56141 v1
        Distortions to Agricultural Incentives
              in the United States and Canada




                                            Bruce Gardner


                                Formerly of the University of Maryland




Agricultural Distortions Working Paper 62, September 2008

This is a product of a research project on Distortions to Agricultural Incentives, under the leadership of Kym
Anderson of the World Bank's Development Research Group. The author was grateful for helpful comments
from workshop participants, for invaluable help with data compilation by Johanna Croser, Esteban Jara,
Marianne Kurzweil, Signe Nelgen, Francesca de Nicola, Damiano Sandri and Ernesto Valenzuela, and for
funding from World Bank Trust Funds provided by the governments of the Netherlands (BNPP) and the United
Kingdom DfID) as well as the Rockefeller Foundation for use of the Bellagio Conference Center. Tragically
Professor Gardner died in March 2008, so the editing of this paper (which does not include a discussion of the
latest US Farm Bill but see Orden, Blandford and Josling 2009) was done as faithfully as possible, knowing
Bruce would not be able to provide the final clearance. It will appear without the Appendix as Ch. 4 in
Distortions to Agricultural Incentives: A Global Perspective, 1955 to 2007, edited by K. Anderson, London:
Palgrave Macmillan and Washington DC: World Bank (forthcoming 2009).

This is part of a Working Paper series (see www.worldbank.org/agdistortions) that is designed to promptly
disseminate the findings of work in progress for comment before they are finalized. The views expressed are the
authors' alone and not necessarily those of the World Bank and its Executive Directors, nor the countries they
represent, nor of the countries providing the trust funds for this research project.
                  Distortions to Agricultural Incentives
                       in the United States and Canada

                                               Bruce Gardner




There is much in common between the agricultural sectors of the United States and Canada.
This chapter begins with a brief background on the two sectors, then reviews their histories of
farm policy developments before reporting new estimates of rates of assistance to their
farmers and their consequences for taxpayers and consumers. This is followed by an
explanation of the politics behind the evolution and gyrations in farm policies in the two
countries, and some speculation on the prospect for reform. Since the policy histories and
their effects in the two countries are somewhat different, they are discussed sequentially in
those sections.
           The number of farms in North America has been falling for decades, a well known
story that has given the public a sense that agriculture is a hard-pressed industry in decline.
What is less well known is that the decline has greatly slowed in the last twenty years. During
the 1950s and 1960s the number of U.S. farms fell at the rate of 3.0 percent annually (falling
by half in 20 years), but between 1995 and 2005 the number declined by 4 percent for the
whole decade (Appendix Figure 1).1
           To understand the situation it is necessary to look at the picture separately for farms
of different sizes. The number of farms with sales over $500,000 annually quadrupled
between 1978 and 2005, from 18,000 to 79,000. The number having sales between $100,000
and $500,000 has increased too. What is most surprising is that the number with sales of less
than $25,000 per year has held quite steady. The category that has declined most significantly
in recent decades are those between $25,000 and $100,000 in sales.
           U.S. land in farms has been gradually declining too, at an annual rate of 0.4 percent
since 1950, which over the years since then has added up to a loss of about 230 million acres
of farmland. However, available cropland acreage has remained almost constant over this
period, with 345 million acres harvested in 1950 and 321 million acres in 2005. Considering

1
    This chapter's coverage of the US draws to some extent on Gardner (2002).
                                                 2


the increase in irrigated and better-drained acreage, quality-adjusted cropland may even have
increased slightly. Together with declining farm numbers, the acreage data imply an increase
in the average size of farms. But as the decline in numbers has slowed a lot in recent decades,
so has the growth in average farm size. In 2005 the average U.S. farm had 444 acres (180
ha.), and 30 years earlier the average size was 431 acres (175 ha.).
       The number of farms in Canada peaked in 1941. In the 40 years between 1961 and
2001, Canada lost half its farms, their number declining from 480,000 to 246,000 (Appendix
Figure 2). This is a rate of decline of 1.7 percent annually, faster than the U.S. rate of 1.4
percent during this period. Canada's land devoted to cultivated crops has declined over the
1960-2000 period also, but less rapidly than the number of farms, so that Canada had 111
hectares of cropland per farm in 1961 and 147 in 2001 (as compared to about 75 hectares of
cropland per U.S. farm in 2002). Yields and value of output per hectare of cropland were
however lower in Canada than in the U.S., reflecting the cooler and drier climate of Canada
generally. Total agricultural land declined much more slowly in Canada than in the U.S.,
indeed hardly at all, from 69.8 million hectares in 1961 to 67.5 million in 2001.
       While the number of farms is declining only slowly, the farm labor force continues to
fall mainly because of less unpaid family labor other than the operator. At the same time, the
use of material inputs (fertilizers, fuels, purchased feed additives) has doubled in the U.S.
since 1950. USDA's aggregate input index is remarkably constant. It was 102 in both 1950
and 2000 (relative to a base of 1996=100). But agricultural output has continued to grow at a
steady clip, so total factor productivity growth has been an impressive 1.9 percent per annum
(Appendix Figure 3), with no evidence of slowdown in the trend in recent years despite
energy price shocks, environmental constraints and concerns about exhaustion of TFP gains
attributable to earlier breakthroughs in improved hybrid seeds and other innovations. So far
continued advances in genetics, livestock management, capital equipment, and economies of
scale have kept the real cost of U.S. farm products on a pronounced downward path. These
cost declines have been largely reflected in lower prices of farm products and hence lower
costs of raw materials for foods. While the average price of farm products rose 40 percent
between 1978 and 2005 (1.2 percent per year), the GDP deflator rose at an annual rate of 3.2
percent. Thus the real price of agricultural output fell by an average of 2.0 percent during this
period ­ essentially the same as the rate of TFP growth.
       Overall farm size (in terms of total land and output per farm) increased in Canada at a
rate faster than in the U.S. As of 2001, the average Canadian farm had 670 acres as compared
                                                      3


to 440 in the U.S. The more extensive nature of Canadian agriculture has not hindered output
or productivity growth though: real output per farm increased more rapidly than farm size
(Appendix Figure 4), reflecting increased yields per hectare and a strong trend in total factor
productivity growth, which has been estimated to increase 2.5 percent annually in recent
decades (Furtan 2006).
        The fact that farm prices have fallen in real terms largely in parallel with cost
decreases indicates that real incomes of farmers may not have benefited from farm
productivity growth. Yet the incomes of farm people have in fact grown, in real dollar terms
and relative to real incomes of the nonfarm population. Not only in the 1930s
Depression/Dust Bowl years but also through the 1960s, farm households could be
reasonably categorized as a low-income population. Sustained equality between the two
populations was however reached by the 1990s, and since 2000 U.S. farm household incomes
have been significantly higher than nonfarm incomes (Figure 1).
        How has this income growth been achieved, given that the decline in real prices has
equaled the decline in farmers' costs of production? The answer is the increasing importance
of farm households' integration into the nonfarm economy, so that in recent years off-farm
income sources account for 85 to 90 percent of average U.S. farm household incomes
(Appendix Table 1). These data suggest that income from farming itself may indeed be quite
low. However, a full understanding of the farm income data requires consideration of
differences between farms of different sizes. Numerically a majority of farms, 87 percent of
them in 2004, have less than $10,000 annually in sales. The costs of farming at this scale are
such that these farms on average earned only $1,020 from farming, and more than half are
estimated to have losses from their farm enterprises. Nonetheless, the average household
income of these farms is $71,500 thanks to off-farm income. At the other end of the
spectrum, family farms classified by USDA as commercial scale operations (those which
have $250,000 or more in sales) earned an average of $145,300 from farming plus $46,038
from off-farm sources, and these latter farms produce more than two-thirds of U.S.
agricultural output.2


2
 There is one category of farms in the USDA classification that has low incomes both from farming and from
off-farm sources, called "limited resource farms". There were an estimated 199,000 such farms in 2004, ten
percent of all farms, and their average household income was $7,700. Their average farm earnings was a loss of
$5,900. Apart from these farms, the other 90 percent of U.S. farm households are doing well economically,
either from farm or off-farm income sources. The data underlying this and subsequent information about farm
household economics are developed by the Economic Research Service of USDA, using their Agricultural
Resource Management Survey of about 10,000 farms annually.
                                                      4


        Net income from farming in Canada over the five years 2001-05 averaged almost the
same as the average U.S. net income per farm, and Canadian net farm income is similarly
highly variable from year to year.3 However, Canadian farm households receive on average
less off-farm income than in the U.S.




Agricultural Policies




We begin with an extensive discussion of U.S. policies, and then discuss the somewhat
different experience in Canada.


United States


Legislative proposals in the U.S. to improve the economic situation of farmers through
governmental intervention in commodity markets were first developed conceptually as
remedies for the precipitous fall in product prices in the aftermath of World War I. After
several failed attempts to enact farm support bills in the 1920s, the further decline in
agriculture's situation with the onset of the Great Depression of 1929-32 led to legislative
success in the landmark New Deal programs beginning in 1933. These programs had the
principal purposes of increasing the incomes of farm people (with an explicit goal stated in
terms of "parity" of farm income with reference to a pre-World War I standard) and
stabilization of farmers' revenues. The fateful choice was to attempt to achieve both these
goals by means of supporting farmers' prices received for a subset of commodities ("basic"
commodities in U.S. law -- initially wheat, corn, cotton, rice, tobacco, pork and milk).
        Already in the 1930s the four main feasible means of market intervention in pursuit of
higher producer receipts had been implemented for key commodities: production controls;
government purchases of commodities for stockpiling at price support "loan rates" at which
farmers could forfiet the basic commodities instead of making repayment of the loan plus
interest; disposal of surplus stocks through distribution or subsidized sale for export or to
domestic consumers; and direct payments to producers. The first direct payments, in 1933,


3
 For 2001-05 the annual net incomes per farm that yields the C$11 thousand average are, respectively: 11.0,
6.0, 11.1, 16.4, and 10.6 (Statistics Canada 2006).
                                                      5


were tied to farmers' idling of land or destruction of livestock, so from their inception they
were not classical production-inducing subsidies.
        In 1936 the U.S. Supreme Court ruled that the federal government had no authority to
administer land-idling acreage controls under New Deal farm legislation, on the
Constitutional grounds "that powers not granted are prohibited. None to regulate agricultural
production is given, and therefore legislation by Congress for that purpose is forbidden."
(U.S. Supreme Court 1936). Subsequently, the Court's alleged respect for precedent was not
extended to this decision, and many later production control measures have passed
Constitutional muster.4 At the time, the result of the Court's decision was a merger of prior
concerns about conservation with measures to remove acreage from commodity production.
This was done in the Soil Conservation and Domestic Allotment Act of 1936 principally by
defining "soil-depleting" crops (the main basic commodities) and "soil-conserving" crops
(grasses and legumes), and paying farmers to substitute the latter for the former.
        Trade policy was almost negligible in the 1930s' programs. The policy proposals of
the 1920s, in contrast, had given a central role to export promotion. The Smoot-Hawley
Tariff, signed into law in July 1930 (despite a petition to President Hoover signed by over
1,000 economists asking that he veto the bill) protected manufacturing much more than
agricultural products. It is notable, however, that the crossover Democratic votes needed to
pass the bill in the Senate (the Republicans then being the main protectionists and the
Democrats free-traders) were lured by the desire to protect sugar (Louisiana), wool
(Wyoming), and Florida fruit (Benedict 1953, p. 251). By 1934 it was clear that even these
elevated tariffs were insufficient to protect sugar, and the first Sugar Act added sugar to the
list of basic commodities, authorizing import and production quotas. With respect to overall
agricultural trade, by 1934 the combination of Depression and trade restrictions in the US and
elsewhere reduced both US agricultural exports and imports to about $600 million per year,
one-sixth of the levels of 1920.
        Experience during and after World War II made it apparent that export demand was
capable of creating farm prosperity to an extent, and with far less cost and turmoil, than a
decade of intensive effort by the federal government had been able to deliver in the 1930s.
Under the Marshall Plan, U.S. exports of foodstuffs were 19 million tons annually in 1947-


4
 The Court changed its view in decisions of 1939 and 1942 upholding, respectively, tobacco and wheat
marketing controls enacted in legislation of 1938 (Mulford v. Smith (1939) and Wickard v. Filburn (1942)).
The reasoning was that agricultural production affected by such programs influenced national markets and so
could be legislated under constitutional powers to regulate interstate commerce.
                                                6


50, compared to 4 million tons in 1935-39. However, three aspects of the situation in the U.S.
were obstacles to free-trade ideas in agriculture. First, the Marshall Plan and subsequent
agricultural exports were in large part financed by subsidies rather than being bought abroad
at world market prices. Second, U.S. commodity policy held some domestic commodity
prices above world levels, so that import restrictions were vital to these policies (otherwise
the program would have to support the world price and not just the U.S. price). Third, the
relatively few US importable farm commodities, notably sugar, dairy products, and some
meats and fruits, had sufficient political power to maintain protection via tariffs or quotas
even when giving them up as part of a larger trade liberalization agreement would have been
beneficial to the nation as a whole.
       Section 22 of the Agricultural Adjustment Act of 1933 required import quotas to be
imposed if imports threatened the effectiveness of a price support program. This situation led
the United States to join Europe in pressing for a waiver of agricultural products from
agreements of GATT members to reduce export subsidies or provide increased import access
to their markets. Some experts argued vigorously for changing U.S. farm programs to make
them compatible with liberal trade, notably in the "Brannan Plan" of 1948 and other
proposals to replace production controls and price supports by payments to farmers and
adjustment assistance (Johnson 1950). But U.S. policy did not turn to favoring the inclusion
of agriculture in the GATT until the 1960s. By then European farm policy had decisively
taken a protectionist path that precluded significant agricultural trade liberalization.
       Beginning with the Agricultural Trade and Development Act of 1954 (P.L. 480), U.S.
policy followed a path suggested by the Marshall Plan of using food aid to foreign countries
as a mechanism for surplus disposal. During 1956-64 about one-fourth of U.S. agricultural
exports that were shipped under this program. P.L. 480 exports had varying degrees of
concessionary pricing, depending on the status of the importing country, but overall there is a
substantial subsidy element in these exports. Since the 1970s the program has shipped a fairly
constant amount of just under $1 billion in commodities annually. In addition, going back to
1935, government-provided export credit and guarantees of repayment to private sector
lenders have been used to stimulate foreign demand for U.S. commodities. Exports have also
been promoted through USDA grants to farm or commercial interests for the purpose of
informational and sales efforts abroad. Revamped as the Marketing Assistance Program in
1990, such programs still spend about $100 million annually.
                                                     7


        More explicit export subsidies were paid through most of the post-World War II
period, most notably in wheat where their role was negotiated under the International Wheat
Agreement starting in 1949.5 In the 1960s more than 85 percent of U.S. wheat exports were
assisted by subsidies. Then during the worldwide commodities boom of the 1970s it appeared
that the era of export subsidies might be replaced by commodity scarcity, with trade policies
restraining rather than subsidizing exports. The US embargoed grain shipments to the Soviet
Union and a few other countries for short periods during 1974-80. Commodity scarcity
proved temporary, however. The worldwide collapse in commodity prices of the 1980s
provided the stimulus for export promotion programs. The European Community intensified
its longstanding practice of export subsidies (Josling 2008). The U.S. began offering specific-
destination export subsidies in retaliation in the early 1980s, and regularized this approach in
the Export Enhancement Program, established under Executive authority of the Reagan
Administration starting in 1983. Canada met the subsidy competition where feasible through
pricing policies of the Canadian Wheat Board.
        The Export Enhancement Program (EEP), like the pre-1970s export subsidies, was
first and foremost a wheat program. It began as low-price government sales in North Africa
in 1983 of wheat stocks held by the Commodity Credit Corporation (CCC) as a result of the
domestic price support programs. The mechanism was complicated, using a payment-in-kind
approach. USDA would determine particular countries and commodities for which it believed
export subsidies would be helpful in selling U.S. products. Exporters would then negotiate a
deal with a foreign buyer at a price discounted from prevailing world trading prices. The
exporter would then apply to USDA for a payment sufficient to make up the difference
between the market price and the negotiated discount price. USDA, if it approved the sale,
would give the exporter sufficient wheat from CCC stocks to cover the payment, called the
export "bonus." By the late 1980s the bonuses were adding up to a billion dollars annually,
with over 80 percent of EEP commodities accounted for by wheat in 1985-89. The program
was widened and generalized so that CCC wheat stocks could be used to subsidize exports of
other commodities, and in 1990, when available CCC wheat stocks were exhausted, in-kind
bonuses were replaced by cash.




