DP814 Domestic and Trade Policy for Central and East European Agriculture
|Author(s):||Larry Karp, Spiro Stefanou|
|Publication Date:||November 1993|
|Keyword(s):||Agricultural Policy, Central and Eastern Europe, Collateral Subsidies, Economic Transition|
|JEL(s):||F13, F14, Q17, Q18|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=814|
After a brief period of liberal agricultural policies, Central and East European (CEE) countries have begun to rely increasingly on price subsidies and trade restrictions. We outline the situation of CEE agriculture and describe current policies. Scarce government funds could be better used to support agriculture by providing partial loan guarantees, thus reducing private collateral requirements and making credit more widely available. This policy would provide income and not merely price insurance. In addition, it avoids the commodity bias associated with price policies. Others have argued that traditional price and trade policies should be used to support CEE agriculture, citing the example of OECD nations, and in particular the goal of joining the EC. We summarize and criticize these arguments.