Here is an interesting graph that may get some discussion going.


It shows the effect of government policies on agricultural prices in Thailand. The zero line represents a price neutral outcome. Below the zero line shows that farmers are getting less than they would if the government adopted price neutral policies. Above the line shows the opposite. The most important factor during the 1970s was the so-called “rice premium” which taxed rice exports both to generate government revenue and to reduce domestic rice prices for urban consumers. The premium was abolished in 1986 and in 1987 the government introduced the first “rice mortgage” scheme which had the effect of increasing domestic prices.

The data are taken from page 60 of this fascinating report on Distortions to Agricultural Incentives in China and Southeast Asia by Kym Anderson and Will Martin. (I hope I have interpreted their data correctly – please let me know if you think I haven’t.) Here is a key quote from their report:

Prior to the 1980s, agricultural price policies, together with trade and exchange rate policies, almost always reduced farmers’ earnings in China and Southeast Asia. The only exceptions were the Philippines in the latter 1960s and Indonesia in the latter 1970s. That explicit or implicit taxation declined from the early 1980s, however, and from the mid-1990s in China and 2000 in Southeast Asia the average NRA [nominal rates of assistance] switched sign and became slightly positive. (page 6)

Populist policies have got a lot of making-up to do.