5
 An earlier wheat agreement, in 1933, created a schedule of quotas limiting the shipments of wheat by
exporting countries, but this proto-OPEC broke down and the agreement was allowed to expire in 1935 (Gale
and Zaglits 1949). Explicit export subsidies were also implemented for a time early on in the New Deal, on
Northwestern US wheat (Nourse, Davis, and Black 1935, pp. 93-95).
                                                 8


        As the U.S. expanded its export subsidies in the 1980s, Europe and Canada, within
their respective support structures, met the competition with increased export subsidies of
their own. The Uruguay Round of GATT negotiations was a natural venue for mutual
agreement to rein in this costly competition. After long and tortuous negotiations, the
Uruguay Round Agreement on Agriculture (URAA) contained disciplines that, together with
strategic rethinking and changed grain market conditions, greatly reduced the role of export
subsidies after the mid-1990s in both the U.S. and European Union. Both have agreed such
subsidies should be outlawed, and that has allowed farm policy discussion in the WTO's
current Doha Round to focus primarily on market access (import protection via tariffs and
quotas) and domestic price supports via subsidy payments to producers.

Import protection measures
International trade policy was a hot political issue in the U.S. a hundred years before the first
domestic commodity support programs were enacted. Manufacturing interests of the North
wanted protection and, after 1820, received it in the face of opposition from Southern
agricultural interests who bought imported manufactured producer and consumer goods and
also linked their capacity to export, cotton especially, to U.S. willingness to import from
Europe. The North, to succeed politically, needed an alliance with the West, which was in
place until the Jackson Presidency, when his vetoes of legislation for Western improvements
changed the balance of interests in favor of lower tariffs, ultimately the "free trade tariff"
legislation of 1846 which generated average tariff rates of 25 percent in 1850 (calculated
from tariff receipts as a percentage of the value of dutiable imports) as compared to 57
percent in 1830. Higher tariff protection resumed after the Civil War, especially on
manufactured goods, with average rates of about 40 percent between 1870 and 1910.
Throughout this period there were tariffs on imported agricultural products such as wool and
sugar, but rates averaged about 5 times as much for manufactured imports as for agricultural
imports (Davis, Hughes, and McDougall 1965, Table 18-2, p. 327).
        Table 1 shows the evolution of U.S. protection as measured by customs duties as a
percentage of the value of imports. This measure does not always provide a good indicator of
the trade effects of tariffs, notably because a tariff so high as to shut off all imports generates
no customs duties and so counts the same as free trade in calculating the numerator of this
measure. Irwin (2007) reviews this and other shortcomings of that Table 1 indicator, and
estimates a Trade Restrictiveness Index (TRI) that takes into account the effect of a tariff on
imported quantities and the fact that the distortive effects of a tariff increase more than
                                                           9


proportionately with the height of the tariff. His estimates indicate that for all merchandise
trade, while customs duties as a percentage of all imports had fallen to 60 percent of the 1875
level in 1931, the TRI in 1931 remained at 97 pecent of its 1875 level, i.e., that the reduction
in the crude measure greatly overstates the extent of liberalization. But between 1931 and
1960 the TRI fell faster than the crude measure and by 1960 the extent of overall trade
liberalization between 1875 and 1960 was about the same for both measures. That is, by
either measure, the restrictivenes of tariffs in the post-World War II period was about one-
fourth the level of the late nineteenth century (Irwin 2007, Table 2).
         Because the United States has always been a net exporter of agricultural goods, and
imported manufactured goods are used directly and in the production of inputs used in
farming, the tariff structure effectively taxed agriculture throughout the nineteenth century.
The estimates of Irwin (2006) indicate that for the 1870-1900 period, an average 30 percent
protection on imported goods (duties as a percentage of all import values including duty-free
imports) generated a net subsidy to import-competing manufacturers of 15 percent and a net
tax on agriculture (and other exporters) of about 11 percent.6
         This situation was reversed by increasing protection (through both import restrictions
and domestic support) of agriculture after 1920. Import duties on wheat, maize, wool, sugar,
and meat were raised sharply in "emergency" legislation of 1921 and the Tariff Act of 1922
when "the representatives of the agricultural states had committed themselves to a policy of
high and even ruthless protection" (Taussig 1931, pp. 452-53). At the same time, imports of
many manufactured products used in farming were made duty-free.7 After 1910, U.S.
manufacturing became sufficiently export-oriented itself as not to be the strong political force
for protection it once was, and after World War II protection of manufacturing steadily
declined to the point that by 2000 import duties as a percentage of aggregate import value had
declined to 1.6 percent (albeit with additional signficant protection of politically sensitive
sectors such as textiles through non-tariff barriers). Tariffs on agricultural products were also
reduced but protection from imports increased due to quantitative restrictions. In short,
between the broad periods of 1820-1900 and 1930-2000 there was a substantial turnaround in

6
   Irwin's estimate of a net subsidy rate of 15 pecent is less than the tariff protection rate of 30 percent primarily
because of the effect of higher import-competing goods in increasing costs of nontraded goods.
7
   It was such political successes of agriculture in tariff legislation that led H.L. Mencken to pillory farmers in
one of his famous diatribes: "Has anyone heard of a farmer practising or advocating any political idea that was
not absolutely self-seeking ­ that was not, in fact, deliberately designed to loot the rest of us to his gain?
...There has never been a time, in good seasons or bad, when his hand were not itching for more...One might
almost argue that the chief, and perhaps even only aim of legislation in These States is to succor and secure the
farmer." (Mencken 1958, pp. 158-60).
                                                       10


manufacturing as compared to agricultural import protection. However, it was apparent
already in the 1920s that too much agricultural production was exported to make import
protection effective in alleviating farmers' losses in the post-World War I price plunge, and
this changed the focus of farm policy to other measures.
         Overall, the protection of agricultural products relative to merchandise in general
continued to increase over the last fifty years. The rates of import protection of both sectors
were equal in the late 1950s and 1960s, but the protection of manufacturing has since fallen
faster than assistance to agriculture. It should be noted however, comparing market-distorting
agricultural protection with merchandise tariff rates has become decreasingly relevant in
capturing the main U.S. import protection elements in either agriculture or manufacturing,
because in agriculture and in industries such as steel, automobiles, and textiles, the more
important distortions of international trade have become quantitative restrictions, often in the
form of "volutary restraint" agreements between the United States and exporting countries.
More economically relevant measures compare internal U.S. prices with international prices
for the same goods, as discussed below. Nonetheless, the picture remains essentially the same
­ that governmental action to assist agriculture is increasing in impact as compared to action
to protect manufacturing.


Export subsidy measures
An indicator of the role of export subsidies can be obtained from the value of subsidies paid
per unit quantity of exports. In the U.S. these have been most significant for wheat, as noted
above. Subsidies were as high as $1.3 billion for exported wheat in 1993 under the Export
Enhancement Program. The subsidies were targeted to particular sales, however, and not
available for all exports. This raised questions about their efficacy in actually increasing the
quantity exported. By focusing subsidy funding on particular sales, the government's
expenditures were made more effective at increasing those targeted sales. Subsidized wheat
received payment of as high as $43 per tonne in 1991. But at the same time large sales to
other importers, notably Japan, were not subsidized at all.
         Because of the targeted nature of the subsidies, the proper measurement of the
subsidy, not to mention its effects on net exports, is difficult to nail down (as is the effects of
the wheat export embargoes of the 1970s).8 The USDA budget provides information on the
range of export promotion activities. In FY2005 as in the prior few years there were no
8
 For estimates of effects of U.S. wheat export subsidies, see Gardner (1996). On the effects of grain export
embargoes, see USDA (1986).
                                                      11


export subsidies under the EEP and also none under the more recent Dairy Export
Enhancement Program. A total of $2.2 billion was spent on USDA's Foreign Agriculture
Service (FAS) programs, but $1.7 billion of this was on food aid programs. Market
development programs and export credit guarantees are export promotion activities that also
have features making them similar to export subsidies. In FY2005, FAS spent $184 million
on market development programs such as sending teams abroad to make the case for US
commodities, and on informational campaigns in the US and abroad. Export Credit
Guarantees covered $2.6 billion in sales during FY2005 (at a budgetary cost of $137 million,
which is a rough indicator of the subsidy element of the program). In response to a WTO
dispute resolution panel in 2005, the U.S. has eliminated some high-risk countries from the
guarantees and made other changes "intended to remove any long-term subsidy component of
the program" (USDA 2006, p. 38). Unlike import restrictions, whose effects can be estimated
by comparing internal and world reference prices because they are focused on a few
commodities and create big effects, these export programs are spread so thinly across many
commodities that it would not be credible to attribute to them any observed elevation in U.S.
commodity prices relative to foreign prices for the same commodities. What makes more
sense is to treat these expenditures together with domestic programs as elements of overall
non-product-specific support, following OECD practice.



Direct support of producers through commodity programs

Payments to producers have been a central element in US agricultural policy since the first
New Deal programs of 1933. Figure 2 shows payments in billions of US$ in real terms using
the GDP deflator with 2000 = 100. For comparison, the figure also shows the total level of
spending on "commodity stabilization and support" as measured by the U.S. Office of
Management and Budget. The spending levels are higher than payments prior to 1990
because much of the spending was for removing products from the market using stockpiling
programs, purchases for sale to schools and other food assistance, or subsidized sales abroad.
In recent years, spending has been overwhelmingly dominated by direct payments to
producers.9

9
  The spike in spending relative to payments in 2000 is an artifact of government budgetary spending being
reported on a Fiscal Year (October-September) basis while payments to farmers are reported on a calendar year
basis. In 2000, an election year, Congress rushed to get payments to farmers that would normally have gone out
after October 1, before October 1, and this resulted in payments that would normally have occurred in two fiscal
years occurring in one calendar year.
                                              12


       Summarizing the effects of U.S. direct support programs is difficult because of the
variety of policy instruments used and their evolution towards being increasingly decoupled
from production decisions over time. Throughout the 1950s, the price suppport loan rates at
which farmer could forfeit basic commodities to the CCC remained a primary policy
instrument, and were reinforced by payments for idling land. By the 1960s, lower loan rates
and direct payments to reduce forfietures at a supported price entered the policy arsenal. In
the 1970s, the direct payments were further institutionalized in the form of "target prices" and
payment to farmers of a "deficiency payment" when the price of basic crops they produced
fell below the target. By the 1980s, deficiency payments were being made only on 85 precent
of a farmer's base acreage, and for a historical level of "program yields." Thus deficiency
payments came to be somewhat decoupled from production decisions, although the specific
basic crop for which payments were received had to be grown on the corresponding base
acreage. Farmers also had to comply with annual acreae reduction requirements to be eligible
for the deficiency payments. Annual acrege reductions idled an average of 46 million acres
during 1983-1988 as world agricultural prices collapsed in the mid-1980s, then fell to much
lower levels.


Income support in the 1996 and 2002 Acts
The most important change in the 1996 Farm Act was its Title 1, the Agricultural Market
Transition Act (AMTA). With rising world prices for the U.S. farm commodities in 1995 and
1996, AMTA replaced target prices, deficiency payments, and annual acreage set-asides for
wheat, rice, feed grains, and cotton by a scheme of fixed "production flexibility" payments.
The payments were based on amounts farmers received, or would have received if they had
participated, in the pre-1996 deficiency payment program. The amount of the payment was
independent of prices and was fixed by each farm's production history. It could not be
increased or decreased by changes in the farm's acreage or yield of the program crops, while
the program allowed farmers to plant a wide range of crops on base acreage (the reasons for
the "production flexibility" label). The production flexibility payments were in this sense
further decoupled from both prices and production, although payments were not divorced
from all production decisions in that producers lost payments if they increased plantings of
non-supported fruits or vegetables or they left farming completely. The aggregate of
payments was scheduled to decline from about $6 billion annually in 1996 and 1997 to $4
billion in 2002. AMTA payments constituted the bulk of projected commodity support in
                                                13


1996, and the projections were for substantially less government spending on commodity
programs than had occurred before 1995, as Figure 3 shows.


The 2002 Act
Within a year after the 1996 Act was introduced, commodity prices had begun to fall
substantially. With the 1998 crops it became clear that prices were likely to remain at low
levels for some time. The Asian financial crisis and China's lack of an expected increase in
imports weakened world demand and hence U.S. exports and prices. These low prices
triggered two policy responses, one automatically and one through Congressional response.
The automatic response came through the "marketing loan" program. This program was
introduced in 1990 to replace the former loan rate program of supported market prices
through forfeitures of commodities at an established "loan rate" price. The forfieture program
had created a market price floor at the loan-rate price (because farmers could always get that
price through the loan program). To keep this program from resulting in the government
accumulating unwanted stocks of commodities, loan-rate prices were mostly kept below
actual average prices after the 1960s. The marketing loan program precluded stock
accumulation altogether by having the government not actually acquire grain but instead offer
farmers a "loan deficiency payment" equal to the difference between the policy-determined
loan-rate price (which varied from county to county) and the local county price. Because the
loan-rate prices were set below average prices, hardly any loan deficiency payments were
made during 1990-1997. But by 1998 commodity prices fell below loan-rate levels
sufficiently to trigger $500 million in loan deficiency payments. Unlike the target-price-
related deficiency payments paid on a historically fixed level of output, the loan deficiency
payments are made on all of current output. In Fiscal Years 1999, 2000, and 2001 these
payments rose to $3.4, $6.4, and $5.3 billion, respectively, as all the grains, cotton, and rice
experienced continuing historically low market price levels.
       The Congressional response to these low prices was to enact emergency "market loss
assistance" programs in each of the years 1998-2001. These programs provided an average of
$4.8 billion annually for those four years, added proportionally to each farmer's production
flexibility payments (in most cases doubling them during 1999-2001).
       These two added sources of spending are the main factors that account for the huge
expansion of commodity program spending during 1998-2001, as compared to the levels
                                                     14


anticipated in 1996, shown in Figure 3. Instead of the roughly $6 billion annually that had
been expected, actual spending averaged over $20 billion in those years.
        By 2001 it was clear that Congress was sufficiently dissatisfied with the political
wrangling involved with annual emergency legislation that more permanent revision of the
1996 Act would be legislated. The Farm Security and Rural Investment Act of 2002 provided
for additional spending on farm programs of more than $50 billion over and above projected
"baseline" spending if the 1996 Act had been continued. This increase was possible because
at that time the U.S. budget was in surplus and was projected to continue in surplus, and
because farm commodity producers had sufficient political power to defeat competitors for
the funds available. This expanded commitment is the most significant, and to some most
shocking, aspect of the 2002 Act.10
        In addition to the issue of spending levels, the 2002 Act addressed structural issues in
the form and scope of farm subsidies. Some farm groups, mainly centered in Great Plains
wheat growing, wanted to return to supply management, in order to reduce production and
increase commodity prices. Environmental groups pushed to have a substantial part of the
new spending allocated to conservation and environment-improving programs. The
legislation as enacted continued the fixed production flexibility payments from 1996
(renamed fixed direct payments). Supply management was rejected but a new
"Countercyclical Payment Program" was added to provide payments that rise or fall inversely
with market prices (although the quantity base for payments remained fixed, with an option
for one-time updating to 2002, for each farmer). This amounted basically to a re-institution of
pre-1996 deficiency payments, but without annual acreage reduction set-aside requirements
and with farmers retaining the planting flexibility introduced in 1996. In addition, earlier
production quotas for peanuts were replaced with strengthened support programs similar to
the other program crops and a new program of direct support payments for milk was added.
Conservation and environmental programs ended up with a substantial share of the new
spending, but not as much as the proponents of these programs had argued for.




