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.