World Food Policy Volume 1, Number 1, Spring 2014 | Page 13

World Food Policy

Food Price and Trade Policy Evolution Since the 1950s:
A Global Perspective1
Kym Anderson2

In both rich and poor countries, food markets have been subjected to some of the
most heavy-handed governmental interventions. Policy developments in this sector
since the 1950s have been mostly gradual but persistent, involving in many cases
a change from taxing to subsidizing farmers—and from subsidizing to taxing food
consumers—as national per capita incomes grow. In a few important countries there
also have been transformational policy reforms, and in all countries there tends to
be only partial short-run transmission of international price fluctuations to domestic markets—a tendency that has not declined over time. This paper summarizes indicators of these trends and fluctuations in price-distorting impacts of policies for a
sample of 82 countries, using a global set of annual data from 1955 to 2011. It then
draws implications for what policy interventions might evolve over coming years,
especially as emerging economies attain and move beyond middle-income status.
JEL codes: F13, F14, N50, Q17, Q18
Keywords: Distortions to food markets, nominal rate of assistance, welfare reduction
index

Introduction

trade has been to protect domestic producers
from import competition as they come under competitive pressure to shed labor. Such
measures harm not only domestic food consumers and exporters of other products but
also foreign producers and traders of food
products. For decades, agricultural protection and subsidies in high-income (and some
middle-income) countries have depressed
international prices of farm products, lowering the earnings of farmers and associated rural businesses in developing countries.
Meanwhile, developing countries’
policies have further depressed the price incentives for their farmers, thus exacerbating
the deleterious effects on them of the richer

A

gricultural and food industries have
been subjected throughout history to perhaps more governmental
interventions than any other sector of national economies. As of 2004, agricultural trade-related policies are estimated to
account for 70 percent of the global welfare cost of the world’s merchandise trade
distortions, even though the agricultural
sector contributes only 6 percent of global
trade and 3 percent of global GDP (Anderson, Cockburn, and Martin 2010, Table 2.3).
For advanced economies, the most
commonly articulated reason to restrict food

1

This paper draws on one section of a recent survey, co-authored by Gordon Rausser and Johan Swinnen, published in the June 2013 issues of the Journal of Economic Literature. I thank those co-authors for
their insights, and also Signe Nelgen for assistance with the figures and tables. Financial support from the
Australian Research Council and Rural Industries Research and Development Corporation is also gratefully
acknowledged.
2
George Gollin Professor of Economics, School of Economics, University of Adelaide; CEPR Fellow; and
Professor of Economics, Arndt-Corden Department of Economics, Australian National University, Canberra.
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