10
   A Washington Post editorial termed the bill "The Mother of All Pork." Business Week magazine opined: "It's
a dreadful piece of legislation ­ bad for most farmers, bad for consumers, and horrendous for taxpayers" (May
7, 2002). The New York Times editorialized against the Act on several occasions, notably in one entitle "The
Hypocrisy of Farm Subsidies" (December 1, 2002).
                                                     15


        The Congressional Budget Office (CBO) estimated that the innovations of the Act
would cost an average of $8.0 billion over the ten Fiscal Years 2002-11.11 Of this, $4.5
billion were for direct payments to farmers under either the fixed payments or the mandated
new Countercyclical Payment Program. In addition were estimated 10-year spending
increases of $0.5 billion in marketing loans and loan deficiency payments, $0.5 billion for the
new peanut program, $160 million for the new dairy program, and $43 million for increasing
support in the sugar program, partly offset by savings projected at $26 million from
tightening payment limitation slightly, for a total of a $5.7 billion average annual spending
increase for all commodity programs (Title I of the Act). New initiatives in the Conservation
Reserve Program and the Wetlands Reserve Program (both long-term paid land-idling
programs that have enrolled a total of over 30 million acres since 1990), as well as the
Environmental Quality Improvement Program, the Farmland Protection Program, and a new
Conservation Security Program were projected to cost $1.3 billion annually over ten years
(FAPRI 2002a). The expanded costs of these programs consisted mostly of payment made to
farmers to encourage the use of soil conservation or water quality improvement practices.
Some of the practices reduce production, such as replacing cultivated crops near streams or
lakes with "filter strips" of grass in the Conservation or Wetlands Reserve Program. Other
"working lands" programs are roughly neutral with respect to production or even increase
production, such as Farmland Protection Program payments to farmers in exchange for their
maintaining land in farming rather than selling it for commercial development.
        Apendix Table 3 shows details by program of spending on farm support. Total outlays
in FY 2003 and 2004 were lower than projected because commodity prices higher than had
been projected resulted in less spending than had been forecast on countercyclical payments
and loan deficiency payments, both of which are lower the higher are commodity prices. But
in FY2005 these payments increased as commodity prices fell.

Overall summary of market-distorting support

Table 2(a) shows the NRAs for key agricultural products, which are partly based on the
OECD's producer support estimates for 1986-07, and the author's use of their method back to
1955. This measure of NRAs excludes the deficiency, production flexibility and fixed direct
payments, and the market loss assistance and countercyclical payments. These various

11
   Ten-year projected spending was estimated in accordance with Congressional budgetary procedures, even
though the Act only authorized programs for the six years 2002-07. The "baseline budget scoring" assumption is
that those programs will be reauthorized to cover the ten-year period.
                                                       16


support payments have been at the heart of U.S. farm policies, as described above, but have
become increasingly "decoupled" from producion decisions and arguably can now be
concluded to have minimal or at least small effects on production or trade (see the Appendix
for further discussion).12 The main policies included in the NRAs in Table 2(a) are: import
protection, most notably for sugar, but also for dairy products and meats; export subsidies,
most notably the Export Enhancement Program and earlier export subsidies for wheat, but
also affecting rice and poultry in some years; and the various loan-related payments to
producers that a producer can increase by increasing output, which are closest to a classical
production subsidy. Plotting these data separately for exported products and for imported
products that compete with US products shows somewhat higher rates of assistance for
importables (Figure 4(a)). Given the dominance of exportables in overall US production, its
line in Figure 4(a) is close to the line for all covered products.
         The NRAs vary greatly across commodities, as summarized in the dispersion measure
shown in the 2nd to last row of Table 2(a), and even more so if the other products that get
negligible support are considered (the latter accounting in aggregate for one-third of the value
of U.S. agricultural production at undistorted prices, see bottom row of Table 2(a)).
         Appendix Table 4 describes support through various government payments (including
those excluded from Table 2(a) which we term "decoupled") for the top 25 commodities,
accounting for 91 percent of the U.S. farm value of production in 2004. Overall, commodities
accounting for 42 percent of production received significant support, with payments
amounting to 6.9 percent of the value of production in 2004. Yet 14 of the top 25
commodities, and a total of 58 percent of the value of production, received no significant
support. Appendix Table 5 shows a broader picture of U.S. federal government activity in
support of agriculture. In addition to the commodity programs there are conservation
programs, export programs, governmentally underwritten loan programs for farmers, crop
insurance, research funding, and marketing and regulatory programs. These additional
activities have a price tag of $15 billion in 2005.13 The sum of $34.1 billion for FY 2005


12
   That argument is harder to make for the 1980s when these payments were tied to significant annual land
idling requirements and it ignores wealth effects, insurance effects, and remaining production restrictions, as
discussed in the Appendix. Whether any of thes effects are quantitatively important is an empirical question.
While impossible to estimate with precision from the data available, the analysis to date suggests these effects
are small.
13
   "Price tag" is a vague term and is used because the figures shown in Appendix Table 5 are not all derived
from a consistent set of U.S. budgetary concepts. Most notably, the export credit guarantees are not the
expenditures of the government on these guarantees; rather they are the value of loans guaranteed. Unless there
are defaults on these loans (funds borrowed by foreign importers to buy U.S. exports are not repaid to the U.S.
                                                        17


amounts to 14 percent of the market value of U.S. farm cash receipts for all crops and
livestock.


Canada


Canada remained a British colony during the early period of U.S. trade policy, and did not
introduce substantial tariff protection of manufacturing until the 1870s, and then at less than
the U.S. levels (Fowke 1946, Ch. 10). Agricultural protection became important earlier,
notably with wheat import tariffs directly against U.S. exports (and U.S. duties levied on
Canadian grain exports). The signficance of particular policy steps has been debated, but a
convincing case can be made that "The tariff (of 1843) was a true break in the old colonial
system, and was brought about, not by capitalists seeking to establish new industries, but by
pioneer farmers trying to exclude outsiders from the local markets" (Jones 1941, p. 537).
Thus, while attempts to measure the relative protection of manufacturing and agriculture
comparable to those cited above by Irwin for the United State for the nineteenth century are
not available for Canada, it seems clear that agriculture was never implicitly taxed in Canada
the way it was in the U.S. (or in Australia and New Zealand ­ see Anderson et al. 2008).
         With respect to the context of agricultural support, Canadian agriculture varies
substantially from east to west in cropping patterns and size of farms, in ways roughly
parallel to corresponding U.S. areas south of the border. In those parallel areas there are many
similarities, notably between the Prairie provinces and the Northern Plains. However, the
history of policy and current practices in the two countries are quite distinct in several
respects.
         In the Great Depression of the 1930s, Canadian farmers were hit as hard as in the
U.S., in both countries with particular severity in the Prairies. The Canadian government
provided some debt relief through the Prairie Farm Rehabilitation Act of 1935, but Canada
did not introduce an integrated set of programs or make substantial income transfers to
farmers as the New Deal did in the U.S. Indeed it is arguable that at that time and still to the
present day, while a series of ad hoc programs have been implemented Canada has no
comprehensive farm policy comparable to the omnibus U.S. farm bills. This is attributable at
least in part to Canada's more decentralized political system, under which many policies are
Provincial rather the Federal, notably in the marketing area where Provinces have set up

lenders) the actual outlays on these programs is negligible. In fact, defaults are rare. In U.S. budgetary parlance,
the value of loans guaranteed is the "program level", and this is what the USDA budget summary shows.
                                               18


marketing legislation for fruits and animal products going back to 1926 (see Schmitz, Furtan,
and Baylis 2002, Ch. 2).
       The first major federal support of the U.S. type was provided under the Agricultural
Stabilization Act of 1958. This program guaranteed producers 80 percent of the average price
over the previous ten years, by means of payments from the federal government. Only small
payments were made, and in 1975 the payment trigger was raised to 90 percent of a five-year
moving average price and a mechanism was introduced for compensating farmers for rapid
increases in cash costs of production, which "indicated the Canadian Government's
continuing commitment to ensuring short-term solvency in agriculture" (OECD 1978, p. 29).
       Canada's agricultural policies for grains and oilseeds have followed to an extent a
path similar in some respects to those of the United States, but with less reliance on crop
supply management through acreage controls and with more reliance on collective marketing
most notably through the Canadian Wheat Board. The CWB has a legal monopoly on the
sales of Canadian wheat and barley into foreign markets -- all exports as well as sales of
wheat to domestic millers of flour must be sold through that agency. Farmers then get a
pooled price depending on the receipts the CWB is able to earn from the exported and
domestically sold commodities. The monopoly powers of the CWB have been challenged in
Canadian courts, much as the original U.S. programs of the 1930s were in the U.S. courts, on
constitutional grounds. In a case brought in 1994, a group of barley growers sued the CWB,
arguing that it "breached the rights of individual farmers guaranteed under the Canadian
Charter of Rights and Freedoms" (Schmitz and Furtan 2000, p. 145). The plaintiffs' plea was
rejected (and following Canadian law they had to pay court costs of the defendants ­ the
government of Canada).
       The year 1995 was a watershed in that, under pressure because of federal budgetary
deficits and the Uruguay Round Agriculture Agreement's disciplines on export subsidies,
transportation subsidies under the Western Grain Transportation Act were ended. These had
cost an average of about $(US)12 per tonne of grain and their elimination was estimated to
have saved the federal government about $(US) 400 million in 1995.
       With respect to income support for producers, Canada has undertaken far-reaching
experimentation in its series of grain programs over the last 30 years. The Western Grains
Stabilization Program (WGSP), initially enacted in 1976, made payments from a fund partly
financed by growers when their aggregate cash receipts from grains fell below a 5-year
                                                19


moving average. After accumulating large deficits without providing satisfactory income
protection to producers, the WGSP was abandoned.
       The Farm Income Protection Act of 1991 marked an important turning point in
Canada's approach to farm support in crop production, moving from policies aimed at
particular commodities toward a whole-farm approach. The 1991 Act introduced the Gross
Revenue Insurance Program (GRIP) and the Net Income Stabilization Account (NISA).
These programs were tuned to each producer's situation, with GRIP making crop-specific
payments to producers when their production times the market-wide average market price fell
below that producer's established average yield times a "target" price. The program was
packaged as insurance in that each producer paid a premium for this coverage (but about two-
thirds of the premium cost was paid by a combination of provincial and federal funds).
       GRIP combined features of the U.S. deficiency payment and subsidized crop
insurance programs, and its comprehensive approach has attractive features. But it proved to
have too little political support from farmers to justify its budgetary costs in the belt-
tightening environment of the mid-1990s, and GRIP expired after 1995. NISA, a more
broadly conceived (avoiding support of specific commodities) and less costly program,
continued until another decade. It is essentially a subsidized savings account into which
producers can contribute 2 percent of the value of qualifying grain sales, to be matched by 1
percent each from provincial and federal governments. The producer can withdraw funds
from the account if either annual farm operating income or family income falls below
established triggers (see Huff (no date) and Gray and Smith (1997) for further discussion).
       In 1998 Canada introduced the Agricultural Income Disaster Assistance (AIDA)
program. Under that program, funded 60 percent by federal and 40 percent by provincial
governments, anyone who files income tax returns as a farmer can get an indemnity payment
if their gross returns fall below 70 percent of the similarly calculated returns over the average
of the three preceding years (Edelman 1999; Schmitz, Furtan and Baylis 2002). In 2001, the
Canadian Farm Income Program (CFIP) replaced AIDA. The experimental nature of farm
income support has been intensified since 2004 with the phasing out of NISA and AIDA, and
replacement with new and ad hoc programs.
       The Canadian Agricultural Income Stabilization (CAIS) Program, introduced in
2003/04, combines insurance and income support features. It makes payments to producers
when a farmer's "production margin" falls below the "reference margin" for the farm,
calculated from previous years' experience. The reference margin is a measure of returns
                                                       20


minus costs that counts fewer expense items than under previous programs, because
"Experience with previous farm programs such as the CFIP indicated that including a high
number of allowable expenses often resulted in reference margins being low and in many
case negative. This often resulted in producers being ineligible for benefits." (Agriculture and
Agri-Food Canada 2006).
         In response to the losses resulting from the Bovine Spongiform Encephalopathy
(BSE) crisis which devastated the beef export business, and as a "bridge" to the CAIS
Program, the Transitional Income Support Program was introduced in 2004 to assist both
livestock and grain producers. This program together with more liberal payouts under the
CAIS raised the costs of farm support in 2003-05 as compared to earlier years. In 2006 the
government introduced payments under the Grains and Oilseeds Program (GOPP) that will
further increase support.
         The 21st century programs are organized and marketed under the Agricultural Policy
Framework, which the Government of Canada and the provinces/territories agreed upon in
late 2003 to coordinate agricultural policy under five headings: Business Risk Management,
Environment, Food Safety and Quality, Innovation, and Renewal (see Agriculture and Agri-
Food Canada 2005). The latter two areas comprehend what are traditionally described as rural
development and research/extension programs. Business Risk Management covers CAIS and
the more recent payment programs. All of the programs have notable differences in funding
and delivery from province to province.
         Unlike for grains, Canada has maintained supply management programs with strong
control measures for dairy, poultry, and eggs. This is in sharp contrast to the U.S. where
supply management in livestock is entirely absent.14 Canada's supply management history
grew out of Provincial marketing board which had become well established by the 1960s
(Schmitz, Furtan and Baylis 2002 Ch. 9). The Canadian Dairy Commission, created in 1966,
introduced supply management ideas which culminated in market-share quotas, under which
a farmer must have an established quota in order to sell milk. Import quotas (under the
Uruguay Round Agriculture Agreement converted to tariff-rate quotas) keep milk from
entering Canada at the high domestic price established for milk sold at retail, while milk for
processed dairy products is sold at lower prices to be competitive in world markets. Similar
but less complex supply management programs exist for broilers (chickens), eggs, and
turkeys.
14
  In the original programs of the 1930s there were U.S. supply control efforts in livestock, but the only
significant such program since 1955 is the Dairy Herd Buyout Program of the mid-1980s.
                                              21



Overall summary of market-distorting support

Table 2(b) shows the NRAs for key agricultural products, which again are partly based on the
OECD's producer support estimates for 1979-07, and the author's use of their method back to
1961. These products cover between 75 and 85 pecent of Canadian agriculture. The average
NRA for those covered products was around 8 percent up to the mid-1970s, rose to 28.6
pecent during the export price war period of 1985-89, but has since come back to around 12
percent. The dispersion in NRAs across the product range also rose substantially up to the
mid-1980s and has more than halved since then. As usual, the estimated NRA for importables
is well above that of exportables according to our classification based on trade status ­ and
well above the average importables NRA for the U.S.


