The Political Economy of Agricultural and Food Policies

Abstract

Food and agriculture have been subject to heavy-handed government interventions throughout much of history and across the globe, both in developing and developed countries.1 Political considerations are crucial to understand these policies since almost all agricultural and food policies have redistributive effects and are therefore subject to lobbying and pressure from interest groups and used by decision-makers to influence society for both economic and political reasons. Some policies, such as import tariffs or export taxes, have clear distributional objectives and reduce total welfare by introducing distortions in the economy. Other policies, such as food standards, land reforms, or public investments in agricultural research, may increase total welfare but at the same time also have distributional effects. These distributional effects will influence the preferences of different interest groups and thus trigger political action.The inherent interlinkage between efficiency and equity issues in policymaking meant that for much of history, economics and politics were closely related disciplines, often written about by the same authors, as reflected in the works of the original architects of the economics discipline-Adam Smith, John Stuart Mill, David Ricardo, and so on. In the late 19th century the economics discipline started separating itself from the "political economy" framework. The revival (or return) of political economy started in the 1950s and 1960s and was referred to as "neoclassical political economy" or "new political economy," as economists started using their economic tools to analyze how incentives of political agents and constraints of political institutions influenced political decision-making. The start of this field is often associated with 1 This chapter is a revised version of J. Swinnen, "The Political Economy of Agricultural and Food Policies," chapter 21 in Handbook of Agricultural Economics, edited by G. Cramer, K. P. Paudel, and A. Schmitz, 381-398 (Oxon, UK: Routledge Publications, 2018). The material is reproduced with permission of the Licensor through PLSclear. For a more extensive discussion on all the issues discussed in this chapter and data illustrations, see also Swinnen (2018).

The political economy of regulations and trade: Wine trade 1860–1970

“…There are several reasons why tariffs are used first (Anderson et al., ; Swinnen, ). First, and most obviously, with pressure on domestic producers coming from imported products, the most direct way of reducing the pressure it to restrict imports.…”

“…There is a rich literature on the political economy of agricultural protection and taxation—focusing mostly on tariffs and subsidies (Anderson, Rausser, & Swinnen, ; Krueger, Schiff, & Valdés, ; Rausser, Swinnen, & Zusman, ; Swinnen, , for reviews). However, there are much fewer studies on why governments used specific instruments to protect their domestic markets.…”

The Political and Economic History of Vineyard Planting Rights in Europe: From Montesquieu to the European Union

“…The decision was in line with reforms in other agricultural markets -such as grains, oilseeds, sugar and dairy -where various regulations which distorted production allocations had been removed and replaced by a more market oriented policy combined with direct income support for farmers (Swinnen, 2014).…”

“…49 Problems of enforcement is an important reason why production quota have been implemented in the EU dairy and sugar sector but not in e.g. grains and oilseeds (Swinnen, 2014). planting. Initially, the municipalities inspected whether new vines were planted.…”

Navigating pathways to reform water policies in agriculture

“…Two types of farm subsidies can negatively impact water resources and be considered "water-harmful" in specific contexts (Sur, Umali-Deininger and Dinar, 2002 [86]). First, several types of water-related input subsidies (of the cost of irrigation, 27 fertilisers, pesticides or groundwater pumping) can have, by lowering input costs, a direct and harmful effect on water resources in specific contexts (Ibid).…”