Food Price and Trade Policy Biases - The Oxford Topic of Food, Politics, and Society - page 371

past policy reforms, and would gain nearly twice as much as high-income countries
by completing that reform process (an average increase of 0.9 percent compared with
0.5 percent for high-income countries). Of those prospective welfare gains from global
liberalization, 70 percent would come from agricultural and food policy reform. This is
a striking result given that the shares of agriculture and food in global GDP and global
merchandise trade are only 3 and 6 percent, respectively. The contribution of global
farm and food policy reform to the prospective welfare gain for just developing coun-
tries is even slightly greater, at 72 percent.
Third, the share of global farm production exported (excluding intra-European
Union trade) in 2004 was slightly smaller as a result of those reforms since 1980-1984,
because of less farm export subsidies: the 8 percent share of production exported for
agriculture in 2004 contrasts with the 31 percent share for other primary products and
the 25 percent for all other goods. If the policies distorting goods trade in 2004 were
removed, the share of global production of farm products that is exported would rise
from 8 to 13 percent, thereby “thickening” international food markets and thus reducing
the instability of international prices and the quantities of those products traded.
Fourth, the developing countries' share of the world's primary agricultural exports
rose from 43 to 55 percent between 1980-1984 and 2004, and its farm output share rose
from 58 to 62 percent, because of those reforms, with rises in virtually all agricultural
industries except rice and sugar. Removing remaining goods market distortions would
boost their export and output shares to 64 and 65 percent, respectively. That is, the past
and current pattern of price distortions means there has been far more farm production
in high-income countries, and less in developing countries, than would have been the
case without those distortionary policies in both sets of countries.
Fifth, for developing countries as a group, net farm income (value added in agricul-
ture) is estimated to be 4.9 percent higher than it would be without the reforms of the
past quarter century, which is more than ten times the proportional output gain for
nonagriculture.
Consequences for Income Inequality and Poverty
To assess the effects of the world's agricultural and trade policies as of 2004 on income
inequality and poverty within and between individual countries and country groups,
Anderson, Valenzuela, and van der Mensbrugghe (2010) also used the World Bank's
global Linkage model. Their results suggest that developing countries would gain nearly
twice as much as high-income countries in welfare terms if 2004 agricultural and other
trade policies were removed globally. In this broad conception of the world as just two
large country groups, global trade reform would reduce international inequality. The
results also indicate that net farm incomes in developing countries would rise by 5.6 per-
cent, compared with 1.9 percent for nonagricultural value added, if those policies were
eliminated. This suggests that inequality between farm and nonfarm households in
developing countries would fall. By contrast, in high-income countries, net farm incomes