However, this does not mean that these types of insurance are widely used in these countries.
For instance, the level of insurance coverage is rather low in Italy, despite the fact that national legislation promotes the use of these instruments. In general, these insurances are not very attractive for farmers due to their high premium costs. Both single and combined risk insurances are also available in Bulgaria, the Czech Republic, Hungary, Poland, Portugal, Slovenia, Slovakia, and Sweden; yet they only cover hail damage and a few other risks. In Belgium, Germany, the Netherlands, and the United Kingdom, there is no public support for insurances at all.
Single risk insurances are the main instrument to protect farmers in these countries, especially for hail damage, and there is a lack of coverage against other types of risks. Insurance systems are even less developed in some Northern European countries, such as the Baltic States.
Finally, Cyprus manages their insurance schemes in a different way as the others, since farmers are obliged to subscribe for insurances provided by the government. The table below gives an overview of some of these trigger rates for the types of insurance in the EU member states. The United States is the largest exporter of agricultural commodities in the world and has a big domestic market for these products. The country shifted its agricultural policy away from the traditional price support schemes with the Farm Bills of , and , in order to fulfil the requirements of the WTO.
To compensate farmers for these reduced market payments, there was a move towards direct payments with the and Farm Bills, which introduced the counter-cyclical payment programmes of the CCP and ACRE. As a result, fixed direct payments became the most important source of support for farmers from the s until The current US agricultural policy for the period is described in the Farm Bill, which was approved around the same time as the last CAP reform. Producers can only enrol in one of these two instruments, and subsidies are limited to a maximum of , dollars per person.
The cost of the PLC programme was approximately Additionally, a new dairy margin protection programme was created to compensate farmers when national milk prices drop too close to feed costs. The amount of indemnity payments given by the US government depends on the annual coverage decision made by the dairy farmer.
Crop insurance programmes are now the main policy tools used to support US Farmers. The Farm Bill maintains and strengthens the existing crop insurance programmes under the Common Crop Insurance Policy, and expands their scope to other products organic products, bio-energy crops and speciality crops and other elements such as livestock diseases, specific production practices, and business interruption. This programme enables cotton producers to obtain an area wide group-risk insurance as a supplementary insurance or a stand-alone policy.
The financial support for insurances against natural disasters was also extended, as the Farm Bill reauthorised and modified certain Supplemental Agricultural Disaster Assistance programmes. The total budget cost of the Farm Bill is estimated to be billion dollars for the period , and almost billion dollars for the next ten years. In short, the US agricultural policy uses a very different set of tools and instruments to deal with price and income volatility for farmers than those available through the CAP.https://ejunyqinod.tk
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While the EU provides direct payments to support the income that farmers receive from the market for their products, the U. Brazil is a major player on international agricultural markets, being the third largest exporter of agricultural products behind only the European Union and the United States. Due to productivity improvements, agricultural output has doubled and livestock production has trebled since The Brazilian agricultural policy is characterised by a dual structure, as it is designed by two separate Ministries: the Ministry of Agriculture, Livestock and Procurement MAPA focuses on commercial agriculture, while the Ministry of Agrarian Development MDA deals with small-scale family farmers.
Rural credit is the main source of government support to both commercial and family farmers. Through several credit allocations, the MAPA aims to improve the marketing, working capital, and investments of commercial farms. In order to ensure these preferential loans, the government can compensate banks by paying a part of the costs for reducing the interest rate. Specific agricultural sectors benefit significantly from these rural credit programmes and targeted fiscal policies.
For instance, the Brazilian government strongly encourages the production of biofuels through these instruments. In particular, concessional credit programmes are provided to oilseeds and biofuel crop producers, ethanol storages are publicly funded through the Moderinfra programme, and a special credit line for sugar producers Prorenova was created to overcome the shortage of sugar in the ethanol industry. The consumption of biofuel has also been promoted through tax cuts for owners of cars running on combinations of ethanol and diesel. Furthermore, since a high amount of outstanding debt is a longstanding issue in Brazilian agriculture, credit support has also been provided to producers through debt rescheduling.
For both large- and small-scale farmers, there have been several debt renegotiations throughout the s and s, which involved reductions in interest rates on overdue debt and extensions of the repayment terms. These concessional credit programmes have expanded consistently in the last years, reaching 76 billion dollars in The subsidies for this credit provision are estimated to have reached 10 billion dollars for the year Minimum guaranteed prices also continue to be a significant pillar of the Brazilian agricultural policy, and aims at protecting farmers against sharp drops in market prices.
