This report monitors and evaluates government support to agriculture in seven emerging economies during 2006-08: Brazil, Chile, China, India, Russia, South Africa and Ukraine. While the economic importance of the agricultural sector is falling relative to other sectors in these countries, the sector continues to play a vital role in providing employment and contributing to food security. Although weather conditions can cause large short-term fluctuations, over the longer-term both agricultural production and, in particular, agro-food trade are growing rapidly. Brazil, Chile, India and Ukraine are net exporters of agro-food products, while China and Russia are net importers.

This chapter provides an overview of developments over the period 2006 to 2008 in agricultural policies in seven emerging economies: two from the South American continent (Brazil and Chile); two from Asia (China and India): two from Europe (Russia and Ukraine) and one from Africa (South Africa). A separate chapter for each of the seven economies, providing in-depth analysis and commentary, follows this overview. The first section discusses developments in world food markets, with a particular emphasis on the significant increase in global agricultural prices. Policy responses to higher food prices, along with other significant policy changes and new initiatives are then described. The global spread of the seven economies, their net trade positions (net exporters and net importers) and their differing policy objectives provide for an interesting contrast in terms of government policy responses to the challenge of food price inflation. The third section examines changes in the level and composition of agricultural support since 1995-97, a period which coincides with the beginning of implementation commitments made under the Uruguay Round Agreement on Agriculture (URAA), and makes comparisons between these economies and with the OECD country averages. Finally, some policy conclusions are offered both in terms of specific responses to higher agricultural prices and the general direction of agricultural policy in these seven emerging economies.

Chile has a relatively open trade policy with support historically concentrated on a few commodities. The country operates a price band system (PBS) for wheat, wheat flour and sugar, but with high world prices and reforms to the PBS necessary in order to comply with WTO obligations, the economic significance of the PBS has diminished. Across the sector, price support has continued to decline and farm prices are now almost exclusively market determined.

China increased the market orientation of its agricultural sector prior to its WTO accession in 2001, but since then this trend has slowed and for some markets even reversed. In particular, grain markets have been exposed to multiple government interventions, further exacerbated by the rise in global prices for agricultural commodities in 2006-08, which intensified inflationary pressures and food security concerns.

Compared to the robust growth in other sectors of the economy, the performance of Indian agriculture remains rather poor as indicated by slow and erratic growth rates since the mid-1990s. This has become a key concern of the government as confirmed by the main objective of the 11th Five Year Plan for 2007-12, to make growth more inclusive.

Russia maintains high border protection for key agricultural imports and budgetary transfers to the agricultural sector are increasing. With high economic growth boosting consumer incomes and raising government revenue, the government has pursued an increasingly protective policy. The level of producer support rose in the current decade compared with the recent low which followed the 1998 financial crisis.

Current policies in South African agriculture are the result of substantial reforms implemented from the mid-1990s. Policy changes that impacted on agriculture resulted in deregulation of the marketing of agricultural products, liberalisation of domestic markets, and reduced barriers to agricultural trade. The main developments in trade policy included the replacement of direct controls over imports by tariffs, removal of state controls over exports and elimination of export subsidies. These reforms reduced market price support and budgetary support to commercial farming. In contrast, increased budgetary spending went to finance the land reform process.

The overall level of producer support is modest, but disguises taxation of export-oriented sectors and considerable protection of import-competing sectors. Support has shown an upward trend in recent years. This tendency, although interrupted in 2007 due to the specific market situation, is an expected consequence of the economic recovery Ukraine saw in recent years. Robust growth in the domestic economy and external demand has lifted agricultural prices towards world market levels. Fiscal improvements resulted in more direct support provided to the sector.