such interventions, (“which focus on the availability and safety of food
governments use certain instruments, which will supplies”) and, increasingly, with the policies
be explained in the next video of the course. designed to preserve and improve the environment.

Examples of these policies are: “protection at the
border from imports, subsidies and other inducements How has Farm Policy changed over time?
to export surplus productions; direct payments to
farmers to maintain farm incomes; stabilization While in the Nineteenth Century, farm policy was
programs to avoid price instability; investment usually limited to imposing tariff and quotas on
incentives for farm improvement; and regulations imports, governments in the Twentieth Century
to protect the health of consumers and farmworkers.” started to play a greater role in domestic agricultural


AGRIMONITOR . This is a hidden However. “neither price support products for food or fuel. (The Implications of the Uruguay Round Agreement on Agriculture for developing countries. instead policies in developed focusing on feeding the urban Farm policy decisions have a areas. the negotiations in the General without such extensive market Agreement on Tariffs and Trade intervention were explored in results of such (GAT T ) 1 .markets through buying. which had brought about the exodus Another impact of these policies (import tariffs of labor from agriculture. Training materials. government introduced legislation which Adding to this. productivity in agriculture and resulting low income in rural areas. the encouragement of the use incomes. farmers benefit in have been welcomed in times of low prices and proportion to their output levels. This. the results of such policies are mixed. supporting domestic policies resulted in unstable and unprofitable domestic producers can come into conflict with world markets for farm goods. would be less disruptive on world payments to farmers. Although farm Farm policies in an this encouraged them to neglect international context their farm economies. a f ra m ewo rk wa s the mid-1980s. evidence shows that land prices granted control over the production and marketing increase with price support or direct payment and of the major crops (such as wheat and corn) and so the main beneficiaries of these farm programs over imports of these products from abroad. in turn. aimed to support of international tension. antipoverty programs. which go disproportionately more prevalent. of certain products over others. markets. when several established so that farm policies countries introduced direct policies are mixed. For instance. In the 1930s. introduced or when benefits increase. Furthermore. internationally this has been controversial.S. world prices have been on the farmers have benefited the most. As such. the largest adequate supply. which can be read here). On the other hand. FAO. Other are those who own the land when the policies are developed countries soon followed suit. conflict arises between using farm to the largest farms. of farm crops as feedstock for biofuels. This is also true rise since 2003. As a result of the Uruguay Round of New ways of supporting farmers farm incomes. led to urban countries have mainly significant impact on international overcrowding and worsened trade and can be a major cause income distribution. the U. That is. The General Agreement on Tariffs and Trades (GATT) was established in Geneva in 1947 with the purpose of creating a framework to regulate and foster international trade. or price support) is that consumers and food processors pay higher food prices. When malnutrition and hunger are for direct payments. Although Although higher farm prices have a positive effect alternative fuels from agricultural production might on the income of farmers. What has been the impact of farm policies? Other issues have appeared that give rise to Analysts agree that though farm policies in developed international concern regarding the impact of farm countries have mainly aimed to support farm policy. ‘consumer tax’ that hits low-income families more with developing countries and large exporters such severely as they allocate a higher proportion of the as Australia or New Zealand complaining that such household budget to food. fostering direct payments as the preferred method to provide ongoing support for agriculture. although developing countries benefited from importing surplus wheat and corn cheaply. So. new farmers benefit less from such programs Market intervention was considered to be necessary and can suffer from land prices falling when to solve the issue of the low relative prices and support decreases. selling and storing farm policies nor direct payment policies are effective products and by limiting or encouraging the production in supporting small farmers”.

production? Limitations in public budgets make Thus. risk- management instruments such as crop insurance are being implemented.S. payments. when prices are weak. Volume 1”. Bates and James Ciment. environmental practices. For instance. payments in the EU are tied to carrying out domestic price support policies may appear. This is an adapted Executive Summary of the Chapter “Farm policy” by Tim Josling. while in the U.Looking Ahead The question remains: what will developing The farming sector is no longer considered poor countries do? Will they follow developed and so the reasons for payments to the sector need countries in their protection of domestic farm to be reexamined in the search for budget savings. AGRIMONITOR . beneficiaries of direct payments now need it unlikely for poorer countries to use direct to carry out particular actions. However. edited by Christopher G. which can be read in full in the book “Global Social Issues: An Encyclopedia.