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The Authors would like to thank participants in the Agricultural Policy Analysis Consortium Workshop, held at FAO, Rome, Oct. 23, 2003, for their helpful comments at the workshop and the suggestions subsequently received.

This paper has also been issued as ESA Working Paper No. 04/04.


The Food and Agriculture Organization (FAO), the World Bank (WB), the International Food Policy Research Institute (IFPRI)) and the Organization for Economic Co-operation and Development (OECD) are establishing a Consortium to develop, coordinate and undertake the measurement of agricultural policy indicators for developing countries. To allow flexibility, a “two-tiered” approach to agricultural policy reviews is envisaged, involving an initial quantification of agricultural policies for a wider group of countries (Tier I), and a more comprehensive country review involving PSE/CSE calculations for a smaller group of selected countries (Tier II). This paper is intended to help to define the contribution of the FAO to the Consortium as it relates to the monitoring of Tier I countries. (See attached Terms of Reference for details about the Consortium and the objectives of the study).

The objective of this paper is to suggest a methodological approach that can be adopted by FAO to collect and analyze a set of agricultural policy indicators (API) that will be of use in evaluating policy change. These policy indicators would need to fulfil certain requirements and constraints. They should be comprehensible, transparent, be capable of straightforward interpretation and be based on a data collection system that is directed by FAO on an on-going basis, either from local sources or collected by local consultants. An additional objective would be to provide a framework for assessing the needs of FAO for other data series that might be complementary to the agricultural policy indicators. At the least the policy indicators should be able to tell whether agriculture in particular countries is being stimulated or retarded by the set of policies employed. Such indicators should also be useful in the context of quantitative models of policy impacts and market projections. But ideally the indicators should also function as building blocks for the more comprehensive policy measurement intended for the Tier II countries. Thus the modular approach we take is designed for flexibility to respond to the needs of policy analysis and advice and to differences in data availability and reliability.

This paper is presented in four parts. Section 2 gives an overview of the rationale for monitoring, the relationship between policy monitoring, quantitative modelling and evaluation, and the basic menu of choices of indicators. Section 3 provides a brief review of the studies that have calculated the extent of agricultural support in developed countries since 1973 and of the comparable exercises that have focused on developing countries, mainly published since 1990. For each study we mention the purpose and objectives of the studies, the indicators developed, and the commodity, country and policy coverage. Emphasis is given to comparative studies across countries that follow a common methodology at the project (study) level: there are, of course, numerous estimates of protection indicators for individual countries, but these are not reviewed here.

In light of the apparent “success” or “failure” of the studies mentioned above, and of the authors' experience with many of them, Section 4 identifies several areas that in our opinion deserve special attention in the planning of the FAO-sponsored studies. We attempt to provide insights into methodological, computational and logistical problems that might be faced by FAO.

Section 5 presents a possible methodological approach that might be used by FAO for the development of agricultural policy indicators for the Tier I countries, and elaborates on the suggested coverage, definitions, classification criteria and methods of calculation. This last section is intended to take into account the varied interests of Consortium members and particularly the needs of the FAO Economic and Social Department.

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