Agricultural relative to non-agricultural support


To get a more-complete picture of the policy distortions to farmer incentives in North
America, we first provide `guesstimates' of the NRAs for non-covered products (a weighted
average across exportables, import-competing products and nontradables), we then add non-
product-specific support such as input subsidies, and also add what we term "decoupled
support" as measured by certain OECD categories of its Producer Support Estimates (PSEs)
over the past 3 decades. As well, we compare the NRA for tradable farm products (including
non-product-specific support but not decoupled payments) with the NRA for non-agricultural
tradables by calculating a Relative Rate of Assistance. These are summarized in Table 3.
       Input subsidies and other non-product-specific assistance is of non-trivial importance
to the overall NRA for agriculture in North America as compared with the rest of the world,
adding between one-quarter and one-third to the sectoral NRA in the U.S and only slightly
less in Canada. In this category are included payments based on input use (OECD E1) and
miscellaneous payments (OECD H).
       Of even more importance is what we have termed as `decoupled' payments, which are
assumed to encourage production less than market price support policies. Following certain
OECD categories, we include here not only the various commodity income support payments
described above as increasingly decoupled from prices and production over time, but also
payments made for long-term acreage idling under programs such as the Conservation
Reserve Program and also subsidies for crop insurance and ad hoc annual disaster payments
                                                     22


(see note to Table 3 for the OECD categories included).15 As can be seen from Table 3(a) and
Figure 5(a), those decoupled payments nearly doubled the NRA for the U.S. in the mid-
1980s, and added about one-third in the 1990s and the present decade. For Canada such
`decoupled' payments have been somewhat less important although still non-trivial (Table
3(b) and Figure 5(b)).
        As pointed out above, it is difficult to summarize the effects of U.S. support programs
because of the variety of policy instruments used. Although any estimate is conjectural, the
set of most-reasonable estimates indicate that in the 1999-2005 period the marketing loan
program has increased the U.S. output of grains and soybeans by about 2 percent, the direct
payment program, including the 2002 Act's changes, about 1 percent, and crop insurance
subsidies by 1+ percent, for a total effect of 4 to 5 percent more of these commodities being
produced than would have been the case in the absence of commodity support programs. The
long-run consequences (on conservation, agricultural research, technology adoption) of
commodity support policies are a quite different matter not considered here.
        Looking at the levels of border protection and domestic support payments themselves,
overall government support for farmers in the U.S. rose in the decade or so from the mid-
1970s (having fallen in the two decades prior to that). It has since fallen back slightly even
when decoupled payments are included, although the level was as nearly as high during the
period of low world agricultural prices during 2000-2004 as it was when prices were low in
the late 1980s (see Table 3). It dropped substantially after 2005 as international food prices
spiked, but this does not represent a change in policy so much as the countercyclical design
of some US payments and a reduced need to support farmers because of higher prices.
Support for farmers in Canada too rose steeply in the decade or so from the mid-1970s, but
has since fallen back even more than in the U.S. especially when decoupled payments are




15
   Neither our categories "non-product specific" nor "decoupled" correspond directly to uses of these terms in
WTO domestic support notifications or as has occurred in dispute settlement arguments. To illustrate, the NPS
for 1986-2007 herein includes diesel fuel tax exemptions not reported by the US to the WTO under the URAA
category of NPS, while it excludes crop and revenue insurance subsidies that are reported as WTO NPS support.
The "decoupled" category herein includes not only the "decoupled income support" as defined in URAA Annex
2 as WTO Green Box (which is how the US reports its fixed direct payments); also included in this category is
the countercyclical payments that the US reports as NPS. Subtleties in distinguishing between these categories
of payments are discussed in the Appendix and both classifications are being subject to WTO dispute settlement
litegation. The decoupled support herein also includes conservation payments (both for long-term land-idling
and working lands) that are reported to the WTO by the U.S. as green box and the crop and revenue insurance
subsidies reported to the WTO as NPS support. The use of these terms herein also differs from common
classifications in U.S. farm bill discussions and budgets that, for example, often clearly separate commodity
support from conservation expenditures.
                                                       23


taken into account. As in the U.S., the NRA for Canada dropped substantially after the early
2000s as international food prices rose.
           By contrast, assistance to producers of non-agricultural tradable goods has been lower
than for farmers throughout this period, and has declined more than for the farm sector.
Hence even leaving decoupled payments aside, the rate of assistance to producers of
agricultural products relative to those producing non-agricultural goods is now considerably
higher than in the early 1960s in the U.S., other than in the years of historically high
international prices, namely 1995 and 2006-07 (Table 3(a) and Figure 6(a)). The 2008 Farm
Bill left the existing support programs in place and created others that could raise
expenditures even if agricultural prices remain higher than they generally were during 1990-
2006.16 Assistance to Canada's producers of non-agricultural tradable goods, too, has been
lower than for farmers since the mid-1960s, and has declined more than for Canada's farm
sector and more than in the U.S. Hence the relative rate of assistance to the farmers became
considerably higher in the 1980s than in earlier decades, but in the 1990s it returned to levels
similar to those in the U.S., again with the lowest levels being in the years of historically high
international prices, namely 1995 and 2007 (Table 3(b) and Figure 6(b)).
           When expressed in real (constant 2000) dollars instead of percentage price wedges,
the decine in border and domestic support recently is much less evident, because over time
the value of the farm sector has been growing and the number of farmers shrinking. The peak
real value of support in total dollars was higher in the latter 1980s than this decade, but when
expressed on a per farmer basis it was even higher in 2000-04 (before international food
prices rose) than in 1985-89. When the market price support compenent is expressed by
product, the lion's share in recent decades has gone to dairy and sugar, which receive more
border protection than cotton and maize (Table 4).


Consumer tax equivalents


While much of the support for farmers worldwide comes from border measures, in the case of
North America there are also large shares that come from non-product-specific meaures and
from payments that are decoupled somewhat from production. Hence consumers there are not
taxed to the same extent as producers are assisted ­ although taxpayers bear additional costs.
And, because of the differing net trade status of each product, the weighted average of ad

16
     See Orden, Blandford and Josling (2008) for discussion of the 2008 US Farm Act.
                                                    24


valorem consumer tax equivalents across all covered farm products differs also because
consumption instead of production weights are used. There are also direct consumer subsidies
in the U.S., notably through the food stamp program, and in some years for some products
those direct subsidies more than offset the tax component of the trade measures used there to
support producer prices, resulting in negative CTEs. The rises and falls in the degree of
distortion on the consumption side of the market can be seen in Table 5.
           Part (b) of that table shows how trivial these transfers from or to food consumers in
North America have been on a per capita basis. Even in Canada they amount to only $154 or
less per capita per year. This, together with the free rider problem associated with collective
action, helps explain why consumers in that region do not counter-lobby farmers over farm
support programs. It also means the trade and national economic welfare effects of U.S.
programs are less than programs delivering the same NRA for farmers in other countries but
via trade measures which generate a CTE equal to the NRA.




The Politics of U.S. and Canadian Policies




Explaining the political forces behind U.S. and Canadian agricultural policies requires
qualitative rather than quantitative analysis, but the contrasts between the political treatment
of commodities within and between the two countries suggests several hypotheses. I will
discuss the following: (1) historical legacies of commodity producer cooperation, (2) the
importance of supply-chain participant cohesion, and the linkage of that with technological
change, (3) the role of budgetary pressures, and (4) the inherent weakness of opposition to
agricultural support. There are both economic and cultural factors lying behind each of
these.17
           The importance of a historical legacy of producer cooperation was emphasized by
Olson (1985). He noted the traditional and continuing strength of the dairy industry and
traced that back to the long-standing organization of producers in marketing cooperatives.
His underlying point is that lobbying is a voluntary collective activity of precisely the kind
highly susceptible to free-rider problems, that this is in fact the chief hurdle to an interest
group obtaining subsidies, and that cooperative organizations have already solved this
17
  For more on the political economy of U.S. farm policy, see Gardner (2002) and Orden, Paarlberg and Roe
(1999).
                                                25


problem sufficiently to permit effective lobbying. This hypothesis fits well with what would
otherwise be perhaps the chief puzzle in Canadian as compared to U.S. agricultural support,
namely why poultry has had a well entrenched support system via supply control and import
protection in Canada but gets virtually nothing in the U.S. As Schmitz, Furtan, and Baylis
(2002) explain it, supply control measures grew out of cooperative activity in those
commodities by provincial producer organizations. But there were no corresponding such
poultry organizations in the U.S.
       Of course the efficacy of lobbying depends not only on getting organized to make
one's case, but also on the legislators' listening and acting favorably. It is almost axiomatic
that legislators have an interest in listening to their electorate, who hire and fire them. But a
legislator cannot act in accord with the requests of all his or her constituents. Why do
agricultural commodity interests get heard well in so many cases? Traditionally U.S. farmers
were said to have a political advantage because of the structure of Congress, which has two
Senators for every state, which means one representing each 300,000 residents of the
Dakotas, Wyoming, and Montana and one for each 20 million residents of California.
However, recent efforts at reform (such as taking payments away from producers who have
over a million dollars in off-farm income) have been defeated in the House (where each
Representative equally has about 600,000 resident constituents) as soundly as in the Senate.
       The general principal of representation is that a legislator whenever possible provides
the constituents what they ask for. What confounds the efficacy of asking is competing
constituents who ask for policies that conflict. A strength of cotton growers is that they
present to the agriculture committees of Congress a unified position of the supply chain
including growers, ginners, shippers, and millers. This has led to policies like the "step two"
payments to cotton textile millers that compensate them for paying prices for cotton that
exceed the low world prices that trigger payments to cotton growers (until stopped, to comply
with a WTO ruling). Similarly a strength of the corn growers is that they have powerful
agribusiness allies who support ethanol subsidies, and a former weakness of the grain
producers was their asking for acreage control measures that restricted raw material supplies
for such agribusiness (former because the 1996 Farm Act revoked the authority of the
Secretary of Agriculture to administer annual acreage reduction programs that until the 1990s
were a key feature of grains policy). Cross-commodity dispute is a related problem, arising,
for example, on the part of fruit and vegetable growers left out of "decoupled" payment
                                               26


programs. Similarly, a strength of sugar import restrictions politically is that high sugar prices
have created a large market for corn-based sweeteners.
       Monetary contributions help in getting an interest group's case listened to. Farmers
are not notably profligate donors, but agricultural Political Action Committees (PACs) have
been important in the U.S. Table 6 summarizes PAC donations to politicians or candidates
reported during the 2006 election cycle (Nov. 2004 ­ Oct. 2006). These data are from the
legally required reporting of PACs for donations over $100,000, and do not capture all
political spending. The $6.7 million they donated may seem a lot, but there were 1,200 non-
agricultural PACs that spent over $100,000 in the U.S. during this period, and their aggregate
spending was $800 million. The largest agricultural PAC, the Sugar Alliance, ranked 154th of
the 1,200. Agriculture's share of the spending, 6.7/800 or just under 1 percent, is about the
same as agriculture's share of national GDP. Overall spending by PACs in the broad
Standard Industrial Classification code for agriculture was $15 million, but the majority of
this was from agribusiness firms, notably Deere, Deans Foods, the International Dairy Foods
Association, Cargill, Tysons, Archer-Daniel-Midlands, Conagra, and Heinz Foods. These
companies have interests that are often the same as the commodity producers' interests, but
not always, and what the agribusiness firms focus on in their lobbying is more typically their
own specific issues of concern. In short, it does not appear likely that money is the source of
farmers' exceptional political influence.
       Technical or other exogenous economic changes create diverse interests within a
commodity group that can make policy-making aimed at benefiting the group as a whole
unattractive to legislators. This happened in the most notable case of a formerly important
commodity program that totally disappeared, the U.S. potato price support program. During
1945-1950, the potato program became highly contentious and eventually died because the
growing Western potato growers could produce profitably at lower prices than the support
levels that prevailed, and saw their market potentially capped by restraints needed to control
the costs of the support system (which then relied heavily on production control for the main
supported commodities). Similarly the long-standing marketing order pricing systems for
California oranges and lemons was ended in the 1990s, mainly because of within-industry
disagreement about its operation; and differing interests of peanut and tobacco farmers with
and without quotas to produce for the high-priced domestic market contributed to demise of
these quota program earlier this decade.
                                                       27


         One might expect consumer interests to oppose farm legislation that would increase
food prices, but this has only rarely surfaced as a significant political force (the notable case
being U.S. grain export embargoes of the 1970s). This lack of opposition seems to be
associated with longstanding positive feelings that the general public has about farmers and
farming. A broad-based source of resistance to agricultural support that has been effective is
budgetary pressure at times when fiscal discipline is perceived to be a high priority. In both
the 1985 and 1990 farm legislation, reductions in payments were enacted in order that farm
bills could meet overall Congressional budget limits. The 1996 farm legislation was also
designed to limit subsidy expenditures, but that budget discipline quickly broke down.
As noted earlier, the Farm Security and Rural Investment Act of 2002 covering crops planted
in 2002-2007 increased spending well above baseline levels from continuation of the
legisltation it replaced. This Act was popular in Congress, having passed in the House of
Representatives by a vote of 280 to 141 and in the Senate by 64 to 35. The Bush
Administration did not raise serious objections and the President signed the bill in the
presence of farm-group representatives with words of praise.18 However, small-farm and
environmental advocacy groups were unhappy that amendments failed that would have
imposed more stringent payment limits on large farms, redirected some commodity program
payments to conservation/environmental programs, and imposed various regulatory restraints
on agribusiness. Outside the community of agricultural interests, the 2002 Act has been
widely reviled, as mentioned earlier.19 And just after the Act was passed, three western
Provinces of Canada, along with a dozen Canadian farm groups, asked for $C1.3 billion to
offset the effects of the new U.S. payments. Since that time, Canada has raised its payments
to producers too, as herein described.




