1. Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES OECDOCDE OECD Work on Agricultural Policies in Brazil, China, India, South Africa Wayne Jones Directorate for Food, Agriculture and Fisheries

2. 2 Pressures for reforms (1980s and 1990s) Macroeconomic crisis –Brazil, SA and India: foreign and domestic debt burden, BoT deficit, high inflation –China: overall economic inefficiency Political changes –Brazil: military regime replaced by elected government –China: change in communist leadership –SA: end of apartheid, democratic elections, lift of international economic embargo –India: political instability, minority governments

3. Directorate for Food, Agriculture and Fisheries 3 Overall economic reform Change of development paradigm –from self-sufficiency and import substitution, to economy opening and export-led growth Economic liberalisation –broad and swift in Brazil and SA; gradual in China and India –deregulation of domestic markets and prices –trade liberalisation –privatisation Depreciation of the local currency followed by tight fiscal and monetary policies

4. Directorate for Food, Agriculture and Fisheries 4 Agricultural policy reform Deregulation of domestic markets and prices for agricultural commodities –radical in Brazil and SA; gradual in China and India Opening of agricultural markets –cuts in import tariffs; –elimination/limitation of STEs; –progress in regional and international trade integration Reduction and/or refocusing of budgetary support

5. Directorate for Food, Agriculture and Fisheries 5 Land and structural reforms –Brazil: Land Reform Plans and National Programme for the Strengthening of Family Agriculture (PRONAF) –China: Household Production Responsibility System; explosion of Township and Village Enterprises –SA: Land Reform Programme and Broad Based Black Economic Empowerment for Agriculture (AgriBEE) –India: early stage of land market reform Institutional changes

6. Directorate for Food, Agriculture and Fisheries 6 Sources of agricultural growth Agricultural growth driven by: Expansion of domestic and external demand Macroeconomic stabilisation and economic opening And based on: Land productivity improvements Shifts in production structure consistent with comparative advantage –China, India and SA: labour-intensive horticulture and livestock –Brazil: soybeans, sugar-cane, and livestock

7. Directorate for Food, Agriculture and Fisheries 7 Agricultural Trade Expanded Source: Comtrade BrazilChina India S.Africa 19932003

8. Directorate for Food, Agriculture and Fisheries 8 Rural poverty incidence fell, but remains high, as does inequality Sources: Brazil – Income survey (PNAD); India – Income surveys (NSSO); China and South Africa – WB estimate 1991 2000 1990 2000 1993 1999 1993 2000

9. Directorate for Food, Agriculture and Fisheries 9 Policy Challenges: Sustaining Agricultural Growth Focus on: Rural infrastructure Land and labour mobility Terms & availability of credit Tax policies Environmental sustainability (water availability and quality) Access to overseas markets

10. Directorate for Food, Agriculture and Fisheries 10 Policy Challenges: Reducing Social Divisions Growth necessary but not sufficient: Social policies Integration of small-scale farming into markets Rural economy diversification Enhanced labour mobility Investments in human capital: health, education, and extension

11. Directorate for Food, Agriculture and Fisheries 11 Tentative Conclusions Reform is possible Macro-economic stability is important Farmers respond swiftly to market forces Reform enhances agricultural growth Ag. growth reduces poverty – but not enough Infrastructure improvement is decisive Human capital improvement is crucial Non-ag. policies are important drivers OECD reform is necessary, but not sufficient