International Food Policy Research Institute
sustainable solutions for ending hunger and poverty
The presentation is based on a paper by Thomas W. Hertel and Roman Keeney of Purdue University, and Maros Ivanic and L. Alan Winters, The World Bank, for the 44th Panel Meeting of Economic Policy in Helsinki, Finland, October 2006.
Rich countries' agricultural trade policies are the battleground on which the future of the World Trade Organization's troubled Doha Round will be determined. Subject to widespread criticism, they nonetheless appear to be almost immune to serious reform, largely because of the widespread belief that they protect poor farmers. Our findings counter this view. Using detailed data on farm incomes, they show that only large, wealthy farmers in a few heavily protected subsectors would be seriously affected by trade reform. By contrast, reforming rich countries' agricultural trade policies would lift large numbers of developing country farm households out of poverty, according to an analysis using household data from 15 developing countries. In most cases, these gains are not outweighed by the poverty-increasing effects of higher food prices among other households. The analysis conducted here indicates that maximal trade-led poverty reductions occur when developing countries participate more fully in agricultural trade liberalization.
Thomas W. Hertel is a Distinguished Professor at Purdue University, where he teaches and conducts research on the economy-wide impacts of trade policies. He is the founder and Executive Director of the Global Trade Analysis Project (GTAP) which encompasses 5,000 researchers in over 100 countries around the world.