Prospects for Reform




18
   As a reminder that Presidents do not always accept what Congress delivers in support of agriculture, President
Reagan in 1985 vetoed a farm bill on budgetary grounds, in the midst of the farm crisis of the 1980s. Congress
could not muster the two-thirds majorities needed to override the veto, so the President's action was decisive.
19
   It is also notable that the more market-oriented members of Congress, even if they represent agricultural
constituencies, opposed the bill. Among the opponents were not only the House Republican leadership, but also
members of the Agriculture Committee such as Boehmer (R-Ohio) and Dooley (D-California), who wrote a
Washington Post opinion piece entitled "This Terrible Farm Bill" (May 2, 2002). Similarly strong opposition
was voiced in the Senate by Richard Lugar (R-Indiana) the senior Republican on the Senate's Agriculture
Committee.
                                                      28


Both the United States and Canada have enacted agricultural support programs that have
distorted their domestic commodity markets. Considering how similar the countries are in
many respects, there are some notable differences between the policy approaches in the two
countries in the choice of policy instruments. But the similarities are more fundamental, and
the ones that bear on the prospects for reform are: (1) strong political resilience of support for
farmers, (2) weak political expression of consumers' interests, (3) trends toward less reliance
on measures that seek to control prices in particular markets (via stockpiling, supply
management, import tariffs), (4) trends toward more reliance on whole-farm income support
(especially in Canada) and payments under commodity programs that are de-linked from
current production (U.S.), (5) acceptance of multilateral liberalization of agricultural trade,
but only with maintenance of protection for some producer interests, (6) modest increases in
political influence of environmental protection, and (7) episodic political strength of taxpayer
interests in cutting farm-support spending, under circumstances that give general budget
reduction. The result of these forces and trends has been that real spending on agricultural
support has not diminished over time even as the share of the agricultural sector in the overall
economy has diminished greatly, while at the same time both countries have moved in the
last fifteen years in the direction of reduced directly market-distorting policies. In the face of
historically low commodity prices 1998-2002 the U.S. maintained policies that have
forestalled output reductions that these low prices would otherwise have induced.
        What options does the preceding summary suggest for reform? First, the best
prospects remain international negotiations, most notably the Doha Round. Given the failure
of the Doha Round so far, this is perhaps a depressing conclusion. Nonetheless, it remains the
case that the U.S. and Canada would sign on to such an agreement if it involved provisions
that reform proponents could point to as offsetting gains in agricultural export markets.
Second, there remain prospects that a combination of environmental/taxpayer interests could
shift agricultural support spending toward public-good provision in ways that would be less
market-distorting than are current policies.20 Reforms in this direction were formulated and
promoted by several organized coalitions of interests in preparation for the 2008 U.S. farm
bill, mainly environmentalists, farmland preservationists, and internationally oriented
agribusiness groups. Third, and not in the cards now but a possibility an economist (or at least
one like me) can cling to is a resurrection of a general predisposition to economic liberalism,

20
   Even if these policies were more market-distorting, as they could possibly become, they would more likely be
of the kind that would reduce agricultural output rather than increase it.
                                               29


as occurred in Australia and New Zealand (Anderson et al. 2008). It was not so long ago that
this predisposition in North America served to limit the scope of market-distorting legislation
considerably, and could again, as the recent Canadian legal debate on the Canadian Wheat
Board's authorities illustrates, despite its outcome. The ascent of free-market Republicans in
the 1980s suggested this might be a real possibility for the U.S. But the policy salience of this
strain of opinion has been thwarted by that party's embrace of muscular nationalism, military
internationalism and cultural conservatism. Similarly, the once-prominent advocacy of free-
trade Democrats has been swamped by the wave of industrial protectionism allied with anti-
trade prairie populism that party believes it needs to regain power.
          The prospects for each of the preceding openings to reform ­ a liberalizing WTO
agreement, conservation/environmental pressures, and a resurgence of deregulatory policy
dispositions ­ would be enhanced with the traditional economist's recipe of compensating the
losers from policy changes with nondistorting transfers. Direct Payments under the U.S. 1996
and 2002 Farm Acts are a move in this direction, but what is really required are one-time
payments, or "buy-outs." U.S. policy has carried out three notable experiments in buy-outs
since 1980: in dairy, peanuts and tobacco. The dairy buy-out (Dairy Production Termination
Program) was implemented in 1986/87, at a time when milk surpluses were chronic. It was
calculated that having dairy farmers agree to sell their herds and leave dairying would save
budgetary outlays. Farmers made offers to the government stating a price per hundred pounds
of milk producing capacity of their herds at which they would be willing to leave the
business. Producers who participated had to sell all their female cattle and agree to remain out
of dairy farming for five years, and attempts were made to ensure that cattle sold were
slaughtered or exported and not sold to another dairy farm. The program was estimated to
reduce U.S. milk production by about 7 percent in the short term but to have had no long-
term effect (Dixon, Susanto, and Berry 1991). The positive lesson is that buy-outs can be
successfully implemented by USDA as a means of getting farmers to participate in policy
reform.
          Buy-outs to permanently remove producers from certain commodity support
programs have been undertaken for peanuts and tobacco since 2000. The 2002 Farm Act
authorized payments to peanut producers to buy their production quotas, which had well
defined values under pre-existing programs. Premiums over market values of quota had to be
paid, but again the approach was proven feasible. Similarly, tobacco quotas and its entire
price support program were terminated in 2005. However, whether buyouts would be feasible
                                               30


for commodities without production-limiting quotas or where program-created assets are not
so precisely defined is questionable. An approximation to a buyout was in the minds of some
proponents of production flexibility contract payments in the 1996 Farm Act. But this
legislation did not formally end the pre-existing support structure and, in fact, did not end the
support programs. Rather, the approach enabled additional payments to farmers. While
students of the prospects for this approach remain cautious (see Orden 2006 and Orden,
Blandford and Josling 2009), something like it coupled with changes of approach as outlined
above are the most likely feasible avenue to future reform.




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                                                          36


Figure 1: Farm household income as a persent of national household income, United States,
1950 to 2005


                          Figure 3. Farm Household Income As Percent of U.S. Household Income



                 160


                 140


                 120


                 100
    Percentage




                  80


                  60


                  40


                  20


                   0
                   1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005




Source: Gardner (2002, Figure 3.12) and USDA, Economic Research Service, Briefing
Rooms (http://www.ers.usda.gov/Briefing/)
                                                             37



Figure 2: Expenditure on commodity programs and payments to farmers, United States, 1955
to 2005

                                                      (2000 $billion)

                              Figure 6. Spending on Commodity Programs and Payments to Farmers

                     45.0


                                                             Spending
                     40.0
                                                              Level

                     35.0



                     30.0
    Billion 2000 $




                     25.0



                     20.0



                     15.0



                     10.0
                                                                           Payments
                                                                          to Farmers
                      5.0



                      0.0
                       1955   1960    1965    1970    1975    1980      1985     1990   1995     2000   2005




Source: Author's compilation from the Congressional Budget Office, Washington DC.
                                            38


Figure 3: CCC commodity program outlays, United States, 1980 to 2002

                                 ($million, fiscal years)



    35000




    30000




    25000



 Million Dollars
     20000
                                                                          CCC Outlays
                                                                          1996 Projection
                                                                          2006 Revision
    15000                                                                 2002 Projection




    10000




      5000




         0
         1980      1985   1990       1995        2000       2005   2010




Source: Author's compilation from the Congressional Budget Office, Washington DC.
                                                     39


Figure 4: Nominal rates of assistance to exportable, import-competing and all covered
agricultural products, United States and Canada,a 1955 to 2007
                                           (percent)
 (a) United States



             70
             60
             50
             40
             30
             20
             10
              0
               1955   1960   1965    1970   1975     1980   1985   1990   1995    2000   2005



         Import-competing products                 Exportables            Total




(b) Canada


             70
             60
             50
             40

             30
             20
             10
             0
              1955    1960   1965    1970   1975     1980   1985   1990   1995    2000   2005



         Import-competing products                 Exportables            Total




a
  Includes the NRAs shown in Table 2 and what we term as "non-product-specific"
assistance, all of which is attributed to tradables. Non-product-specific for 1986-2007
includes payments classified by OECD as based on input use (E1) and miscellaneous
payments (H). The total line does not include what we term "decoupled" assistance.
Source: Anderson and Valenzuela (2008), drawing on authors' spreadsheet.
                                                                                                       40


Figure 5: Nominal rates of assistance to all agriculture without and with decoupled support,a
United States and Canada, 1955 to 2007
                                            (percent)
(a) United States


    70

    60

    50

    40

    30

    20

    10

    0
         1955
                    1958
                             1961
                                      1964
                                               1967
                                                        1970
                                                                 1973
                                                                          1976
                                                                                   1979
                                                                                            1982
                                                                                                     1985
                                                                                                              1988
                                                                                                                       1991
                                                                                                                                1994
                                                                                                                                         1997
                                                                                                                                                  2000
                                                                                                                                                           2003
                                                                                                                                                                    2006
                              Decoupled support excluded                                                    Decoupled support included


(b) Canada


     70

     60

     50

     40

     30

     20

     10

         0
             1955
                      1958
                               1961
                                        1964
                                                 1967
                                                          1970
                                                                   1973
                                                                            1976
                                                                                     1979
                                                                                              1982
                                                                                                       1985
                                                                                                                1988
                                                                                                                         1991
                                                                                                                                  1994
                                                                                                                                           1997
                                                                                                                                                    2000
                                                                                                                                                             2003
                                                                                                                                                                      2006




                              Decoupled support excluded                                                    Decoupled support included
a
  Decoupled support includes `direct payments' in the years 1979-85. From 1986 those payments are
specified to comprise the OECD's items C (payments based on area planted/animal numbers), D
(payments based on historical entitlements), F (payments based on input constraints) and G (payments
based on overall farming income). And for 2005-07, those items replaced by similar but newly
defined items C to E. The values of those payments are estimated by the OECD. Non-product specific
support is also from OECD estimates as defined in the note to Figure 4 (see text for discussion).
 Source: Anderson and Valenzuela (2008), drawing on authors' spreadsheet and OECD (2008 and
earlier years).
                                                      41


Figure 6: Nominal rates of assistance to all non-agricultural tradables, all agricultural tradable
industries, and relative rate of assistance,a United States and Canada, 1955 to 2007
                                              (percent)

(a) United States

           50

           40

           30

           20

           10

             0
              1955    1960     1965    1970    1975   1980      1985   1990   1995   2000   2005
           -10

                ag tradables                  nonag tradables                 RRA




(b) Canada

           50

           40

           30

           20

           10

            0
             1955    1960      1965    1970    1975   1980      1985   1990   1995   2000   2005
          -10


                        ag tradables                  nonag tradables                RRA




a
    The RRA is defined as 100*[(100+NRAagt)/(100+NRAnonagt) ­ 1].

Source: Anderson and Valenzuela (2008), drawing on author's spreadsheet.
                                             42


Table 1: Customs receipts as a percentage of value of imports, United States, 1821 to 2000

                                          (percent)

                       Manufactured               Agricultural                    All
                           products                  products             merchandise

  1821                            47                       47                      43
  1830                            64                       62                      57
  1840                            21                       00                      18
  1850                            27                        3                      25
  1860                            19                        2                      18
  1870                            46                       47                      50
  1880                            39                        6                      29
  1890                            41                        8                      30
  1900                            40                       15                      28
  1910                            29                        9                      21
  1920                             7                        2                        6
  1930                            18                        8                      15
  1940                            15                        7                      13
  1950                             9                        2                        6
  1960                            na                       na                        7
  1970                            na                       na                        7
  1980                            na                       na                        3
  1990                            na                       na                        3
  2000                            na                       na                      1.6

Sources: Davis, Hughes, and McDougall (1965, p. 327) for manufactured and agricultural
products, Carter (2006) for all merchandise.
                                                                                43



Table 2: Nominal rates of assistance to covered farm products, United States and Canada,a 1955 to 2007
                                                                   (percent)
(a) United States

                                        1955-59   1960-64   1965-69   1970-74   1975-79     1980-84   1985-89   1990-94   1995-99   2000-04   2005-07
Exportables                                 1.0       1.1       6.7       5.7       2.1         5.0      10.5       5.5       5.1       8.1       4.8
Cotton                                      5.8       0.2      65.2      43.2       9.2        15.6      32.6      24.6      27.8      70.0      77.0
Egg                                          na        na        na        na       4.1         5.8       4.6       8.1       2.2       0.0       0.0
Maize                                       0.0       1.4       2.4       3.4       0.4         2.6      10.4       0.6       4.8       7.0       6.6
Poultry                                     0.0       0.0       0.0       0.0       0.0         0.0       7.0       1.3       0.3       0.0       0.0
Rice                                        0.0       0.0       0.0       0.0       2.6        15.6      38.8      20.1       7.8      52.7       2.2
Sorghum                                      na        na        na        na        na        37.3      15.0       0.2       4.8       5.5       7.2
Soybean                                     0.0       0.0       0.0       0.0       0.0         0.0       0.6       0.1       6.6      12.4       0.6
Wheat                                       0.0       3.6      17.8      14.4       9.6        11.2      29.1      25.5       5.4       4.3       0.2
Import-competing products                   8.8       9.4       9.4       6.6       9.8        21.1      25.2      19.9       9.5      17.5       8.9
Barley                                       na        na        na        na        na          na      61.9      59.6       4.8       5.3       3.2
Beef                                        0.0       0.0       2.0       2.0       2.0         2.0       1.3       1.0       0.0       0.1       0.0
Milk                                       20.2      23.6      21.0      17.0      25.4        61.8      96.9      59.9      78.8      66.5      24.2
Pigmeat                                     0.0       0.0       0.0       0.0       0.0         0.0       0.0       2.0       0.0       0.0       0.0
Sheepmeat                                    na        na        na        na        na         7.1       2.4       1.2       3.4      13.8       9.9
Sugar                                      50.4      65.9     134.3      18.2      40.3       120.2     158.3      78.8      96.1     115.6      47.6
Wool                                         na        na        na        na        na          na       1.2       0.9       0.9      16.1      28.2
Non-tradable                                0.0       0.0       0.0       0.0       0.0         0.0       0.0       0.0       0.0       0.0       0.0
Potato                                      0.0       0.0       0.0       0.0       0.0         0.0       0.0       0.0       0.0       0.0       0.0

All covered                                 4.7       4.8       7.8       5.9         5.1      11.1      16.2      11.2       6.2      11.6       6.3
 Domestic market support                    0.0       0.0       0.0       0.0         0.1       0.9       2.3       0.4       2.2       3.6       1.0
 Border market support                      4.7       4.8       7.8       5.9         5.0      10.2      13.9      10.8       4.1       8.0       5.3
Dispersion of NRA of covered products      17.3      23.1      46.6      15.7        14.6      39.8      55.3      27.6      31.4      38.4      23.3
% coverage at undistorted prices             66        66        66        69          70        69        66        67        65        66        68
                                                                                      44



Table 2 (continued): Nominal rates of assistance to covered farm products, United States and Canada,a 1955 to 2007
                                                                   (percent)
(b) Canada

                                            1961-64   1965-69   1970-74    1975-79     1980-84    1985-89    1990-94    1995-99    2000-04     2005-07
    Exportables                                 2.5       2.4       2.2        2.8         4.3        8.2        2.4        1.4        1.4         0.4
    Barley                                      2.0       2.0       2.0        5.8         8.0       10.4        2.5        1.4        2.8         1.0
    Beef                                        1.0       1.0       1.0        1.2         2.6        4.0        3.9        nap        nap         nap
    Peas                                        0.0       0.0       0.0        0.0         0.0        0.0        0.0        0.0        0.0         0.0
    Pigmeat                                     2.0       2.0       2.0        2.0         2.0        6.3        5.1        3.8        2.0         0.4
    Rapeseed                                    0.0       0.0       0.0        0.0         0.0        9.6        0.5        0.1        0.1         0.0
    Soybean                                     nap       nap       nap        nap         nap        2.8        0.4        0.5        1.2         0.3
    Wheat                                       3.0       3.0       3.0        3.1         5.3       10.4        1.4        0.6        0.6         0.2
    Import-competing products                  15.7      12.0      12.2       32.3        47.2       53.1       44.0       41.3       49.1        46.9
    Beef                                        nap       nap       nap        nap         nap        nap        nap        2.0        1.8         0.7
    Egg                                          na        na        na         na        41.1       30.1       33.1       27.7       10.6        64.7
    Maize                                       4.9       4.7       3.5        2.3         2.0       12.8        2.5        3.3        8.7         2.9
    Milk                                       34.4      34.4      34.4      162.8       307.2      314.2      182.6      109.4      125.9        94.4
    Poultry                                    17.0      17.8      33.5       24.4        23.3       23.7       25.2        2.7        2.6         6.9
    Soybean                                     0.0       0.0       0.0        0.0         0.0        nap        nap        nap        nap         nap
    Sugar                                        na        na        na         na        32.5       79.5       31.0       17.7         na          na
    Non-tradables                               0.0       0.0       0.0        0.0         0.0        0.0        0.0        0.0        0.0         0.0
    Potato                                      0.0       0.0       0.0        0.0         0.0        0.0        0.0        0.0        0.0         0.0

