1. 50 years of measuring support to agriculture in Canada:
Overview and interpretation
Lars Brink
Focus on Fellows Symposium
The Evolution of Policy Directions for Agriculture in Canada
Annual meeting, Canadian Agricultural Economics Society CAES
28-30 June Newport, Rhode Island, USA

2. Outline Origin of (payments + price gap) measurements
Major measurements of support for Canada
Evolution of support over time
The world is changing – what does it mean for measuring support?
Lars Brink

3. Policy affects farmers’ businesses
Because you are an ag producer, government policy has particular provisions for you and your products
Support, protection, transfers, subsidies, benefits, assistance …
Many names for same basic idea
Different contexts and purposes
Why measure policy support?
Compare size and composition of support
Commodities, time, provinces, countries, commitments …
Estimate effects: welfare, trade, prices, income …
Represent support policies one by one in models, or add them up
Lars Brink

4. Government expenditures
Early emphasis:
Government expenditures
Structure of government expenditures
How much goes to whom and where and for what purpose?
Sort accounting expenditures under labels to analyze and discuss
Payments to producers and for government services
Turner’s articles in Journal of Farm Economics 1956 & 1959
Government Involvement in Agriculture 1968
For Federal Task Force on Agriculture
All about expenditures and government cost 386 pages
No mention of price gaps from market regulations or trade policies
Lars Brink

5. Evolution from early years
Idea is obvious today but was not obvious then
Expenditures and border protection
Payments and price gaps
Price gap: compare domestic price to reference price
E.g., border price
Where does price gap interest come from?
Countries’ history of support through border measures only
Supplemented occasionally with some subsidies
International trade frictions
Economic analysis of policies for agriculture
Lars Brink

6. Not just payments, not just price gap
Haberler 1958
“Best way” to measure “total protection”
Difference between price, including subsidy, and border price
That is: add payments and price gap
Compared 1954–55 wheat, barley, egg prices in Canada to world price
Early use of reference prices
GATT and FAO to measure more products and countries
First GATT effort, with FAO participation, failed
GATT Tokyo Round
Lars Brink

7. FAO International Agricultural Adjustment program…
Agricultural protection
Josling “domestic policy and international trade”
1973
PSE Producer Subsidy Equivalent; CTE Consumer Tax Equivalent or “consumer burden”
PSE adds payments and price gap
First operational use of (payments + price gap) in one indicator
; wheat, barley, maize, sugar, milk
Canada, US, UK, France, Germany
Lars Brink

8. OECD and USDA OECD trade mandate 1982 Parallel work in USDA on PSEs
Quantitative modelling
Payments + price wedge from border measures
Adopted PSE
, then , then …
Parallel work in USDA on PSEs
First for US negotiators
And “to facilitate the public debate about liberalizing agricultural trade”
PSEs for 13 products in Canada
Lars Brink

9. Time of GATT Uruguay Round
World Development Report 1986
Nominal Protection Coefficients
CUSTA 1988 Canada-US Free Trade Agreement
PSE comparison triggers removal of import licensing requirement
Uruguay Round
PSE-related measurements; SMU Support Measurement Unit
AMS Aggregate Measurement of Support
TDE Trade Distortion Equivalent (green-box-like idea)
International Agricultural Trade Research Consortium IATRC
“Country lists” with 1988 data
AMSs and green box with data
Lars Brink

10. Canada-specific measurements
Expenditure data in 1950s and 1960s
Direct payments
Statistics Canada data from 1971
Price gaps and payments in 1970s and 1980s
Economic analysis of welfare effects
Several initiatives for data and measurements in 1980s
Government expenditures
Net benefits from 1981 for NTSP National Tripartite Stabilization Program
Lars Brink

11. Ongoing yearly measurements for Canada
1984: Input to OECD PSE and CSE data base
Payments and price gaps; data from 1986 (originally 1979)
1987: Government expenditures in support of the agriculture and agri-food sector
Operating, capital, program, tax; some data from 1981
Evolution over time in coverage and presentation
1995: Notifications to the WTO
Payments and certain price gaps
Lars Brink

12. Long term series on price gaps and payments: More than curiosity value
Australia (not Canada!)
Nominal Rate of Assistance ,
Lloyd & MacLaren 2014, 2015
Canada
Expenditures
Berthelet 1985
Payments, price gaps
Lattimore 1983
Revealed comparative advantage
Sarker & Ratnasena 2014
World Bank
Nominal Rate of Assistance
Distortions to agricultural incentives; Anderson et al. 2013
Lars Brink

13. Nominal Rate of Assistance %, Canada
Wheat
Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
Lars Brink

14. Nominal Rate of Assistance %, Canada
Pigmeat, Wheat
Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
Lars Brink

15. Non-product-specific, Pigmeat, Wheat%
Non-product-specific, Pigmeat, Wheat
Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
Lars Brink

16. Nominal Rate of Assistance %, Canada
Milk
Agriculture
Nominal Rate of Assistance %, Canada
World Bank “Distortions to Agricultural Incentives”
Lars Brink

17. Source: Bonti-Akomah, S. , J. Vignola, and M. Cahoon. 2015
Source: Bonti-Akomah, S., J. Vignola, and M. Cahoon An overview of the Canadian agriculture and agri-food system Research and Analysis Directorate, Agriculture and Agri-Food Canada, April.
Lars Brink

18. Source: Bonti-Akomah, S. , J. Vignola, and M. Cahoon. 2015
Source: Bonti-Akomah, S., J. Vignola, and M. Cahoon An overview of the Canadian agriculture and agri-food system Research and Analysis Directorate, Agriculture and Agri-Food Canada, April.
Lars Brink

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27. Measuring policy effect is different from measuring policy effort
Measuring distortion differs from measuring support
Analysis of policy effect needs data on policy effort
Analyst builds own “data set” on policy effort
Usefulness of data set for others is incidental
Analyst draws on comprehensive “data base” on policy effort
User selects and sorts for own use in analysis
User wants to know what is captured in data
Implementation criteria and detailed documentation
Lars Brink

28. Shifting needs for data on policy effort
Policy effort now more stable
Agricultural Policy Framework 2003, Growing Forward I and II
International context
Changing focus in trade policy
Negotiate new market access; enforce existing discipline on support; negotiate tightening for some, loosening for some
Size and nature of producer support in other countries
Subsidy envy: not only about EU and US but also emerging producers
“Structure, conduct and performance”, value chains
Particular commodity sectors
Lars Brink

29. Where does measurement of support fit?
Today’s interests in agriculture and agri-food, such as
Can governments keep up data work on support and on new important topics?
Would there be public data on size and composition of PSE if it was not required from Canada as OECD member?
Does data base work get enough resources to prevent deterioration?
If not government, who could collect & supply data on policy effort?
Potential consequences for future policy analysis?
Innovation and research
Food safety
Environment, water, sustainability
Pest and disease control
Climate change: adapt and mitigate
Food and health
Lars Brink

30. Thank you!