The global agrifood system can no longer deliver the ‘triple wins’ of a healthy planet, healthy people, and healthy economies. The current system is associated with high ‘hidden costs’ and urgently needs transformation to provide better livelihoods, raise farm productivity, and become more sustainable, equitable, resilient, and healthy. Achieving such transformative change requires a systemic shift in how the agrifood system are supported. We need to recognize that hundreds of millions of atomistic and rational economic decision-makers make up the agrifood system. Actors on the farm and along food value chains respond to economic incentives, and a core priority for food system transformation should be ensuring that economic agents receive appropriate incentives to guide meaningful change. Studies show that agrifood system transformation has the potential to bring climate change under control, increase biological diversity, ensure healthier diets, and create new business opportunities worth up to US4.5 dollars trillion a year (FOLU 2019). Building better systems requires tackling multiple distortions, including the complex agriculture-energy nexus. Energy is a key input to the agrifood system as fossil fuels and electricity are used directly in agriculture production to operate machinery, power water pumps, manufacture fertilizers, cool or dry crops and livestock products, and fuel transport. Subsidies for both fossil fuels and energy, which is also generated from fossil fuel in most countries, increase the environmental footprint of the food system as they encourage overuse and waste at the cost of other economic activities. For example, fuel and electricity subsidies in India are reducing the marginal cost of pumping for farmers and incentivizing over pumping and a rapid depletion of groundwater resources. Wasteful overuse of cheap energy in agriculture also has a large opportunity cost in terms of foregone economic activity in other sectors, including the development of downstream processing and value addition activities in agri-food supply chains themselves. Finally, energy subsidies undermine the competitiveness of alternative types of energy (such as renewable energy) and efficient energy technologies such as solar energy, with negative long-term impacts on the environment. Repurposing these distortive agricultural policy support towards policy measures that promote increased efficiency, increased resilience, and enhanced positive environmental impacts offers an opportunity to accelerate the transformation towards environmentally sustainable agrifood systems.
Authors
- Citation
- “ World Bank . 2024 . Repurposing Agricultural Support Policies for Sustainable Food Systems -Toolkit . © Washington, DC: World Bank . http://hdl.handle.net/10986/41648 License: CC BY-NC 3.0 IGO . ”
- Collection(s)
- Other Agriculture Study
- DOI
- https://doi.org/10.1596/41648
- Identifier externaldocumentum
- 34326687
- Identifier internaldocumentum
- 34326687
- Published in
- United States of America
- Report
- 190654
- Rights
- CC BY-NC 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by-nc/3.0/igo
- UNIT
- Agriculture and Food GE (SAGGL)
- URI
- https://hdl.handle.net/10986/41648
- date disclosure
- 2024-06-03
- region geographical
- World
- theme
- Rural Markets,Mitigation,Agriculture Finance,Rural Development,Environment and Natural Resource Management,Finance for Development,Finance,Biodiversity,Climate change,Urban and Rural Development,Adaptation,Renewable Natural Resources Asset Management
Files
Table of Contents
- ABBREVIATIONS 8
- ACKNOWLEDGEMENTS 10
- GLOSSARY 11
- INTRODUCTION 15
- Module 1: Setting the Repurposing Agenda 25
- 1.1. DESCRIBING THE COUNTRY’S ECONOMIC CONTEXT 25
- 1.2. REVIEWING AGRICULTURAL AND RURAL POLICY FRAMEWORKS 27
- 1.3. ASSESSING THE COHERENCE OF EXISTING POLICIES 28
- 1.3.1. Coherence with Government Objectives 30
- 1.3.2. Coherence of Government Policies 30
- 1.3.3. Coherence in Terms of Policy Effects 30
- 1.4. POLICY DIALOGUE TO SET THE REPURPOSING AGENDA 33
