Recent ACIAR research on trade reform and Indian agriculture found that trade policy reform must be complemented by 'behind-the-border' reforms if government objectives of improved productivity, higher rural employment and incomes and enhanced food security are to be met. Project ADP/2007/062 titled 'Facilitating Efficient Agricultural Markets in India: An Assessment of Competition and Regulatory Reform Requirements' therefore focuses on facilitating the development of agricultural policy settings which will enable Indian farmers to efficiently adjust to a less regulated marketing environment including an appropriate competition policy regime.
The project is being undertaken collaboratively between the NSW Department of Primary Industries, India's National Council of Applied Economic Research, La Trobe and Melbourne Universities and the Australia and New Zealand School of Government.
Project objectives include:
Assessing agricultural marketing and competition policy settings in a selection of high profile developing countries to identify policy objectives, policy change processes and the 'market failure' principles driving those changes.
Undertaking a policy comparison across those same developing countries of trends in agricultural sector regulation more broadly to identify and assess efforts being made to facilitate farm level adjustment. Successes and failures will be identified to evaluate the scope for lessons learnt to be applied in an Indian context.
Using the country comparisons and an appropriate public policy framework, undertake 2-3 industry case studies which examine the application of current policy settings at the industry level and how an alternative competition policy regime would apply. These will focus on wheat in Punjab and horticulture products in West Bengal.
Formulate a set of policy recommendations with options that guide the introduction of necessary competition and regulatory reforms for consideration by policy makers.
The project commenced in May 2008 and finishes in October 2010. In the reporting period to 31 May 2009, collaborators focussed on Objectives 1 and 2 involving the preparation of a report comparing agriculture policy settings in the BRICs countries of Brazil, Russia, India and China, as well as South Africa.
This involved significant information gathering, but at the same time provided the opportunity to develop a shared understanding among collaborators of relevant microeconomic reform and 'role of government' principles as they relate to pro-competition policy. It has also provided the opportunity to engage with key Indian Government agencies.
Preliminary findings from the BRICs country comparison were reported in a paper presented to the 2009 Australian Agricultural and Resource Economics Conference. Findings included that the outcomes from policy reform have been mixed in terms of their consistency with accepted microeconomic reform principles:
emphasis has often been placed on privatisation initiatives, rather than on broader regulatory reform;
direct regulation in agriculture (industrial policy) appears to have reduced government incentives to progress competition law initiatives in the agri-food chain;
similarly, direct regulation in agriculture appears likely to be reducing government incentives to consider alternative approaches to poverty and the maintenance of socially acceptable levels of farm family welfare; and
strong growth in the non-agricultural sectors in most developing countries may also be having the effect of making direct regulation and transfer payments more 'affordable' and less of a priority for reform.
Of some further concern was that reform efforts to date appear largely to represent a set of responses to economic crises and WTO pressures, and for the most part, have failed to provide a legacy of ongoing, internally-driven, policy reform processes.
The Stage 1 Report comparing agricultural policy settings in the BRICs economies will be finalised following stakeholder feedback at an 'agricultural policy reform conference' tentatively scheduled to be held in Delhi in November 2009. Professor Allan Fels AO, Dean of the Australia and New Zealand School of Government, will provide a keynote address on competition policy in developing countries.

Recent ACIAR research on trade reform and Indian agriculture found that trade policy reform needs to be complemented by 'behind-the-border' reforms if government objectives of improved productivity, higher rural employment and incomes and enhanced food security are to be met. Project ADP/2007/062 titled 'Facilitating Efficient Agricultural Markets in India: An Assessment of Competition and Regulatory Reform Requirements' therefore focuses on facilitating the development of agricultural policy settings which will enable Indian farmers to efficiently adjust to a less regulated marketing environment including an appropriate competition policy regime.
The project is being undertaken collaboratively between NSW Industry & Investment, India's National Council of Applied Economic Research, La Trobe, Melbourne and Exeter Universities and the Australia and New Zealand School of Government.
Project objectives include:
1. Assessing agricultural marketing and competition policy settings in a selection of high profile developing countries to identify policy objectives, policy change processes and the 'market failure' principles driving those changes.
2. Undertaking a policy comparison across those same developing countries of trends in agricultural sector regulation more broadly to identify and assess efforts being made to facilitate farm level adjustment. Successes and failures will be identified to evaluate the scope for lessons learnt to be applied in an Indian context.
3. Using the country comparisons and an appropriate public policy framework, undertake 2-3 industry case studies which examine the application of current policy settings at the industry level and how an alternative competition policy regime would apply. These will focus on wheat in Punjab and horticulture products in West Bengal.
4. Formulate a set of policy recommendations with options that guide the introduction of necessary competition and regulatory reforms for consideration by policy makers.
The project commenced in May 2008 and finishes in October 2010. In the reporting period to 31 May 2010, collaborators focussed on Objectives 1, 2 and 3.
The Mid-term project workshop in Delhi was postponed from May 2009 to 24 November 2009 due to the unforseen scheduling of the Indian national election in April 2009. The December Workshop was an important project outcome and milestone and provided the opportunity to discuss the project and its future policy reform and methodological directions with Indian Government officials, stakeholders, the Project Steering Committee and collaborators. The Workshop titled 'Achieving Food Security in India: Improving Competition, Markets and the Efficiency of Supply Chains', was a significant event for ACIAR and other project collaborators, being opened by the Australian High Commissioner, Mr Peter Varghese, and having Professor Allen Fels AO, Dean, Australia and New Zealand School of Government as Keynote Speaker and Professor Ramesh Chand, National Professor, NCAP as the Chief Guest.
The Mid-term Workshop focussed on the regulatory reform case studies being undertaken throughout 2010. The case studies focus on wheat and horticulture and involve supply chain analysis whereby regulatory restrictions on competition are being documented and subject to a 'market failure' assessment. Following discussions among project collaborators it was also decided that the regulatory supply chain assessment will also involve estimation of price correlations between farm-gate, wholesale and retail to assess the relative significance of regulatory impediments to competition.
An important Mid-term Workshop outcome was the opportunity to link the need for regulatory reform to food security and declining productivity in India agriculture which is of significant interest to Indian policy makers. The idea that regulatory reform could facilitate adjustment in a way that enables India's comparative production advantages to be better achieved as well as enhanced productivity and food security, now represents an important project theme which has created significant interest in the case study outcomes and the lessons that can be applied more broadly.
The Mid-term Workshop and interactions with the Project Steering Committee also gave rise to an unplanned project outcome in the form of the opportunity to draft a paper for inclusion in the 2010 'India Infrastructure Report' prepared by the Infrastructure Development Finance Company. The paper titled 'Is there a Role for Agricultural Offsets in Sustainable Infrastructure Development: A Preliminary Assessment of Issues', is a policy discussion paper which identifies issues associated with Indian agriculture potentially becoming a provider of carbon offsets to other greenhouse gas emitting sectors of the Indian economy. The paper is directly relevant to the broader project in that it identifies new policy settings for agriculture, such as the repositioning of input subsidies to promote carbon-based farming systems.
The Stage 1 Report comparing agricultural policy settings in the BRICs economies is currently being finalised following stakeholder feedback at the Mid-term Project Workshop in November which indicated a need to further consider the impact of agricultural policy reform on agricultural productivity in the BRICs economies. Recent World Bank reviews of agricultural policy in the BRICs economies are also being incorporated.