Food Price and Trade Policy Biases - The Oxford Topic of Food, Politics, and Society - page 363

experience (Anderson and Valenzuela 2008, summarized in Anderson 2009). That
study reports a nominal rate of assistance (NRA), defined as the percentage by which
government policies have raised producer returns above what they would be without
the government's intervention (or the percentage by which government policies have
lowered returns, if the NRA is less than zero). Since farmers are affected by the prices
of not just their own outputs but also those of nonagricultural producers who compete
with them in the common national markets for mobile labor and capital, the World
Bank study also estimates a relative rate of assistance (RRA). The RRA is defined as the
percentage by which government policies have raised prices of tradable farm products
relative to prices received by producers of nonfarm tradable products (most of which are
manufactures—see Anderson et al. 2008).
Historically, national nominal rates of assistance to agriculture (and relative rates
of assistance even more so) have tended to be higher when a country's per capita
income is higher, and RRAs have tended to be negative for developing countries and
positive for high-income countries (Anderson 1995). However, since the 1980s the
anti-agricultural policy bias in developing countries and the pro-agricultural bias in
high-income countries have diminished, so that the two groups' average RRAs have
converged toward zero since the mid-1980s (Figures 14.1 and 14.2). The extent and
speed of that movement toward zero varies across regions, however: among develop-
ing countries it has been greatest for Asia and least for Africa, and among high-income
countries it has been greatest for the European Union and not at all for other Western
European countries, apart from the dip in the most recent period (2005-2007), when
international food prices rose steeply (Figure 14.3). Australia and New Zealand are

70

HIC & ECA
HIC & ECA, incl.
decoupled payments
Developing countries

60

50

40

30

20

10

0

1955-59 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04

-10

-20

-30

Figure 14.1 Nominal rates of assistance to agriculture in high-income, transitiona and devel-
oping countries, 1955 to 2004
a Denoted by the World Bank as ECA, for (Central and Eastern) Europe and Central Asia.
Source: Anderson (2009, Ch. 1), based on estimates in Anderson and Valenzuela (2008).