In accordance with the widely adopted market-oriented economic principles, most countries in Latin America and the Caribbean have progressed in the process of deregulation, privatization and external opening of their economies. Along with the rest of the economy, regional policies have progressively emphasized the role of market forces in agriculture as the main mechanisms for resource allocation. This process implies a redefinition of the role of the public sector in agriculture. As shown by the region's recent experience, radical changes in strategy involve the risk of falling from one extreme to another, that is, from an excessive intervention in the productive market mechanisms to an excessive absence of the public sector.
These issues gain relevance in the context of the generally moderate performance of regional agriculture production in recent years. Among the various factors behind such trends, what has been the role of the new policy strategies? More specifically, do farmers overall, or at least a large number of them, risk being the great losers of free-market reform? Although this much debated question can only be answered in the longer term, the issue has immediate implications for policy-makers.
The present study analyses the significance of this new economic context for the design of policies for the agricultural sector. In addition, it analyses and assesses recent trends in agricultural development policy in Latin America, to identify and synthesize new policy directions, and to highlight emerging challenges and avenues for policy innovation. The main conclusion of the study is that Latin American agricultural and rural development policy is at a turning point that will require bold new initiatives to improve the production performance of agriculture, reduce rural poverty, protect the natural resource base of the sector and ensure the political sustainability of economic growth. This will require a pro-active set of interventions designed at restoring the specificity of sectorial agricultural policy while maintaining consistency with the macro reforms.
We believe that this study is a valid contribution to understand the experience of Latin America concerning the impact of macroeconomic policy reforms on agriculture and the rural sector over the past two decades and the main changes in the agricultural policy instruments. It also offers several concrete suggestions for transitional and new market compatible policies, that should help guide and orient the process of policy formulation and policy advice in the Region.