Agrimonitor:

PSE Agricultural Policy

Monitoring System in

LAC

INE/RND

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.

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

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).

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.

High uneven distribution and level of

support in LAC Region

High levels of Market Price Supports (MPS) are a major

inhibitor of regional integration.

Very low level of support for GSSE, which are

limiting productivity and competitiveness

Consumer Support Estimate (CSE) shows the burden

on consumers from price policies affecting medium

and low income consumers

Public expenditure on rural public goods has greater

economic returns than that spent on private goods

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)

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