For the government purchases, the CONAB directly buys agricultural products from family farms at market prices, and distributes these as part of food programmes or uses them to replenish their food stocks. Meanwhile, the minimum price programmes ensure that farmers receive a guaranteed price for their products based on their production costs. Examples of support prices per tonne include dollars for wheat, dollars for corn and dollars for rice in The general PROAGRO programme is designed to help producers who have troubles to finance their rural credit due to heave income losses caused by natural disasters and diseases.
Farmers pay a premium fee to this programme based on a variety of indicators the type of crop, the applied technology, the area of production etc. When the MAPA decides that the crop failures are significant enough, farmers are exempt from the financial obligations on their rural credit. This support is limited to a maximum of dollars per farmer.
Finally, family farms in specific areas in the Northeastern and Southeastern regions of Brazil can participate in the GS programme. In , commercial agricultural producers received million dollars in insurance subsidies through the general insurance programme and million dollars through the rural insurance programme. In short, domestic support to Brazilian agricultural producers is provided mainly through subsidised credit, and complemented by price support measures and insurance policies, which aim at stabilising the prices for agricultural products and protecting the incomes of both large-scale and family farmers.
China has not only become the largest agricultural producer in the world, but is also a large net importer of agro-food products, as it feeds almost one fifth of the global population. The financial support for its agricultural sector has increased significantly in the last decade and continues to grow every year. The main instruments of the Chinese agricultural policy consist of minimum guaranteed prices for wheat and rice, and ad hoc market interventions for other agricultural commodities. In combination with tariffs, tariff rate quotas TRQs , and government controls, these instruments ensure that farmers receive a minimum level of prices for their products.
Additionally, a variety of other programmes gives further financial support to Chinese farmers: direct payments for grain producers; subsidies for agricultural inputs fertilisers and energy , improved seeds, and machinery; and financial contributions to agricultural insurance schemes.
Price guarantees are limited to the biggest grain-producing provinces and differ for the various types of grain. In , average support prices per tonne are estimated at dollars for wheat, dollars for corn and dollars for rice. Intervention purchases are made by the state-owned China Grain Reserves Corporation Sinograin if the market price for wheat, corn and rice drops below certain levels. This requires large public stocks, which are managed by the State Grain Administration. The cost of maintaining these stocks was 8.
For other agricultural commodities, ad hoc market interventions are possible at fixed prices, although these are not always executed and there are significant regional differences. Nevertheless, in recent years policy reforms abandoned the stocks for cotton and soybeans, and replaced them with a system of compensatory direct payments if prices fall below a certain level.
This type of reform could be extended to other commodities in the future.
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The amount of budget transfers provided through these price interventions has risen significantly since the end of the s, as the minimum prices have been increased every year. Grain producers also receive direct payments to support their production and stabilise their incomes. They are paid at a flat rate per unit of land, which consists of 24 or 36 dollars per hectare, depending on the region. Government spending on these direct payments involves 2. Subsidies on agricultural inputs are provided to compensate grain producers for increasing prices of fertilisers, energy, and fuel.
The Improved Seed Variety Subsidy programme provides subsidies for farmers to enable them to improve the quality of their seeds. The implementation of this subsidy depends on the product: while the national government makes cash payments based on land for rice, maize and rapeseed, the provinces can make direct payments or reductions on the prices of seeds for wheat, soybean and cotton.
Farmers receive 24 or 36 dollars per hectare, depending on the commodity. However, it is not monitored if these funds are actually being used for seed purchases. This subsidy programme currently covers 12 categories and 48 sub-categories of machines. In theory, state contributions are limited to 7 dollars per single item, but these subsidy ceilings are never enforced in practice. The budgetary transfers for these programmes involved Depending on their nature, subsidies can inflict significant damage on producers in other countries, as well as on domestic taxpayers and consumers.
Within industrial countries, this assistance is costly and regressive since much of the benefit accrues to large farms, and price supports hurt low-income consumers most, because they spend a larger share of household expenditure on food. In other countries, especially the poorer ones unable to compensate for losses through measures of their own, the over-production stimulated by these measures reduces prices and incomes from the affected products and subjects them to greater volatility.
Related Agricultural Policies in OECD Countries 2009: Monitoring and Evaluation (Agriculture)
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