- 1.4.1. Policy Dialogue at the Global Level 33
- 1.4.2. Country-Level Policy Dialogue 36
- 1.5. USING EVIDENCE IN POLICY DIALOGUES 38
- 1.5.1. Barriers to the Supply and Use of Evidence in a Policy Dialogue About Repurposing 39
- 1.5.2. Enablers of an Evidence-informed Policy Dialogue 40
- 1.6. ASSESSING THE IMPLEMENTABILITY OF REPURPOSING STRATEGIES 41
- Module 2: Public Expenditures on Agriculture 45
- 2.1. MEASURING PUBLIC EXPENDITURES ON AGRICULTURE 47
- 2.1.1. Why Monitor Public Expenditure on Agriculture 47
- 2.1.2. Country-level Analysis: Public Expenditure Reviews 49
- 2.1.3. Key Public Spending Indicators and Data Needs 52
- 2.2. GUIDE FOR CALCULATING PUBLIC EXPENDITURE INDICATORS 59
- 2.2.1. Data Collection and Preparation 60
- 2.2.2. Data Classification 64
- Module 3: Price Incentives for Agricultural Commodities 73
- 3.1. KEY PRICE INCENTIVE INDICATORS: DEFINITIONS, CALCULATION, AND INTERPRETATION 73
- 3.1.1. Data Needs for Price Incentive Analysis 75
- 3.1.2. Calculating Price Incentive Indicators 76
- 3.1.3. Interpreting Price Incentive Indicators 83
- 3.2. GUIDE FOR PRICE INCENTIVE ANALYSIS 90
- 3.2.1. Preparing for Price Incentive Analysis 90
- 3.2.4. The Nominal Rate of Assistance 99
- 3.2.3. The Nominal Rate of Protection 99
- 3.2.2. Price Gap Estimation 96
- 3.2.5. The Market Development Gap 100
- Module 4: Methods to Evaluate Policy Impacts 103
- 4.1. KEY CONSIDERATIONS TO GUIDE SELECTION OF THE MOST APPROPRIATE TOOL 104
- 4.1.1. Defining the Outcome(s) of Interest and Analytical Instruments 104
- 4.1.2. Available Methodological Approaches 106
- 4.2. SIMULATION-BASED MODELING METHODS 108
- 4.3. ECONOMETRIC METHODS 111
- 4.3.1. Randomized Control Trials 111
- 4.3.2. Differences-in-Differences 112
- 4.3.3. Regression Discontinuity 113
- 4.3.4. Instrumental Variables 114
- 4.4. QUALITATIVE METHODS 115
- 4.5. THE NECESSITY FOR MULTIPLE METHODS 116
- Module 5: Tools to Understand the Political Economy of Repurposing Agricultural Policies 119
- 5.1. CONCEPTUAL APPROACHES TO POLITICAL ECONOMY ANALYSIS 119
- 5.1.1. What is Political Economy Analysis? 119
- 5.1.2. The Advocacy Coalition Framework 120
- 5.3.1. The Multiple Streams Framework 123
- 5.3.2. The Kaleidoscope Model 125
- 5.2. PRACTICAL STEPS TO UNDERTAKE POLITICAL ECONOMY ANALYSIS 127
- 5.2.1. Introduction: Key Variables and Levels of Analysis 127
- 5.2.2. The Macro Level: Characterizing Country Context 129
- 5.2.3. The Meso Level: Characterizing Food and Agriculture Institutions 131
- 5.2.4. The Micro Level: Political Economy Analysis of a Reform 132
- CONCLUSIONS AND KEY TAKEAWAYS 136
- REFERENCES 139
- APPENDIX: Terms of Reference for Study on Repurposing Agricultural Subsidies 153
- ANNEX 157
- Table 1.1 Key Variables and Sources 26
- Table 1.2 Policy Coherence Assessment Summary, Mali 31
- Table 1.3 Global Policy Dialogue Avenues in the Repurposing Policies Agenda 34
- Table 2.1 Functional Classification of food and agricultural projects and expenditure 62
- Table 2.2 Examples of Agriculture Programs’ Functional Classification 68
- Table 2.2 Examples of Agriculture Programs’ Functional Classification 69
- Table 2.4 Example of Approximating Spending on Each Commodity 71
- Table 2.5 Example Spending for Maize (Year 1) 71
- Table 3.1 Data Needs and Most Common Data Sources for Calculating Price Incentive Indicators 76
- Table 3.2 CIF Price in Dakola for Rice Imported from Thailand 79
- Table 3.3 Reference prices for rice in Burkina Faso in 2013-2016 80
- Table 3.4 Price Gaps and Nominal Rates of Protection for rice in Burkina Faso in 2013–2016 81
- Table 3.5 Share of Commodities in Agricultural Production Value in Bangladesh, (Average for 2011–2020) 91
- Table 3.6 Commodity Data, Sources, and Examples for Wheat and Barley 94
- Table 3.7 Examples and Sources of Information on Policies Affecting Prices, by Policy Type 95
- Table 3.8 Key Data and Calculation of the PG for Imported Rice in Bangladesh, 2019 97
- Table 3.9 Calculation of the Price Gap for a Net Exporter of Wheat 98
