2014年-世界发展银行全球_Review_Estimation_and_Analysis_of_Agricultural_Subsidies_in_Mongolia_50页_1mb

Summary of Review, Estimation and Analysis of Agricultural Subsidies in Mongolia

Core Content

This report provides an in-depth review, estimation, and analysis of agricultural subsidies in Mongolia, focusing on their role, effectiveness, and economic implications. It was prepared by the World Bank in collaboration with the Mongolian Government, particularly the Ministry of Industry and Agriculture (MIA), and aims to serve as a tool for monitoring public expenditures and improving the design of subsidy programs.

Main Viewpoints

• Agriculture's Role in Mongolia:
  The agriculture sector is a major contributor to the Mongolian economy, providing 43% of employment. Livestock accounts for 7 out of 10 jobs in the sector and contributes significantly to GDP. However, the sector faces challenges due to periodic natural disasters, limited crop productivity, and the impact of global food price volatility.

• Subsidy Programs:
  Agricultural subsidies in Mongolia are primarily provided through direct government budgetary transfers, including the Crop Protection Fund, Livestock Conservation Fund, and Small and Medium Enterprises Development Fund. These programs aim to support production, stabilize prices, and improve competitiveness.

• Subsidy Trends:
  While direct government budgetary transfers to agriculture have increased over the period 2008–2012, the total producer support (PSE) has not. This suggests that subsidies are often compensating for lower domestic prices rather than improving production efficiency.

• Market Price Support (MPS):
  The report emphasizes the importance of considering implicit support through market price support for wheat and wool, which are the most traded commodities. The negative MPS values indicate that the government is effectively subsidizing producers to offset the gap between domestic and international prices.

• Sectoral Analysis:

  • Crop Subsidies:
    These include wheat price support and soft loans for machinery, fuel, seeds, and chemicals. Wheat production increased threefold between 2007 and 2012, but the PSE for crops dropped significantly after 2010.
  • Livestock Subsidies:
    These are mainly through the Livestock Conservation Fund and the National Mongolian Livestock Program (MNLP). Livestock subsidies have been higher than crop subsidies, but they have not contributed to long-term food security or economic efficiency. The MNLP is not fully funded and implementation remains incomplete.
  • Agro-processing Subsidies:
    These include support for flour mills and processors of cashmere, wool, and meat. The aim is to modernize processing facilities and increase value-added production.

• Producer Support Equivalent (PSE) Analysis:
  The PSE for the primary agriculture sector declined from 13–17% in 2008–2010 to less than 1% in subsequent years. For comparison, Mongolia's PSE was much lower than OECD countries (18.6%), China (16.8%), Kazakhstan (14.6%), and Russia (13.5%) in 2012. Only Ukraine (1.3%) and Turkey (-7.3%) had lower PSE values.

• Fiscal and Economic Impact:
  The report highlights the fiscal burden of subsidies, noting that they exceed the MIA's investment budget and are nearly nine times higher than expenditures on agricultural R&D. It recommends reallocating resources towards R&D, infrastructure, and market efficiency to improve long-term outcomes.

Key Information

• Subsidy Types:

  • Direct payments to farmers and herders.
  • Subsidized soft loans for agricultural inputs and machinery.
  • Market price support for wheat and wool.
  • Support for agro-processing activities.

• Institutional Structure:
  Subsidy programs are managed by the MIA, Ministry of Finance, and other relevant agencies. The National Statistical Office (NSO) and the World Bank provided data and analysis support.

• Methodology:
  The study uses OECD methodology to calculate PSE and includes both direct and indirect subsidies. It also evaluates the impact of subsidies on production, terms of trade, and fiscal sustainability.

• Challenges Identified:

  • Inconsistent and overlapping subsidy objectives.
  • Environmental concerns due to overstocking of livestock.
  • Limited effectiveness of subsidies in promoting long-term economic efficiency and food security.
  • Need for improved market structures and reduced reliance on direct subsidies.

• Recommendations:

  • Rationalize subsidy programs to align with clear, non-overlapping objectives.
  • Invest in general services support, such as R&D, education, and infrastructure, which are more effective than direct subsidies.
  • Improve market efficiency and reduce the need for direct subsidies by analyzing market structures and performance.
  • Implement a smart subsidy strategy that promotes pro-poor growth, local market development, and competition in input supply.
  • Follow the MNLP framework for livestock support rather than ad-hoc payments.

Conclusion

The report underscores the importance of accurate estimation and regular monitoring of agricultural subsidies in Mongolia. While subsidies have played a role in stabilizing production and prices, their overall impact has been limited in terms of long-term economic efficiency and environmental sustainability. A shift towards more targeted and effective subsidy strategies, supported by public investment in general services and market reforms, is recommended to improve the outcomes of agricultural policy.