    All covered                                 8.7       7.2       7.0        16.0        22.5      28.6       20.8        12.3       13.5       11.4
     Domestic market support                    0.0       0.0       0.0         0.1         0.5      13.2        4.1         1.9        1.4        0.4
     Border market support                      8.7       7.2       7.0        15.9        22.1      15.4       16.6        10.4       12.1       11.0
    Dispersion of NRA of covered products      11.1      11.0      13.8        47.5        84.5      87.2       50.1        31.1       35.9       32.5
    % coverage at undistorted prices             71        76        79          84          86        83         81          79         76        76
a
 The main U.S. policies included are import protection; export subsidies; and the various loan-rate-related price support and payments to producers. Excludes deficiency,
production flexibility and fixed direct payments, and the market loss assistance and countercyclical payments (see text for discussion). Weighted averages use weights based
on the unassisted value of production. Dispersion is the standard deviation shown is the simple 5-year average of the annual standard deviation around the weighted mean.
Source: Anderson and Valenzuela (2008), drawing on author's spreadsheet.
Table 3: Nominal rates of assistance to agricultural relative to nonagricultural industries, United States and Canada,a 1955 to 2007
                                                                      (percent)
(a) United States
                              1955-59   1960-64   1965-69   1970-74   1975-79   1980-84   1985-89   1990-94   1995-99   2000-04   2005-07
Covered products                  4.7       4.8       7.8       5.9       5.1     11.1      16.2      11.2        6.2     11.6        6.3
Non-covered products              8.0       7.7       6.0       5.0       4.7       6.6     10.9        8.4       8.5       9.6       5.4
All agriculture (excl NPS)        5.8       5.8       7.2       5.6       5.0       9.7     14.4      10.2        7.0     10.9        5.2
  All importables                 8.6       8.9       8.5       6.1       8.4     16.9      20.9      16.4        9.1     15.0        8.7
  All exportables                 2.7       2.7       6.5       5.5       2.6       5.3     10.6        6.2       5.8       8.4       4.7
  All nontradables                8.0       6.8       5.1       4.3       4.2       5.7       9.4       7.2       7.3       8.2       2.3
Non-product specific (NPS)        7.0       5.2       3.3       1.1       1.2       1.8       2.7       3.7       3.3       4.9       4.3
All agriculture (incl NPS)      12.8      10.9      10.5        6.9       6.2     11.5      17.1      13.9      10.2      15.6        9.8


Decoupled payments                0.0       0.0       0.0       0.0       0.1       5.2       9.3       5.9       6.3       8.4       5.6
All agric (incl NPS & dec)      12.8      10.9      10.5        6.9       6.3     16.7      26.4      19.9      16.5      24.1      15.3


All ag tradables (incl NPS)     12.5      10.8      10.8        7.0       6.2     12.0      18.0      14.4      10.4      16.5        9.9
All nonag tradables               6.1       7.3       7.4       5.4       3.8       3.5       3.5       3.2       2.1       1.5       1.4
     b
RRA                               6.0       3.2       3.2       1.5       2.2       8.2     13.9      10.8        8.1     14.7        8.4
                                                                                    2


Table 3 (continued): Nominal rates of assistance to agricultural relative to nonagricultural industries, United States and Canada,a 1955 to 2007
                                                                      (percent)
(b) Canada

                                  1961-64   1965-69   1970-74   1975-79   1980-84   1985-89    1990-94   1995-99   2000-04   2005-07
    Covered products                  8.7       7.2       7.0     16.0      22.5        28.6     20.8      12.3      13.5      11.4
    Non-covered products              6.6       5.4       4.9       9.8     12.9        14.9     10.6        6.2       7.1       6.7
    All agriculture (excl NPS)        8.1       6.8       6.5     15.0      21.2        26.3     18.9      11.0      12.0        9.1
     All importables                15.1      11.7      12.0      31.1      45.2        50.9     41.8      36.2      42.0      45.0
     All exportables                  4.3       3.5       3.0       4.6       6.3       10.1       4.8       2.9       3.2       0.9
     All nontradables                 0.0       0.0       0.0       0.0       0.0        0.0       0.0       0.0       0.0       0.0
    Non-product specific (NPS)        na        4.9       4.0       5.7       9.1       13.2     12.8        7.8     12.1        2.2
     Inputs                           na        na        na        0.5       0.8        6.9       5.6       2.4       1.8       2.1
     Other                            na        4.9       4.0       5.2       8.3        6.3       7.2       5.5     10.4        0.1
    All agriculture (incl NPS)        8.1     11.7      11.0      20.8      30.3        39.7     31.6      18.9      23.9      11.4


    Decoupled payments                0.0       0.0       0.0       0.7       4.7        8.6       8.0       5.3     10.3      11.8
    All agric (incl NPS & dec)        8.1     11.7      11.0      21.5      35.0        48.3     39.6      24.3      34.2      23.2


    All ag tradables (incl NPS)       8.1     11.7      11.0      20.8      30.3        39.7     31.6      18.9      23.9      11.4
    All nonag tradables               9.2       6.9       6.0       5.1       4.8        3.9       2.6       1.1       0.8       0.8
         b
    RRA                              -1.0       4.5       4.7     14.9      24.3        34.5     28.3      17.6      22.9      10.5

a
 Decoupled support includes `direct payments' in the years 1979-85. From 1986 those payments are specified to comprise the OECD's items C (payments
based on area planted/animal numbers), D (payments based on historical entitlements), F (payments based on input constraints) and G (payments based on
overall farming income). And for 2005-07, those items replaced by similar but newly defined items C to E. The values of those payments are estimated by the
OECD. See text for discussion of non-product specific support.
b
 RRA is defined as 100*[(100+NRAagt)/(100+NRAnonagt)-1], where NRAagt and NRAnonagt are the percentage NRAs for the tradables parts
of the agricultural and non-agricultural sectors, respectively.
Source: Anderson and Valenzuela (2008), drawing on authors' spreadsheet and OECD (2008 and earlier years).
                                                                        3


Table 4: Gross subsidy equivalents of assistance to farmers, by product, per farm worker, and total, United States and Canada, 1955 to 2007

   (a) by covered product (constant 2000 $US millions, excluding non-product-specific and decoupled payments)

                          1955-59   1960-64   1965-69   1970-74   1975-79   1980-84    1985-89   1990-94   1995-99   2000-04   2005-07
                 Barley      na         14        19        44        97       141       518       392        48        53        20
                   Beef       0         25       442       555       541       549       388       307        53        69        25
                Cotton      458         19      1573      1541       593       792      1170      1030      1094      1692      2442
                   Egg       na         na        na        na       395       495       302       432       174        34       167
                 Maize        0        273       509       998       163       848      1927       152       825      1316      1081
                   Milk    3365       4253      4116      3829      7775     13778     12986      9875      3761      8125      6666
                   Peas      na          0         0         0         0         0         0         0         0         0         0
               Pigmeat        0         31        41        56        55        52       124       297        68        46        12
                 Potato      na          0         0         0         0         0         0         0         0         0         0
                Poultry       0        105       127       248       222       197       791       363        68        38        90
              Rapeseed       na          0         0         0         0         0        68         4         1         2         0
                   Rice       0          0         0         0        54       212       261       219        76       344        33
             Sheepmeat       na         na        na        na        40        40        14         5        12        40        28
              Sorghum        na         na        na        na       436       636       261         4        40        40        36
               Soybean        0          0         0         0         0         0        91        18       734      1274        90
                  Sugar     515        594       995       476       711      1015      1173       800       759       824       552
                 Wheat        0        317      1308      1266      1248      1689      2108      1737       333       240        16
                  Wool       na         na        na        na        na        na         1         1         0         3         5



   (b) Per person engaged in agriculture (constant 2000 US$, including non-product-specific but not decoupled payments)


                                    1961-64   1965-69   1970-74   1975-79   1980-84   1985-89    1990-94   1995-99   2000-04   2005-07
Total, North America                 3115      3739      3445      4181       6720      8222      7370      5580      9165      7364
  United States                      3383      3886      3431      3728       6303      7710      6831      5185      8795      7279
  Canada                             1590      2914      3524      6478       8857     11412     11379      8591     12056      8034
                                                                          4


Table 4 (continued): Gross subsidy equivalents of assistance to farmers, by product, per farm worker, and total, United States and Canada, 1960
to 2005

(c) total (constant 2000 $US millions)

                           1961-64   1965-69    1970-74   1975-79   1980-84   1985-89   1990-94   1995-99   2000-04   2005-07
North America,
Covered products             5632        9130     9014     12331     20445     22185     15636      8044     14142     11264
   United States             4708        8115     7731      9029     16177     18088     12781      6195     12227      9109
   Canada                     924        1015     1283      3302      4268      4096      2856      1850      1915      2156
North America,
Cov+noncov products          9886     12539      12345     15387     25132     28745     20788     13195     19816     12985
   United States             8552     11263      10821     11816     20473     24224     17599     11100     17591     10717
   Canada                    1334      1276       1524      3570      4659      4521      3188      2095      2225      2268
North America,
Non-product-specific         7658        6192     3399      4077      5822      6863      8580      6999     10228     10166
   United States             7658        5269     2417      2678      3815      4548      6397      5491      7974      9598
   Canada                       0         923      981      1399      2007      2315      2182      1508      2254       568
North America,
incl. NPS                   17544     18731      15743     19464     30954     35608     29368     20194     30044     23151
   United States            16210     16533      13238     14494     24288     28772     23997     16590     25564     20315
   Canada                    1334      2199       2505      4970      6666      6836      5371      3603      4480      2836
North America,
Decoupled payments              0          0         0       529     11199     16979     11526     11012     15598     14795
   United States                0          0         0       352     10193     15529     10177      9990     13657     11826
   Canada                       0          0         0       177      1006      1451      1349      1022      1941      2970
North America, including
NPS and decoupled           17544     18731      15743     19993     42153     52587     40894     31205     45643     37947
   United States            16210     16533      13238     14846     34481     44301     34174     26580     39222     32141
   Canada                    1334      2199       2505      5147      7672      8286      6720      4625      6421      5806

Source: Anderson and Valenzuela (2008) based on author's spreadsheet.
                                                                         5


Table 5: Consumer tax equivalents of policies assisting farmers, covered products, total and per capita and by product, United States and
Canada, 1960 to 2005

   (a) Aggregate CTE (percent)

                          1960-64   1965-69    1970-74   1975-79   1980-84   1985-89   1990-94    1995-99   2000-04     2005
Total, North America         5.7        8.4       6.1       7.2      12.6       9.8       1.9       -4.7      -2.4      -6.3
  United States              5.4        8.4       5.9       5.8      11.0       7.5      -0.4       -6.8      -4.2      -8.5
  Canada                    10.1        8.2       7.8      19.1      27.3      31.0      24.6       14.1      15.6      14.1


   (b) CTE per capita (constant 2000 US$)

                                    1960-64   1965-69    1970-74   1975-79   1980-84   1985-89   1990-94    1995-99   2000-04     2005
Total, North America                    27        41         36        44        68        42          8       -18        -9       -26
  United States                         26        40         34        35        58        32         -2       -26       -16       -35
  Canada                                50        47         54       127       154       134         95        54        54        56
                                                                        6


Table 5 (continued): Consumer tax equivalents of policies assisting farmers, covered products, total and per capita and by product, United States
and Canada, 1960 to 2005

    (c) CTE by covered product (constant 2000 $US millions), United States, 1955 to 2007

                          1960-64    1965-69   1970-74   1975-79   1980-84   1985-89   1990-94    1995-99   2000-04     2005
Barley                        na        na        na        na        na         89        99      -100       -95        -89
Beef                           0       426       547       531       475       -776     -1529     -1806     -1813      -1976
Cotton                        16      1489      1284       482       657       1028       865       965      1320       1955
Egg                           na        na        na       -20        -9        -79       -54      -308      -409       -519
Maize                        246       435       822        95       566      -1320     -2947     -3257     -3702      -4374
Milk                        3398      3304      3056      5140     10134       9039      5777      1738      4264       1005
Pigmeat                        0         0         0         0         0      -1142     -1748     -2253     -2362      -3122
Potato                         0         0         0         0         0          0         0         0         0          0
Poultry                        0         0         0         0         0       -134     -1076     -1263     -1328      -1657
Rice                           0         0         0        25       100        -46      -138      -201      -199       -357
Sheepmeat                     na        na        na        29         5          6         6        13        53         57
Sorghum                       na        na        na         0         0       -143      -189      -185      -163       -161
Soybean                        0         0         0         0         0       -199      -337      -365      -376       -483
Sugar                       1011      1683       791       965      1051       1421      1018       926       992        593
Wheat                        147       591       572       449       546         88      -126      -917      -859      -1293
Wool                          na        na        na        na        na          2         1         1         0          0
United States               4819      7929      7073      7696     13525       7835      -378     -7010     -4677     -10422
                                                                      7


   (d) CTE by covered product (constant 2000 $US millions), Canada, 1961 to 2005

                         1961-64   1965-69   1970-74   1975-79   1980-84   1985-89   1990-94   1995-99   2000-04   2005
Barley                       11        15       29        68        86        17        16         0         0        0
Beef                         26        41       52        54       108        70        54         6         5        0
Egg                          na        na       na        70       127        98       121        89        33      141
Maize                        17        23       27        23        23        22         1         0         0        0
Milk                        709       682      749      2542      3185      2847      2137      1471      1641     1663
Peas                          0         0        0         0         0         0         0         0         0       na
Pigmeat                      31        41       54        56        45         7         0         0         0        0
Potato                        0         0        0         0         0         0         0         0         0        0
Poultry                     105       127      245       227       203       271       361        30        31       30
Rapeseed                      0         0        0         0         0        22         1         1         1        0
Soybean                       0         0        0         0         0         8         1         2         5        6
Sugar                        na        na       na        44        39        43        31        25        na       na
Wheat                        28        25       37        38        55       152        42        -3        -6        0
Canada                      927       954     1194      3122      3871      3557      2767      1622      1710     1841

Source: Anderson and Valenzuela (2008) based on author's spreadsheet.
Table 6: Political Action Committee (PAC) disbursements during the election cycle, United
States, Nov. 2004 to Oct. 2006
                                         ($million)

Commodity of PAC:

Sugar Alliance                                      1.2
Farm Credit Council                                 1.0
Dairy                                               0.8
Texas Farm Bureau                                   0.5
Cotton Council                                      0.3
Sugar                                               0.3
Cattlemens Beef                                     0.3
Dairy                                               0.3
Broiler Chickens                                    0.3
FLA sugar                                           0.2
Indiana Farm Bureau                                 0.2
Sugar beets                                         0.2
Farmers' Group                                      0.2
Peanuts                                             0.2
Eggs                                                0.2
Michigan Farm Bureau                                0.2
Farmer Coop                                         0.1
Sugar beets                                         0.1
Beef                                                0.1

TOTAL of ABOVE                                      6.7

Source: Political Moneyline, www.tray.com
Appendix: Complexities in analysing economic effects of farm policies of the United Stages
and Canada


The policies affecting producer prices in the United States and Canada, as summarized in the
NRA estimates, have affected farmers' production decisions in major and complex ways, albeit
somewhat differently in these two countries and so they are discussed in turn.

United States

It is helpful to begin with trade policies and then to examine domestic farm support policies,
before turning to the empirical literature.

