This study reviews policy developments in recent years and, in the light of that, explores ways in which further consensus might be reached among WTO members to reduce farm trade distortions – and thereby also progress the multilateral trade reform agenda. Particular attention is given to ways that would boost well-being in developing countries, especially for those food-insecure households still suffering from poverty and hunger.
Why open agricultural trade matters
There is overwhelming conceptual and empirical support for the claim that opening to trade can raise the level and growth of national income. That can in turn provide the wherewithal to reduce poverty, hunger and under-nutrition, and also boost diet diversity, food quality and food safety, and thereby ultimately boost national and global food security, health and well-being. The economic benefits of openness are proportionately greater, the smaller is the national economy. Such gains are even greater if accompanied by a freeing up of domestic product, factor and other input markets.
Policy reforms since the 1980s: much achieved, much still needed
For several decades prior to the 1980s, agricultural protection and subsidies in highincome countries had been depressing international prices of farm products. As well, governments of newly independent developing countries often directly taxed farm exports, as well as harming farmers indirectly with an industrialization strategy that involved restrictions on imports of manufactures and an overvalued currency. Since an important aspect of those price-distorting policies was their anti-trade bias, they reduced the quantity of farm products traded internationally. This meant that food prices were more volatile in international markets than they otherwise would have been.
Since the mid-1980s, many countries have been reforming their agricultural, trade and exchange rate policies. In addition to farm policy reforms in high-income countries, reforms in developing countries since the 1980s have reduced greatly their anti-agricultural distortions. These two parallel sets of reforms are as dramatic as the policy changes in those countries in the preceding three decades.