The Outlook for Agriculture and Rural Development in the Americas: A Perspective on Latin America and the Caribbean
agricultural policies

Policies and Institutional Framework

  • agriculture R&D
    3
    of the 18 LAC countries (ARG, COL and URY) allocate more than 50% of the GSSE to R&D
  • international transportation
    To lower
    the cost of domestic and international transportation should be a priority for trade facilitation
  • M&E systems
    Increase
    efforts to implement monitoring and evaluation of policies for agriculture in LAC is also important
  • In LAC (10 out of 18 studied countries), there is a tendency to increase the amount of public resources destined to the provision of services to producers in a collective fashion (rather that to individual producers). Services such as R&D, phytosanitary inspection, agricultural education and infrastructure have more permanent multiplier effects.

  • Processes of economic integration will be positive and will help the development of national agricultural policies as long as they improve the income of all actors across the value chain. For this to be true it will be needed to reduce the cost of internal transport. It is estimated that a reduction of 1% of the transport cost in Colombia will increase agricultural and manufacturing exports by 8%. Reduce the cost in 10% would increase South America┬┤s intra-regional exports between 30 and 40%.

  • Agriculture has not been a pioneer in the process of monitoring and evaluating public policies, however, during the las few years efforts in this subject have been more prevalent in LAC. This has been done with the objective of increasing accountability processes and to improve the efficiency and the efficacy of public expenditure. Mexico and Colombia are the countries with the longest standing tradition in the evaluation of agricultural public policies. Chile, Uruguay, Peru and Costa Rica are making significant progress in the adoption of monitoring and evaluation as part of their entire cycle of public policies.

Summary of: Policies and Institutional Framework

Governments continuously strive to make public spending more effective and efficient, in order to tackle challenges and take advantage of opportunities for the sustainable development of agriculture and rural areas. They also seek to adequately respond to commitments undertaken at global forums and to changes in the global financial and social contexts. This chapter analyzes the most recent innovations in the management of public agricultural policies, while making reference to the goals and targets of the 2030 Agenda.

Across the world, policies are evolving toward a market approach that allows farmers to make better decisions, although this trend is less apparent in LAC countries. In general, despite certain differences between sectors, producer support policies in LAC favor transfers associated with prices and market management (including the input market). This makes them a disincentive to innovation and the improvement of productivity. Countries that make significant efforts to modify the type of support provided to producers allocate more public resources to the provision of general services for producers collectively (rather than direct transfers to individual producers). Such services include research and development (R&D), inspection, marketing, promotion, agricultural education, infrastructure and public storage, with more lasting impacts and multiplier effects.

As direct support for agriculture is reduced and the effects of climate change become more pronounced, integrated risk management policies have been actively promoted in recent years, although in the case of small-scale agriculture they are still at the embryonic stage. The main obstacle to the implementation of these types of policies and their respective instruments is the need to ensure that risk transfer mechanisms are sustainable and viable for governments (given the limited public funding available) and profitable for the private sector, without undercutting the proactive role that farmers should play in addressing their own risks. This chapter describes the progress achieved in adopting risk management instruments, including methods for protecting farmers from risks posed by variations in prices and income, as well as methods adopted by the State to protect them from catastrophic or systemic risks.

This chapter also presents other innovations related to policies for promoting a more intensive and sustainable agriculture. Methods for providing direct support to producers are compared with other more effective measures, such as: a) promotion of access to, and the use of, quality seeds; b) driving of agricultural mechanization to foster greater integration among producers, manufacturers, distributors and suppliers of machinery services; c) a series of private initiatives and public policies for the sustainable management of natural resources, geared toward improving the balance between mandatory, conditional and voluntary programs, although there is limited experience in LAC with respect to environmental conditionality, which should gain importance in the future. Furthermore, the chapter reports on the manner in which markets are evolving toward regulations that promote a more rational use of natural resources in production processes.

A topic that is gaining importance in LAC countries is the implementation of systems for monitoring and evaluating agricultural policies, with a view to enhancing their effectiveness and efficiency, strengthening accountability processes, and responding to the need to monitor progress achieved with respect to international commitments (for example, the 2030 Agenda). The greatest challenge for LAC will be institutionalizing policy evaluation processes so that they form an integral part of the agricultural policy cycle.

Trade negotiations currently underway are shaping a new trade agenda in the Americas that seeks to establish new intraregional economic relations with Asia and Europe. The economic integration agenda in LAC will focus primarily on strengthening the bonds between members of the Pacific Alliance, between the Pacific Alliance and the Southern Common Market (Mercosur), and between Mexico and the rest of LAC; in the two latter cases, these bonds will be strengthened by the renegotiation of the North American Free Trade Agreement.

Lastly, this chapter analyzes the actions that LAC countries have undertaken to actively participate in global agreements on climate change, including the signing and legislative ratification of the Paris Agreement on Climate Change, as well as the inclusion of actions or references to the agricultural sector in their intended and determined contributions, in which the sector is addressed with a focus on adaptation.

In order to advance toward meeting the goals associated with the SDGs, a series of coherent, multi-objective, effective and efficient policies that are managed at various levels of intervention are required. These policies should generate the conditions necessary to enable countries to respond in an adequate and timely manner to market signals; to make the best decisions regarding what, when and how much to produce; to adopt technologies and to create innovations that make it possible for them to compete equally with producers from more advanced regions. Domestic market development policies will also be necessary in order to support regional integration and vice versa. Future integration processes will need to respond to the specific needs of agricultural producers in terms of infrastructure, transportation and services (for example, trade information) and address the complexity of regulations.