Agricultural trade policies
Summarizing the effects of U.S. import restrictions and export promotion under the programs
discussed earlier is difficult because of the variety of policy instruments used. These include
import quotas, tariffs, special access provisions (such as the Caribbean Basin Initiative),
"voluntary restraint" agreements (such as the ones on Australian beef sales to the U.S.),
embargoes on trade with specific countries (such as grain exports to the Soviet Union), regional
trade liberalization agreements (most notably NAFTA), and targeted export subsidies (EEP and
DEIP). Some of the effects of those policies on domestic as compared to off-shore commodity
prices are not straightforward.
        U.S. policy provides an ideal indicator of domestic relative to international reference
price for its single most protected major commodity, namely sugar. The New York Mercantile
Exchange trades contracts in both off-shore Caribbean basis raw sugar and landed, duty-paid
sugar at U.S. port locations. The percentage difference between these prices gives a market-
based daily measure of the degree of protection afforded by the full complexity of the U.S. sugar
program. The relevant price data are shown in Appendix Figure 5.
        Over the 2001-2005 period, the average NRA on raw sugar was 110 percent. Although
the sugar program has many complexities, including production controls if minimum import
levels are not met, this percentage is a good measure of the protection afforded the U.S. industry
relative to the world market. In assessing the impact of world markets, it is also helpful to know
that the NRA is achieved through application of tariff-rate quotas, which together with
agreements under NAFTA and CAFTA permitted 2.6 million tons of sugar (raw value) to be
imported (as compared to 9 million tons produced domestically). It is also helpful to know that
these quotas are allocated to country governments in a political process, as opposed to being
auctioned off or assigned to U.S. importing companies. The 2005 allocations are shown in
Appendix Table 6.
        A more complicated trade policy picture is provided by dairy products. The price of milk
is supported through government purchases of commodities to support prices for butter, nonfat
dry milk (or powdered milk) and cheddar cheese, at prices that would attract imports if imports
were allowed to enter freely. Since 1997 butter and cheese prices have generally been above the
support levels, with the only product consistently purchased for price support being nonfat dry
milk. In response to this, USDA cut the support price of nonfat dry milk over time, from $1.04
per pound in 1997 to $0.80 in 2005, and purchases slowed. In this respect, the distortions to the
tradable dairy commodity markets appear likely to be small, and have been analyzed as having as
                                                 2


their chief result forestalling the conversion of nonfat dry milk production in California (which
now produces half the U.S. output) to other manufactured milk products (Bailey 2005).
Nonetheless tariff-rate quotas on imports of these products remain in place. And, although the
market price of milk for manufacturing has been above the support price in all recent years, the
U.S. price for such milk has remained well above the New Zealand price which is the best
candidate for an international reference price. The average NRA for the five years 2000-04,
comparing the U.S. manufacturing milk price with that of New Zealand, is 51 percent.
        Import protection for other major commodities is minimal in the last two decades, as the
commodities are exported and no longer have domestic programs that support market prices and
thus draw imports that require section 22 quotas to foreclose. But quotas and tariff-rate quotas
are used to restrict some competing imported products in fruits and vegetables, even from
NAFTA partners.

Domestic support policies
The joint effects of border measures and domestic commodity programs are well illustrated by
the case of milk. The price support system for manufacturing milk places a floor under the price
of all milk produced. The effects of this policy is reasonable captured by internal and off-shore
price comparisons. Over and above this support, classified pricing under marketing orders
generates a price for fresh (drinking) milk that is higher. The premium for "Class I" milk varies
regionally. The U.S. average increase to the price farmers receive for milk has been estimated in
several studies over the last 30 years. A review by a Task Force of the American Agricultural
Economics Association placed the average rate of subsidy achieved by classified pricing at 4
percent (AAEA 1986). Although this study is 20 years old, the structure and extent of the
marketing order system remains essentially in place to the present. This 4 percent is properly
counted as domestic support that generates additional milk production that adds to world
supplies of dairy products but does not impose a border distortion. In addition, under the 2002
Farm Act there are the Milk Income Loss Protection program payments.
        A major problem in analyzing the production-inducing effects of the many domestic
programs is that the data available to characterize them are government spending levels. It would
be relatively straightforward conceptually, though difficult empirically, to estimate the effects of
this spending if it took the form of classical production subsidies (as is the dairy program,
essentially). Then we could calculate a percentage distortion of the market price by dividing
spending on each commodity by the quantity produced, and estimate the effects of that
percentage subsidy using the relevant elasticities of supply and demand for the subsidized
commodities, taking into account interactions between commodities that are substitutes in either
production or consumption (and often both), and between commodities that are related vertically,
as feed and livestock.
        However, the bulk of U.S. spending in support of agriculture does not take the form of a
production subsidy of this type. An attempt is made in Appendix Table 4 to distinguished
"coupled" from "decoupled" payments. That attempt could be questioned, and the spending
detailed in Apendix Table 5 is even more difficult to characterize.
        If U.S. policies had no effects on world market prices, specifically on the reference prices
used to calculate the effects of trade restrictions, then the difficulties of estimating domestic
support effects would be less important. But for the major U.S. commodities, the effects of U.S.
policies on world markets are potentially significant. So it is important to assess the production
effects of these policies.
                                                          3


        The question of which governmental expenditures do most to influence agricultural
production comes to a head first in deciding what programs to omit from consideration as output
stimulators. The earlier discussion of Appendix Table 5 left out the big domestic food assistance
programs ­ the Food Stamp Program and Child Nutrition Programs ­ which had FY 2005
outlays of $50 billion, more than all the other programs listed in Appendix Table 4 combined.
These programs are omitted on the grounds that they do not distort markets, but are analytically
comparable to welfare programs that transfer cash to poor households.
        The only food programs included in Appendix Table 5 are those that explicitly attempt to
support agricultural markets where surplus production is a problem. The major programs in this
category are P.L. 480, where a mix of foreign need and domestic political interests come into
play (spending about $800 million), and "Section 32" purchases by USDA, a program under
which USDA, at the discretion of the Secretary of Agriculture, purchases commodities deemed
to be in surplus for use in school lunch or other feeding programs (spending about $450 million).
        The OECD estimates a PSE of 23 percent of U.S. gross farm receipts for 1999-2001, and
15, 16, and 16 percent for 2003, 2004, and 2005, respectively (OECD 2006). The 2005
percentage is quite close to the 14 percent calculated above with reference to Appendix Table 5.
Both percentages are higher than would be obtained from NRA calculation using Appendix
Table 3 data where, for 2005, the payments of $20.2 billion amount to 8.5 percent of the $239
billion value of U.S. farm output. This occurs because Appendix Table 5 and OECD include a
substantially wider range of government outlays as part of agricultural support.
        The question for analytical purposes is the effect of this activity on U.S. agricultural
output, prices and trade. As the OECD definition of the PSE makes clear, this issue is
sidestepped in measures like the ones just calculated. The issue has been confronted most
directly in the context of international trade negotiations. The World Trade Organization (WTO)
aggregates "all domestic support measures considered to distort production and trade" (World
Trade Organization 2002) as the Aggregate Measure of Support (AMS). Under the Uruguay
Round Agriculture Agreement (URAA) of 1994, the members of the WTO agreed to discipline
their spending on these "amber box" programs, with some exceptions. The exceptions are "de
minimis" provisions that exempt spending that is less than five percent of a commodity's value
(for commodity-specific programs) or five percent of all agricultural commodities produced in a
country (for programs not tied to a specific commodity), and a "blue box" of programs that
provide subsidies that are linked to production limitations.21
        Each WTO member country is charged with notifying the WTO of its actions as related
to URAA commitments. The United States, according to its notifications, has not provided
support at levels that have reached its AMS commitments, and so has not had to undertake
reductions in support under the URAA agreement. The biggest component of support up to 1996,
deficiency payments, was in the blue box and so not disciplined. Since 1996, the biggest
component of support, production flexibility contract payments under the FAIR Act, has been
21
   With the product-specific de minimis provision, it makes a difference how products are aggregated. For example,
if butter receives support worth 10 percent of its value and cheese and other milk products receive no support, it is
still possible not to exceed the de minimis level of support for dairy products as a whole. Therefore a country has an
incentive to define commodities broadly. In fact the US spreads its support for all dairy products over a single
aggregate dairy category (which is appropriate since what is being supported at the farm level is the underlying raw
material, milk). But fruits and vegetables are not aggregated. U.S. submissions to the WTO report product-specific
support for the following commodity categories: barley, beef, corn, cottonseed, cotton, dairy, pork, honey, canola,
flaxseed, mustard, rapeseed, safflower, sunflower, mohair, oats, peanuts, rice, rye, sorghum, soybeans, sugar,
tobacco, wheat, wool, potatoes, apples, cranberries, and lamb.
                                                           4


placed in the "green box", defined as program outlays that do not have the effect of supporting
prices and "have no, or at most minimal" trade-distorting effects on production.
        The latest notifications tabled by the United States as of 2007 were those for 2001. They
are as follows (in billions of dollars):

                                          URAA                           Amber Box         Amber Box
                                          Commitment                     Total             net of
                                                                                           de minimis

Product-specific                                                          14.6              14.4
Non-product-specific                                                      6.8                0.0
Total                                         19.1                        20.4              14.4

The product-specific items include dairy price supports ($4.5 billion) and sugar import protection
($1.0 billion), as market support measures that do not involve payments and thus are excluded
from the items listed in Appendix Tables 3 to 5. Loan deficiency payments and related marketing
loan gains account for most of the rest. Production Flexibility Payments are notified as Green
Box and not included here. The non-product-specific items include Market Loss Assistance
payments ($4.6 billion), benefits from crop insurance programs ($1.8 billion), and input supply
subsidies, mainly irrigation and grazing rights, $0.4 billion. Since 5 percent of aggregate U.S.
agricultural output of $198 billion in 2001 is $9.9 billion, none of the $6.8 billion in non-
product-specific support has to be counted against the $19.1 billion URAA ceiling, and no
disciplines are required on U.S. domestic support.
        As analytical categories, the amber box and green box raise several questions. The most
obvious is how can Production Flexibility Contract payments be green, and at the same time
Market Loss Assistance (MLA) payments, which provided a 50 percent supplement to PFC
payments on exactly the same payment base, be amber. Since both are decoupled from the
farmer's production decisions in the sense that they do not change if the producer increases or
decreases acreage or output of the covered crops, why are not both equally green? The answer in
the URAA text, as cited in USDA's explanation to Congress of why the U.S. notified the WTO
that MLA payments fall into the amber box, is that MLA payments, as a Congressional policy
response to low prices, are in fact "coupled" to market conditions and are therefore amber. The
URAA is taken to require this even though the fixed payment base for the market loss assistance
payments makes these payments not notably more production distorting than the PFC payments.
Similarly, the Counter-cyclical Payments of the 2002 Act would have to be counted as Amber
Box because they rise as prices fall, even though these payments too do not vary with a
producer's output. However, the Bush Administration has not notified WTO of its policies after
2001, when the 2002 Act went into effect, possibly to avoid taking a stand on this issue.22
22
  The URAA has two requirements for payments to qualify for the green box. First, there is the basic criterion that
payments "shall have no, or at most minimal, trade-distorting effects or effects on production" (Annex 2, Paragraph
1). The second is a policy-specific requirement that "The amount of such payment in any given year shall not be
related to, or based on, the prices, domestic or international, applying to any production undertaken in any year after
the base period" (Annex 2, Subparagraph 6(C). It would be possible to read this second requirement as pertaining to
production over and above that of the base period (otherwise why use the term "undertaken", which could be
omitted if all production is meant). This interpretation preserves the sense of the basic criterion, and the Bush
Administration's unwillingness to embrace this plausible way of notifying MLA payments as green may be a reason
why agricultural interests in Congress were irritated.
                                                       5


         The marketing loan program is the aspect of U.S. policy that is closest to a classical
production subsidy, since it makes use of the difference between a supported price and the
market price on all of a producer's output that can be documented as available for sale from a
farm (up to quite liberal levels of payment restriction). Westcott and Price (2001) estimated of
the output effects of marketing loan supports by removing price wedges attributable to marketing
loan provisions as of 1998, and simulating the effects for each commodity to 2005. They used a
model embodying a complete set of commodity supply and demand elasticities and cross-
elasticities, with baseline projections of yields and export demand. Taking an average of their
results for 1999-2001, i.e., two to four years after the loan program is taken away, they estimate
the following percentage changes in prices and quantities attributable to the program, as
compared to the situation without the program:


                 Commodity                       Market price             Cropland Area
                 Wheat                              -2.2                       1.5
                 Corn                               -1.4                       0.4
                 Soybeans                           -3.7                       1.4
                 Cotton23                           -9.0                       6.0

         In contrast, it is arguable that the additional spending on direct and countercyclical
payments, though large, is essentially a set of lump-sum payments that farmers cannot change
through their decisions about what to produce, how much to produce, or the production practices
followed. Therefore one may expect small if any output effects or price effects, and few if any
deadweight losses due to market distortions.
         What does this argument miss? One issue is the permitted updating of acreage bases for
payments in 2002, which blunts the point that the payments do not influence production
decisions. Given that updating farmers have an incentive to maintain acreage in order to be in a
favorable position for future updating.
         A second issue is a set of individually small but collectively significant policies that have
remained in place: the market-distorting sugar support price; the Dairy Market Income Loss
Protection (MILC) Program, which makes payments on current production (up to a limit of 2.4
million pounds per year ­ equivalent to a herd of about 140 cows), a marketing loan program for
peanuts that makes payments on a current production base, and the introduction, in the 2002 Act,
of similar marketing loan programs for wool, mohair, honey, and pulses (chickpeas, lentils, and
dry peas). These last are significant new production-inducing subsidy programs, albeit on
products with aggregrate values too small to register in Appendix Table 4.
         With respect to Product Flexibility Payments (1996 Act) or direct payments (2002 Act),
reasons have been given as to why the payments may result in commodity production higher
than would be the case in the absence of the program, despite their "decoupled" nature. Most
notable among the reasons are wealth effects, insurance effects, and restrictions on use of land in
growing horticultural crops.
         Whether any of these effects are quantitatively important is an empirical issue, and one
that is impossible to estimate with precision from the data available. Westcott and Young (2001),

23
   The cotton figures are Westcott-Price estimates only for quantity. I estimate producer price based on a demand
elasticity of ­2/3.
                                                 6


following up on Young and Westcott (2000), use estimates of wealth effects on planted acreage,
developed from pre-1990 data by Chavas and Holt (1990), to estimate that during the period of
the FAIR Act PFC payments had "the possible increases in aggregate planted acreage range from
225,000 to 725,000", or about 0.3 percent of total cropland (p. 11). Adams et al. (2001) consider
1997-2000 acreage data directly for 11 major U.S. program-crop states. They find a positive
effect of PFC plus market loss assistance (supplemental PFC) payments, but the effect has only
marginal statistical significance. FAPRI's simulations imply that $10 billion in payments, about
the average level in 1998-2001, would cause about 2.75 million acres of U.S. cropland to be
devoted to program crops that would not have been in the absence of the FAIR Act, 1 percent of
the acreage planted to those crops. The implied output effect of about 1 percent means the
payments introduced in the FAIR Act had about half the downward world price effect of the
marketing loan program. In view of the weak statistical significance of the underlying
coefficient, the estimates are best taken as an upper limit of the program's effects.
        In addition to commodity program effects, the Federal Crop Insurance Program has
increased its subsidies and hence participation in the program since the 1994 Crop Insurance
Reform Act. Estimates in the literature imply that $3 billion in crop insurance subsidies, a level
being approached after 2005, would increase aggregate U.S. crop acreage by 0.5 to 10.0 percent,
a remarkably wide range of uncertainty (see Glauber and Collins 2002; Young, Vandeveer and
Schneff 2001; Orden 2001; Keaton, Skees and Long 2001). The most careful and detailed of
these studies suggest the lower end of this range is most plausible. Young, Vandeveer, and
Schneff project average acreages and yields during 2001-2010 in the absence of subsidized crop
insurance. They estimate 960,000 acres would be withdrawn from grain, soybean, and cotton
production (less than 0.5 percent), with more than half of this acreage from the Great Plains, a
primarily wheat-growing area. Their implied estimate is that production of wheat would decline
about 0.8 percent, cotton 1.7 percent, feed grains 0.2 percent, and soybeans 0.1 percent.

Overall effects
Although any estimate is conjectural, the set of most-reasonable estimates indicate that in the
1999-2005 period the marketing loan program has increased the U.S. output of grains and
soybeans by about 2 percent, the direct payment program, including the 2002 Act's changes,
about 1 percent, and crop insurance subsidies by 1+ percent, for a total effect of 4 to 5 percent
more of these commodities being produced in 1999-2002 than would have been the case in the
absence of commodity support programs.