- Table 3.10 NRP at the Farm Gate for Rice in Bangladesh, 2019 99
- Table 3.11 NRA for Rice in Bangladesh, 2019 99
- Table 3.12 Calculating MDG (Absolute Terms) 101
- Table 4.1 Summary of Strengths and Limitations of Different Modeling Approaches 107
- Table 4.2 Summary of Strengths and Limitations of Different Econometric Methods for Evaluating Policies 114
- Table 5.1 Narratives of the Two Discourse Coalitions 122
- Table 5.2 Indicators to Characterize the Country Context 130
- Table A.1 Key Barriers and Enablers for Evidence Demand and Supply in Repurposing Policy Dialogue 157
- Table A.2 Mapping a Subsidy Reform with the UIF: Factors and Key Questions 158
- Table A.3a PEs that directly benefit agents in the agriculture sector 160
- Table A.3b PEs that collectively benefit the agriculture sector rather than a specific agent 161
- Table A.4 Rural Support Expenditures Classification 162
- Table A.5 Selected PEA Tools and Approaches 162
- Box 1.1 Rwanda’s Agricultural Policy Strategies 29
- Box 1.2 Mali’s Agricultural Policy Coherence, Based on Public Expenditure Review 31
- Box 2.1 Ag-Incentives and the International Organizations Consortium for Measuring the Policy Environment in Agriculture 47
- Box 2.2 Trends of Public Expenditure on Agriculture in Mali and coherence against key strategic objectives 55
- Box 2.3 MAFAP Public Expenditure Classification and COFOG 58
- Box 3.1 Case Study: Calculating the RP, PG, and NRP for Rice in Burkina Faso 79
- Box 3.2 Price Incentive Indicators to Inform Country-Level Policy Change: Cotton in Mozambique 85
- Box 3.3 Farm Input Subsidies Narrowing Price Disincentives: The Case of Maize in Malawi 87
- Box 3.4 The Market Development Gap for Imported Rice in Burkina Faso and Exported Cotton in Mozambique 89
- Box 5.1 Why is Subsidy Policy Reform So Difficult? Insights from an Advocacy Coalition Framework Case Study of Electricity Subsidies for Groundwater Irrigation in India 121
- Box 5.2 Using the MSF to Analyze the Introduction of Soda Tax in France 124
- Box 5.3 Using the Kaleidoscope Model to understand the political economy of input subsidy reform in Zambia 126
- Box 5.4 Macro- and Meso-level Political Economy in Tanzanian Agriculture: Analyzing Rice Policy Implementation 131
- Figure I.1 Agricultural Policy Support Instruments and Indicators 18
- Figure I.2 Level and Composition of Global Support to Food and Agriculture (US$ Billion, Average 2013–2018) 20
- Figure I.3 Nominal Rate of Assistance by Income Group 21
- Figure 1.1 Key Agricultural Policy Frameworks, Rwanda 29
- Figure 1.2 The Role of Coordination Institutions and Property Rights in Responding to Climate Change 38
- Figure 1.3 Policy Implementation Domains 42
- Figure 2.1 Classification of Public Expenditure 54
- Figure 2.2 Agricultural Public Expenditure in Mali 55
- Figure 2.3 Average Composition of Agricultural PE in Mali, 2005–2017 56
- Figure 2.4 Funding for Food and Agriculture by Source 56
- Figure 2.5 Key Aggregated Indicators of Public Expenditure 59
- Figure 2.6 Example Structure of Public Expenditure Raw Data 64
- Figure 2.7 Classification Tree for Agrifood Public Expenditures 65
- Figure 2.8 Classification Tree for Administrative Costs 66
- Figure 2.9 Classification Tree for Multipurpose Projects 67
- Figure 2.10 Decision Tree for Sectoral Classification 70
- Figure 3.1 NRP for Cotton at the Farm Gate in Selected East and Southern African Countries 85
- Figure 3.2 Nominal Rate of Protection and Assistance for Maize in Malawi 87
- Figure 3.3 MDG for Rice in Burkina Faso 89
- Figure 3.4 MDG for Cotton in Mozambique 90
- Figure 4.1 Analytical Approach Decision Tree 106
- Figure 4.2 Impacts of Country-Specific Repurposing Scenarios 110
- Figure 5.1 The ACF 121
- Figure 5.2 The MSF 123
- Figure 5.3 The Kaleidoscope Model of Policy Change 125
- Figure 5.4 Political Economy Analysis Building Block Variables 128
- Figure 5.5 The Three Levels of Political Economy Analysis 129
- Figure 5.6 Process Net-Map of Agricultural Policy Processes 134