Estimates of Distortions to Agricultural Incentives 1955-2011

The World Bank’s research project on “Distortions to Agricultural Incentives” has produced a core database of Nominal Rates of Assistance to producers, or NRAs, together with a set of Consumer Tax Equivalents, or CTEs, for farm products and a set of Relative Rates of Assistance to farmers in 75 focus countries. This is a detailed core database.

The vast majority of the world’s poorest households depend on farming for their livelihood. In the past their earnings were often depressed by pro-urban and anti-agricultural biases of their own country’s policies. While progress has been made over the past two decades by numerous developing countries in reducing those policy biases, many trade-reducing price distortions remain intersectorally as well as within the agricultural sector of low-, middle- and high-income countries.

This project, in seeking to understand the extent, effects of and reasons behind that transformation, began by compiling new estimates of price distortions over the past half century. National country studies were undertaken in more than 50 countries in Africa, Asia, Latin America, and Europe’s transition economies. They were supplemented with similar estimates and analytical narratives of policy trends in 20 high-income countries. Together those countries account for more than 90 percent of the value of global agricultural output.

The core database provides nominal rates of assistance estimates for the main individual commodities that together account for about 70 percent of the value of farm production in those countries, as well as guesstimates of the NRA for the 30 percent of farm production not covered. Also estimated is the NRA for non-agricultural tradables so as to compute a relative rate of assistance. Consumer tax equivalents are also provided for the covered products in each focus country, along with value of production and consumption at undistorted prices and of trade for each covered product and for non-covered farm products. The working paper no. 4612, available as external resources, serves as the "methodology paper" for this first database.