2013年-世界发展银行全球_What_is_the_Cost_of_a_Bowl_of_Rice____The_Impact_of_Sri_Lankas_Current_Trade_and_Price_Policies_on_the_Incentive_Framework_for_Agriculture_66页_1mb

Summary of "What Is the Cost of a Bowl of Rice?"

Core Content

This report analyzes the impact of Sri Lanka's current trade and price policies on the incentive framework for agriculture. It explores how these policies affect farmers, consumers, and government revenue, and provides insights into the efficiency and distributional consequences of agricultural trade policies.

Main Objectives

• To quantify the level of support for farmers producing import-competing products.
• To assess the degree to which final consumers are indirectly taxed by these policies.
• To evaluate the extent of taxation on agricultural exports.
• To examine the contribution of trade policy to government revenue.
• To assess the cost-effectiveness of the fertilizer subsidy scheme.
• To better understand the income transfers between producers, consumers, and the government.

Key Findings

1. Trade Policy and Agricultural Incentives

• Sri Lanka has historically been an open economy, but since 2004, it has adopted more inward-looking policies, focusing on import substitution.
• These policies create a complex trade regime that protects import-competing agricultural products, such as rice, potatoes, and milk, while imposing taxes on export-oriented products like tea and rubber.
• The effective rate of protection (ERP) for import-competing products is high, meaning that domestic producers receive higher incomes due to these policies.
• In contrast, the ERP for exportable products is negative, implying that producers of such goods suffer from lower incomes.

2. Fertilizer Subsidy Analysis

• Fertilizer subsidies represent a large portion of the agriculture budget, with 68% in 2009 and 59% in 2010.
• The cost-effectiveness of the fertilizer subsidy is low, with an efficiency ratio of 1.37 to 2.38. This means the government spends between 1.4 and 2.4 rupees per acre to increase farm income by only 1 rupee per acre.
• The subsidy is not effectively used for export-oriented crops like tea and rubber, which are more affected by export taxes.

3. Income Distributional Implications

• The current trade and price policies have significant income distributional effects.
• Consumers, particularly lower and middle-income households, bear a large implicit tax burden due to high import protection rates.
• Rural poverty remains high, with a headcount of 9.4% in 2009/10, and the poor suffer more from the negative effects of these policies on real income.
• The analysis shows that the poor experience larger relative income losses compared to non-poor households, even though the absolute losses are smaller.

4. Impact on Agricultural Sector

• The high level of protection for agricultural imports and the taxes on exports have distorted the agricultural sector.
• These distortions affect not only product markets but also the demand for inputs, land, water, and labor.
• The current system may hinder the development of new products and export diversification, as it encourages a focus on protected activities.
• The policy framework may unintentionally reduce the competitiveness of the agricultural sector, especially for export-oriented products.

5. Policy Implications

• The Mahinda Chintana, Sri Lanka's National Development Plan, emphasizes agricultural competitiveness and export promotion.
• The de-facto disincentives to export are likely an unintended consequence of the complex and ad hoc nature of the trade policy system.
• There is a need to reassess the current system of taxes, levies, and trade policies to align with the policy goals of the Mahinda Chintana.
• Public investments in areas with positive externalities, such as agricultural research and rural infrastructure, could yield higher returns for the economy.

Main Viewpoints

• High import protection leads to higher farm incomes for certain products but imposes a significant tax burden on consumers.
• Export taxes reduce investment in export-oriented activities and may hinder growth.
• Fertilizer subsidies are costly and inefficient, with limited returns on investment.
• Income distribution is significantly affected, with the poor and small-scale farmers suffering more from the negative impacts of trade and price policies.
• Trade reforms are essential for improving the competitiveness of the agricultural sector and promoting a more efficient allocation of resources.
• Linking trade and price policy reforms with complementary reforms in factor markets (such as land and irrigation) is crucial for a smooth transition to a more competitive and sustainable agricultural system.

Key Information

• Import-competing products (e.g., rice, potatoes, milk) are heavily protected, with ERP ranging from 34% to 52%.
• Export products (e.g., tea, rubber, coconuts) face various taxes, including export cessions and levies, which reduce producer incomes.
• Fertilizer subsidy is the largest component of the agriculture budget, but its cost-effectiveness is low.
• Rural poverty remains a significant issue, with about 9.4% of the rural population living in poverty.
• Trade policies have created a complex and uncertain environment for private investment in agriculture and agro-processing.
• Public investment in areas with positive externalities (e.g., agricultural research, rural roads) is more beneficial for the economy than subsidies that distort resource allocation.

Conclusion and Recommendations

• The current trade and price policies are not aligned with the long-term goals of the Mahinda Chintana.
• A reassessment of the trade and price policy framework is necessary to ensure it supports the development of a competitive and sustainable agricultural sector.
• Trade reforms should be linked with reforms in factor markets to allow for more efficient resource allocation and crop diversification.
• Public investment should focus on areas that generate positive externalities, rather than on subsidies that may not be effective.
• There is a need for greater transparency and coherence in the policy framework to reduce unintended consequences and promote inclusive growth.