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Extra resources for Agricultural Policies for Poverty Reduction
In other words, agricultural policies are not enough. Third, in order to improve both agricultural competitiveness and the prospects for earning more outside the sector, the most important policies may not in fact be agricultural policies. It is therefore important that smallholder policies are framed in an economywide context, with agricultural policies a component of the overall policy mix. The elements of an appropriate strategy are discussed in the next section. AGRICULTURAL POLICIES FOR POVERTY REDUCTION g OECD 2012 43 1.
Formal (ex ante) price stabilisation induces moral hazard, with agents failing to mitigate risk, and price stabilisation can easily turn into systemic price support or suppression, depending on political pressures. Price stabilisation programmes have also proven to be costly and often financially unsustainable (Anderson and Roumasset, 1996). Yet, in the short term, it has been suggested that there may be no other way of containing the impact of adverse price 48 AGRICULTURAL POLICIES FOR POVERTY REDUCTION g OECD 2012 1.
In low income countries, where family and social networks are the main form of social protection, there is some wariness about potentially weakening that aspect of the social fabric. In the poorest countries, however, it has been argued that the necessary institutions and infrastructure do not exist for cash-based instruments to be appropriate, and agricultural policies, such as price supports and input subsidies, have been suggested as an alternative. For example, there may be no registry or information base by which to establish criteria of eligibility; remote farmers may not have a convenient way of spending cash; and - with weak institutions - such programmes may be particularly susceptible to corruption.
Agricultural Policies for Poverty Reduction by OECD Publishing