What impact are subsidies and trade barriers abroad having on Australasian and Brazilian agriculture?

Abstract

This paper provides new estimates of the extent and economic effects of agricultural policies that provide domestic support or import protection to farmers in countries that compete in the global marketplace with unsubsidised farmers. Analyses earlier this century found that import market access barriers accounted for more than 90 per cent of the global welfare cost of all assistance to farmers, with domestic support measures providing as little as 5 per cent. Since then the share contributed by domestic support has grown greatly in some high-income and emerging economies, thanks to policy re-instrumentation. Using the latest version of the GTAP model and database of the global economy, this paper estimates the economic effects of direct farmer subsidies, and of the producer subsidy and consumer tax equivalents of farm trade policies, on farmers in three lightly assisting countries. The estimates adjusted for country size suggest the effects on agricultural exports, net farm income and national economic welfare of such policies are far more adverse for Australia, Brazil and especially New Zealand than for the rest of the world, and that domestic supports abroad are much more important contributors to those losses now than they were at the start of this century.