Video - Policies to support agricultural production

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From the course by University of Western Australia

Agriculture, Economics and Nature

136 ratings

University of Western Australia

Agriculture, Economics and Nature

136 ratings

Sound economic thinking is crucial for farmers because they depend on good economic decision making to survive. Governments depend on economic information to make good policy decisions on behalf of the community. This course will help you to contribute to better decision making by farmers, or by agencies servicing agriculture, and it will help you to understand why farmers respond to policies and economic opportunities in the ways they do. You can use this course to improve your skills and knowledge, and to assess whether this is a subject that you'd like to study further. The course includes high-quality video lectures, interviews with experts, demonstrations of how to build economic models in spreadsheets, practice quizzes, and a range of recommended readings and optional readings. Assessment is by a final exam. The key economic principles that we’ll learn about can help us understand changes that have occurred in agriculture, and support improved decision making about things like agricultural production methods, agricultural input levels, resource conservation, and the balance between agricultural production and its environmental impacts. There are literally thousands of agricultural economists around the world who work on these issues, so there is a wealth of knowledge to draw on for the course. Watch a brief video about our course here: https://www.youtube.com/watch?v=T_IeYGpeqV8

From the lesson

Government policies in agriculture

Week 6 ties up the course through discussion of government policies that support agriculture, policies that protect the rural environment, policies with problems, and justifications for agricultural policy.

Video - Policies to support agricultural production6:28

Meet the Instructors

Professor David Pannell, BSc(Agric), BEc, PhD
Head of School of Agricultural and Resource Economics
University of Western Australia
Jacob Hawkins, BA(Biol), MESM, PhD
School of Agricultural and Resource Economics
University of Western Australia

Governments around the world use a wide variety

of different policy approaches to try and support

agricultural production and productivity.

Today we're going to talk about a few examples

of the sorts of approaches that governments

use in these policies.

First of all, we'll talk about subsidized crop insurance.

In the United States, farmers can

purchase government subsidized crop insurance through what's

called the Risk Management Agency of the United States

Department of Agriculture.

So this insures them against crop losses

due to natural disasters or natural events,

but it also covers them for revenue losses

due to low commodity prices or commodity price declines.

So on the screen there's a website address

which you can go to to get more information.

Because these schemes are subsidized by government,

they amount to, or they include, a transfer of wealth

from taxpayers to farmers.

So it is the broader community supporting agriculture.

So that's one of the themes of these different approaches

that we'll be looking at today.

The second one I want to talk about is direct payments.

So governments in a number of countries

have subsidized agricultural production for a long time,

either through inflating agricultural prices, which

is something we'll talk about in a later session,

or more commonly in Europe in recent years

has been the idea of a single payment which

is not tied to prices.

So the single payment scheme in the European Union's

common agriculture policy involves

farmers receiving an amount of money

per hectare of agricultural land that they

agree to keep in good condition and that they actually

keep in good condition.

So it's not tied to the price of the commodity-- it's just

an amount that they receive, basically

for continuing to look after the land and continuing to farm it.

So there's another way that governments

have supported agriculture.

The third idea is extension.

Agricultural extension's got a long history.

Extension's a word that's used in a different way

in agriculture than in some other places.

Extension means a broad range of activities

that include education, training, raising awareness,

facilitating networks and communications between farmers

or between farmers and agencies.

So it's a broad term that covers a lot of different approaches.

And government agencies or government

funded bodies or universities around the world

communicate the latest developments

in agriculture techniques to farmers to try

and help them improve their production.

In some developed countries, and Australia's one of them,

government support for extension has

tended to decrease over time.

So there's much more reliance these days

in Australia on extension being provided by the private sector,

whether that's by paid farm management consultants

or by people who work for agricultural supplies--

people who supply fertilizers and herbicides, for example.

There's much more a private sector role

in this area of extension these days

than there was 20 or 30 years ago.

The next way that governments try

to support agricultural production

is through research and development.

So agricultural R&D also has a long history,

and there's lots of evidence that R&D

makes an enormous contribution to agricultural productivity.

So national and state agricultural agencies

are part of this, universities, and other types

of research organizations.

So in Australia we have the CSIRO,

which is an Australian government funded

national research organization that doesn't just

do agricultural research-- it does a whole range of things,

but they've been a prominent player

in agricultural research.

The US Department of Agriculture has the Agricultural Research

Service which plays an important similar role in this state

research as well.

Again, another decline here.

There's been observation that funding

for agricultural research around the world

has been on a declining trend.

And there's quite a bit of concern

being expressed that in coming decades

it will be hard to maintain the level of productivity growth

that we've seen in agriculture for the last few decades.

It's a particular concern in developing countries

where they really are at a time where

they need agricultural research to help them turn the corner,

get over the hump and improve their agricultural

productivity.

And there's been quite a lot of discussion

in various quarters about the importance of increasing

agricultural research investment.

Next, infrastructure.

So governments provide infrastructure such as railway

and roads to enable transportation

of produce from farms to markets, but also to transport

inputs from ports or from factories to the farm.

So we have in Western Australia a Department of Infrastructure

and Regional Development, and a Department

of Planning, Transport and Infrastructure in South Africa.

Every developed country has a department

that looks after these sorts of provisions.

And finally, there is institutional support.

This is perhaps a bit less obvious,

but it's one of the things that helps our whole economy

and our whole society function.

And it benefits agriculture in the same way

as it benefits other parts of the economy.

So agriculture benefits from the top of institutions

that government provides for the benefit of the whole community,

such as the rule of law, the enforcement of contracts,

public education, and so on.

So in summary, there are many different types

of policies that directly or indirectly support

agricultural production, and we've looked at a few of them.

We've looked at subsidized crop production, direct payments,

extension, research and development, infrastructure

and institutional support.

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