ED Entreprise Economie Société
Farm Subsidy and Trade Policies in Agriculture: Impact on Productivity and Price
by Abdullah MAMUN (BSE - Bordeaux sciences économiques)
The defense will take place at 10h00 - H2-108 BSE University of Bordeaux 16 avenue Léon Duguit Bât. H2 CS 50057 33608 Pessac CEDEX +33 (0)5 56 84 25 75
in front of the jury composed of
- Antoine BOUET - Full professor - Université de Bordeaux - Directeur de these
- Raphael CHIAPPINI - Associate Professor - University of Bordeaux - CoDirecteur de these
- Jean-Christophe BUREAU - Professeur - Agro-ParisTech Paris Saclay - Rapporteur
- Alexandre GOHIN - Directeur de recherche - INRAE SMART Rennes - Rapporteur
- David LABORDE - Chercheur - Food and Agriculture Organization - Examinateur
The agricultural sector receives a wide range of support from the governments across the world as the concerns for food security and price stability are widespread and have implications in political stability and economic prosperity. The supports come in different forms – market support through mostly trade policies and subsidies from government budgets. Despite huge amount of farm support, we experienced high food price crises during 2006-08, 2010-11, and 2022 following Russia-Ukraine war. Questions remain about what impact farm support policies can have on global agriculture productivity. On the other hand, market price support induced by trade policies such as export tax, ban, licensing, quota etc. are found to be less able to contain domestic price volatility in many economies. It is thus relevant to study what determines such trade policies and to what extent trade policies are effective in price transmission and reduce volatility. First, the impact of subsidies on productivity growth in agriculture globally is examined using a long time series on the nominal rate of assistance for 42 countries that cover over 80 percent of global agricultural production. A conditional convergence model of productivity growth reveal heterogenous effects of various subsidy instruments depending on the choice of productivity measure. Regression results suggest a strong positive effect of input subsidies on both output growth and labor productivity. A positive but relatively small impact of output subsidies is found on output growth only. Drivers of export restrictions on agricultural products are often under investigation. Food price crises from 2007 to 2022 and the episodes of export restrictions are studied. Findings from a fitting a probabilistic model, using key variables such as domestic inflation rate and international price changes, suggest that the inflation rate has a higher power to predict export restrictions than international commodity prices. The probability of export restrictions increases more when price change is measured from a reference level in the long interval than the short interval. Among the covariates, agricultural land per capita, commodity share in production and export, weather conditions increase the chances of imposing export restrictions. Per capita income, population density, share of agriculture in GDP, and political economy indicators have negative influence on export restriction. Finally, the price volatility, and price transmission from the changes in international market are modeling in an error correction model (ECM) for the grains and oilseeds sector. The trade measures implemented by the countries during many food price crises made the situation worse by contributing to price volatility and looking even larger. Findings suggest that both the extent of price insulation and the scale of magnification of international price shocks differ between these two commodity groups. Magnification effect due to incomplete price transmission is higher in the grains market than in the oilseeds sector. It is revealed that the idiosyncratic trade policy shocks are more responsible in making domestic price volatile.