ISU Professor Leads Report on Agricultural Trade Reforms for World Bank

John Beghin, Martin Cole Endowed Chair and professor of economics, (515) 294-5811;
Sandy Clarke, CARD communications;

January 11, 2005

An agricultural trade expert at Iowa State University was recently enlisted by the World Bank to bring top analysts together to sort through the multiplicity of effects from protections and policy reforms in agricultural markets.

The resulting report, Global Agricultural Trade and Developing Countries, released on January 10, points to agricultural protection as a continuing problem in ongoing global trade negotiations, especially for developing countries.

John Beghin, the Martin Cole Endowed Chair in the Department of Economics and Center for Agricultural and Rural Development (CARD) at Iowa State University, edited this new report on agricultural trade reforms, along with colleague Ataman Aksoy.

"The World Bank has been challenged by many critics to provide a deeper and more relevant assessment of farm and trade policy and their effects than they have done previously," says Beghin. The organization provides loans, policy advice, and technical assistance to low- and middle-income countries.

A key finding of the report is that agricultural protection, in the form of border protections and domestic subsidies, continues to be a major factor affecting world markets. Protection remains high in industrial countries, while many developing countries have liberalized their agricultural sectors.

"Rural income opportunities for the lowest-income countries are reduced because the policies of higher-income countries depress world prices," says Beghin. "Agricultural trade liberalization would induce significant price increases for most commodities."

The report shows the detrimental effects of multilateral trade liberalization for some countries, as a result of lost preferential trade agreements and higher prices of commodities for consumers. Given the complexities of specific issues in agriculture, the report calls for a global solution for market liberalization.

"Rather than being self-contained, agricultural trade negotiations should involve concessions on other sectors and issues to identify overall reform packages that are palatable to all parties," says Beghin.

The report presents first an investigation of the major cross-cutting issues in agricultural and food trade. This is followed by specific studies of nine commodities that feature distorted policy regimes among industrial and developing countries or that are important exports of developing countries. Several of the studies relied on earlier analysis of the Food and Agricultural Policy Research Institute at CARD.

The studies document the magnitude of distortions in the current policy regimes and estimate the winners and losers of trade and domestic policy reforms. This information is important for policymakers as they approach global negotiations and evaluate their domestic policies.

Beghin says he hopes the report sheds light on the pernicious effects of distortions in agricultural markets. The studies attempt to show the implications of leveling the playing field in agricultural trade.

"It took eight rounds of World Trade Organization negotiations to dismantle protection in manufacturing," he says "and it may take as long to remove protectionism in agriculture and food markets. So the intellectual debate on agricultural distortions will last for a while!"

Beghin has joined others involved in the project on an informational tour, with stops at the World Trade Organization headquarters in Geneva, Food and Agriculture Organization in Rome, and the Organization for Economic Cooperation and Development in Paris.

More information on this report is available at the World Bank Web site.