OECD Work on Agricultural Policies in Brazil, China, India, South Africa

1. OECD Work on Agricultural Policies in Brazil, China, India, South Africa Wayne Jones Directorate for Food, Agriculture and Fisheries

2. Pressures for reforms (1980s and 1990s) • Macroeconomic crisis • Brazil, SA and India: foreign and domestic debt burden, BoT deficit, high inflation • China: overall economic inefficiency • Political changes • Brazil: military regime replaced by elected government • China: change in communist leadership • SA: end of apartheid, democratic elections, lift of international economic embargo • India: political instability, minority governments

3. Overall economic reform • Change of development paradigm • from self-sufficiency and import substitution, to economy opening and export-led growth • Economic liberalisation • broad and swift in Brazil and SA; gradual in China and India • deregulation of domestic markets and prices • trade liberalisation • privatisation • Depreciation of the local currency followed by tight fiscal and monetary policies

4. Agricultural policy reform • Deregulation of domestic markets and prices for agricultural commodities • radical in Brazil and SA; gradual in China and India • Opening of agricultural markets • cuts in import tariffs; • elimination/limitation of STEs; • progress in regional and international trade integration • Reduction and/or refocusing of budgetary support

5. Institutional changes • Land and structural reforms • Brazil: Land Reform Plans and National Programme for the Strengthening of Family Agriculture (PRONAF) • China: Household Production Responsibility System; explosion of Township and Village Enterprises • SA: Land Reform Programme and Broad Based Black Economic Empowerment for Agriculture (AgriBEE) • India: early stage of land market reform

6. Sources of agricultural growth Agricultural growth driven by: • Expansion of domestic and external demand • Macroeconomic stabilisation and economic opening And based on: • Land productivity improvements • Shifts in production structure consistent with comparative advantage • China, India and SA: labour-intensive horticulture and livestock • Brazil: soybeans, sugar-cane, and livestock

7. Brazil China India S.Africa 1993 2003 Agricultural Trade Expanded Source: Comtrade

8. 1991 2000 1993 1990 1999 2000 2000 1993 Rural poverty incidence fell,but remains high, as does inequality Sources: Brazil – Income survey (PNAD); India – Income surveys (NSSO); China and South Africa – WB estimate

9. Policy Challenges: Sustaining Agricultural Growth Focus on: • Rural infrastructure • Land and labour mobility • Terms & availability of credit • Tax policies • Environmental sustainability (water availability and quality) • Access to overseas markets

10. Policy Challenges: Reducing Social Divisions Growth necessary but not sufficient: • Social policies • Integration of small-scale farming into markets • Rural economy diversification • Enhanced labour mobility • Investments in human capital: health, education, and extension

11. Tentative Conclusions • Reform is possible • Macro-economic stability is important • Farmers respond swiftly to market forces • Reform enhances agricultural growth • Ag. growth reduces poverty – but not enough • Infrastructure improvement is decisive • Human capital improvement is crucial • Non-ag. policies are important drivers • OECD reform is necessary, but not sufficient