Long-run policy effects
The long-run consequences of commodity support policies are a quite different matter. One has
to consider government programs that have a longer-term focus (conservation, agricultural
research), and the long-term effects of price supports through farmers' investment and
technology adoption decisions.
       The Conservation Reserve Program (CRP) idled 34 million acres (10 percent of all land
used for crops) as of 2006, roughly the same level as for the last 15 years. If that program were to
end, what would the output effects be? Most land in the CRP is designated as highly erodible or
having other characteristics that make cropping it more than usually threatening to water quality
(such as land within 100 feet of a stream or lake). These lands are expected to have lower than
average yields when cropped, but analysis by the Economic Research Service of USDA has
estimated that yield capacities of CRP land are not far below each area's corresponding cropped
                                                  7


acreage on average; but 58 percent of CRP land is in the relatively low-yielding Great Plains
states and only 18 percent is in the Corn Belt. So bringing this land back into production would
have a disproportionately large effect on wheat production. Assuming two-thirds of CRP land
would return to crop production with 85 percent of the yield of average U.S. cropland,
assumptions consistent with USDA-ERS analyses, a reasonable estimate of the effect on
aggregate grain and soybean output is that the CRP has decreased output by the equivalent of
(340.670.85=) 19 million U.S. average-quality cropland acres, about 7 percent. Thus the CRP
slightly more than offsets the production increasing effects of marketing loans, crop insurance,
and direct payments as operated under the 2002 Act.
        In its benefit-cost analysis of the CRP, USDA estimates imply that 34 million acres
placed in the program increase the prices of wheat, corn, and soybeans by 11 percent, 13 percent,
and 12 percent respectively (USDA 1997, p. 7602). These estimated effects are probably too
large as long-run impacts, but even if the long-run effects are only half as large, they still roughly
offset the price-reducing effects of the USDA's current commodity support programs.

Empirical evidence
In order to provide an informal reality check for the preceding estimates of commodity program
effects (not counting long-term effects of conservation or research programs), consider the time
series data on corn, soybean, and wheat acreage, as shown in Appendix Figure 6. The period
between 1970 and 1981 is one in which a huge increase in plantings of these crops occurred,
from 160 to 240 million acres, a 50 percent increase. This expansion was induced by price rises
in which farm-level corn and soybean prices more than doubled and wheat prices tripled. During
the commodity crash and consequent farm income crisis of the 1980s, this acreage fell back,
partly in response to lower prices and partly because of federal acreage-idling programs of pre-
1996 legislation. The acreage reductions of 1983, 1986, and 1987 are specific consequences of
these programs. By 1990-1995 relative stability in acreage emerged for aggregate grain and
soybean acreage, but with a moderate continuing trend away from wheat and into soybeans. In
this context the FAIR Act of 1996 was intended to let farmers respond more fully to market
prices rather than deficiency payments (a goal already partly achieved in the 1990 Farm Act and
likely responsible for some of the move to soybeans in 1990-1995).
        What were the consequences of moving to "freedom to farm" in the 1996 Act? What was
most clearly expected was a further shift to soybeans, and indeed this shift occurred. Beyond
price incentives, one reason was the desire of some Corn Belt growers to introduce a two-year
corn-soybean rotation for pest control purposes, but who had been trapped into continuous corn
or nearly so by the loss of corn deficiency payments if they shifted to soybeans beyond the limits
allowed under the limited flexibility provisions of the 1990 Act. However, regional data make it
clear that the move to soybeans was not just a Corn Belt adjustment. Table 11 shows planted
acreages for the main regions comparing the two years just before the FAIR Act (1994 and 1995
average) with the last two years (2000 and 2001 average). Soybean acreage increased by about
the same amount (6 million acres) in both the Corn Belt and Great Plains, and by a much larger
percentage in the latter.
        Aggregate acreage for the three crops increased most in the Corn Belt. As Appendix
Figure 6 shows, the main jump in acreage occurred in 1996. The predominant causes were the
high commodity prices that persisted over a year from mid-1995, and the end of legislated
acreage reduction programs. The effect of the FAIR Act's marketing loan, PFC payment, and
crop insurance programs was to maintain that higher acreage. This can be seen most clearly by
                                                           8


plotting the data in price-quantity space. Appendix Figure 7 shows corn acreage planted and the
average price received by farmers for the preceding crop.24 It is noteworthy that the 1998-2002
levels of plantings are clustered in the lower right-hand corner of price-quantity space. This
means that the acreage-response supply function lies below the supply function of earlier years.
Why? One reason is that the real cost of producing corn has declined (note that prices are
deflated to give real values), attributed to technological advances -- improved seed, machinery,
etc.

                                               Wheat            3 crops

                                              -1,802        4,897
                                           -23.1 percent 5.2 percent

                                              -5,462        2,651
                                           -13.2 percent 3.9 percent

                                                 -49        -1,721
                                            -1.1 percent -8.1 percent

                                               -1,255              185
                                            -7.8 percent       0.8 percent

                                              -8,567        6,013
                                           -12.3 percent 2.9 percent

There is an overall tendency for successive observations to lie lower and to the right, as the
division of the data into the 1980s (squares), early 1990s (triangles), and 1998-2002 (diamonds)
indicates. In addition, corn programs, particularly set-asides, make a difference. This is most
obvious in the case of the Payment-in-Kind acreage idling program of 1983, which brought
planted corn acreage down to 60 million. The 7.5 percent corn acreage reduction in the 1995
program in responsible for the left-most triangle in the 1990-1997 data and the only such year in
which corn had an acreage reduction program.
        The data suggest that the loan deficiency payments and perhaps the market-loss
assistance payments of 1998-2001 also have played a role. Sketching in supply functions
(adjusted for acreage reductions in years when they occurred) as shown in Appendix Figure 7
indicates that the curve shifted down by about 65 cents per bushel between 1991-97 and 1998-
2002. If technical progress reduced costs by 2 percent per year during this period (USDA's
estimate of the long-term average total factor productivity growth for U.S. agriculture), this
24
  This price is called the lagged price in the diagram, because it is received in marketing the crop preceding the crop
whose planted acreage is shown. But the time is which the prices are observed actually coincides with the planting
period. For example the price that corresponds to planted acreage in 2001 is the average price received for the 2000
crop. Most of the crop is sold in the months immediately following the harvest, in October 2000 to January 2001,
just a few months before planting the 2001 crop; but some sales whose prices make up the season average price of
2000-crop corn occur throughout the marketing year, which goes through August 2001. Therefore, it is possible that
observation of plantings could influence the "lagged" price to some extent, and we would not be able to identify the
acreage-proxied supply function exactly.
                                                 9


could have accounted for a shift of about 12 percent over the six years from the midpoint of the
1991-97 period to the midpoint of the 1998-2002 period, which at an average price of $2.50
would amount to 30 cents. This leaves a 35-cent apparent supply shift unaccounted for. That is,
in 1998-2002 farmers are planting an acreage of corn that, based on farmers' historical behavior,
would have required a price 35 cents per bushel higher than the actual price we observe in 1998-
2002. (If there were no cost reductions, and the underlying real cost situation has remained the
same since 1991, then the apparently missing price incentive is 65 cents per bushel.)
         Recall from the earlier discussion of marketing loans that the average marketing loan
benefit for 1999-2000 was 26 cents per bushel. This explains a substantial part of the apparent
supply shift ­ if producers expect a 26-cent marketing loan benefit, they will commit acreage to
corn that they would commit if the market price (which doesn't include the marketing loan
benefit) was 26 cents higher and there were not marketing loans (as there were not in the higher-
priced years of 1991-1997). Since the total apparent supply shift (measured vertically) is 65
cents, this leaves a 9-cent (if corn production costs were reduced 12 percent) to 39-cent (if costs
were not reduced at all) shift to be explained by other factors. The prime candidate is the
Production Flexibility and Market Loss Assistance payments made under the FAIR Act.
         To estimate the additional corn production created by the policies, we need to convert the
vertical shift to a horizontal one. For this transformation only one parameter is necessary, the
elasticity of supply. Assuming it is 0.3, the horizontal shift is 1.2 (12 percent cost reduction) to
4.5 percent (no cost reduction). Taking the midpoint, and assuming no yield effects, the
implication is that policies in place under the FAIR Act generated about 3 percent more corn
than would have been the case under pre-1996 policies.
         The data for soybeans indicate an even larger soybean acreage effect in 1998-2002.
Despite record-low real prices, acreage keeps increasing. In part, following the discussion earlier,
this is attributable to the FAIR Act's removal of previously existing disincentives to grow
soybeans. Indeed, the soybean data call into question the estimate of the corn effect as estimated,
because it too could be in part a result of corn acreage moving to soybeans as a result of FAIR
Act soybean provisions rather than corn subsidies. The data of Appendix Figure 6 and Appendix
Table 7 suggest that even a corn-soybean aggregate analysis would not tell the whole story,
because there has been a substitution of both of these crops, but especially soybeans, for wheat.
For the three-crop aggregate, the data indicate an acreage effect of about 4 percent. Appendix
Figure 6 plots the path labeled "policy phase-out" as an estimated 4 percent less during 1999-
2001 as the difference between the U.S. acreage actually planted to corn, soybeans, and wheat
and the acreage the would have been planted in the absence of the PFC payments, market-loss
payments, marketing loan payments, and added crop insurance subsidies that were paid in those
years.

Canada

Appendix Table 8 shows applied tariff rates for Canadian agricultural, food, and nonfood
manufacturing products. Wheat makes the highest contribution to Canada's measured tariff
protection, but it is not clear how meaningful the tariff is, since the main cross-border traffic in
wheat would be with the U.S., which under NAFTA would not be subject to those duties. There
have been non-tariff barriers to wheat movement, most notably in the case of durum wheat in the
1990s, but here it was Canadian exports to the U.S. that were restricted. It is also likely that the
                                                10


Canadian Wheaet Board (CWB) at times exercises voluntary restraint on exports to the U.S.
(Gray and Gardner 1995).
        As of 2000, the tariff levels for supply-managed commodities, which apply once
triggering quantities are reached, were: milk, 241 percent, butter 299 percent, skim milk powder
202 percent, turkey meat 155 percent, eggs 164 percent, and chicken meat 238 percent (Schmitz,
Furtan, and Baylis 2002, p. 272). These levels do not necessarily indicate differences between
domestic Canadian and world reference prices, however, since they are set higher than necessary
in years of average world price levels, so that no quantities will be imported above the in-quota
levels that trigger the duties even in years when world prices are unusually low (so substantially
lower tariffs might have been sufficient). Moreover, to the extent that supply management
programs are actually restricting Canadian supplies, the effects on world markets of liberalizing
the policies are unclear even as to the sign of the effect on world prices. Letting more products
into Canada would be positive for world prices but letting Canadians produce more would be
negative.
        Because they make payments to producers based on estimates of returns for the farm
enterprise as a whole, the main Canadian programs since 1991 do not lend themselves well to
commodity-specific analysis. We can compare Canadian producer prices to international
reference prices, adjusted for transportation and other transactions costs, and for differences in
quality characteristics between Canadian and reference traded commodities.
        The major long-standing market support policies for grains and livestock operate outside
the Agricultural Policy Framework ­ the Canadian Wheat Board CWB and the supply
management programs for livestock. As mentioned earlier, the CWB has a monopoly of
Canadian wheat and barley exports. It is one of the largest wheat merchandisers in the world, and
accounted for 12 percent of the world cereals market according to a recent estimate (Carter.
Loyns, and Berwald 1998). The CWB aims to sell strategically in competition with other
exporters, notably Australia, the EU, and the U.S. The strategy became one of matching export
subsidies in the 1980s and 1990s. In a subsidizing world, the CWB could increase the farmers'
"pooled" price of wheat exported and sold to domestic millers by selling less for domestic
millers' use and more on the world market. With a relatively inelastic demand in the domestic
market, this approach generates price discrimination that in principle would increase the farmer's
revenue from any given amount sold. The effectiveness of this policy has been questioned by
producer groups as discussed earlier (Schmitz and Furtan 2000). The question again is how to
estimate appropriately the market-distorting effects of the CWB in the international perspective.
        Given the structure of Canada's policies, with commodity price effects within Canada
and between Canada and world market prices impossible to observe directly via policy
instruments, the most feasible empirical approach is simply to compare internal Canadian prices
to the closest corresponding international reference prices. The description of policies and policy
instruments provides a qualitative sense of what to expect in such comparisons, but not much
more. In price-comparison approach, we give up the attempt to determine detailed sources of
distortions and take policies as, roughly, black boxes that generate the observed effects.
        Consider wheat, Canada's most important farm product in value of production, and a
paradigm of a heavily traded and reasonably standardized commodity with good historical
international price data. What is the most appropriate comparison of Canadian and U.S. prices to
measure "bottom line" protection of the Canadian wheat market? On the Canadian side, the best
available candidate for a wholesale price is the price quoted for sales from the Canadian Wheat
Board, f.o.b. Thunder Bay (Lake Superior). A widely used international reference price for wheat
                                                        11


is the U.S. Gulf price published by the U.S. Department of Agriculture. This price is for hard red
winter wheat, comparable in quality to the predominant Canadian wheat but not as close as dark
northern spring wheat (winter wheat, planted in the fall, generally does not survive northern
winters) which has prices quoted at the Minneapolis Grain Exchange.25 So, a good indicator of
Canadian protection should be the Thunder Bay relative to the Minneapolis price. This is shown
as NRA3 in Figure 8a.
        It indicates about a 20 percent rate of protection in 1997-2003. This indicator can be
questioned on the ground that the Thunder Bay price is an asking price posted by the CWB
rather than a transactions price. The CWB makes deals at both discounts and premiums from this
price (but jealously guards any information about prices in these deals). A better indicator might
be the realized export value of Canadian wheat. FAO's data on the unit export value of Canadian
wheat, relative to the Minneapolis price. This is shown as NRA2 in Figure 8. It suggests the
CWB has been doing vastly better than the Thunder Bay price since the mid-1990s, averaging
almost 70 percent over Minneapolis in 2000-03. This seems too good to be true (why aren't the
CWB customers going after the much cheaper Minneapolis and Gulf wheat)? In addition, a lot of
Canadian wheat goes to domestic milling and livestock feeding (which is outside CWB control).
So the export price may be overstating the protection given to wheat as a whole. For information
on farm-level protection NRA1 in Appendix Figure 8 shows the percentage relationship between
the FAO producer price of wheat in Canada, and the U.S. gulf price, backed off to the U.S. farm
level (using the average margin over this data period of $24 per tonne). By this measure
Canadian wheat is disprotected by about 20 percent in recent years.26 Overall, the wheat price
comparisons, unfortunately, provide more of a puzzle than an answer. For present purposes I use
the middle-of-the-road estimate, the Thunder Bay/Minneapolis relationship.
        Canadian relative to international reference prices for other commodities vary in ways
that are not transparently related to policies for some of them. Comparisons for Canada's top ten
commodities by market value (excluding potatoes), which accounted for 70.4 percent of the
value of Canada's farm output in 2005, are shown in Appendix Table 9.
        The final two tables in this appendix provide details of the annual NRA estimates for the
United States and Canada.




25
   It should be noted too that the Gulf Price (New Orleans) is not really a market price at the Gulf, but rather
USDA's imputation of a price at the Gulf using price quotes for wheat traded at the Kansas City or Chicago
exchanges plus their estimate of shipping costs to the Gulf.
26
   A farm-level NRA can also be estimated by comparing the FAO producer prices for Canada and the US. This
measure indicates even greater disprotection of Canadian wheat in recent years, averaging about -25 percent in
2000-03. Finally, it might be the case that because of NAFTA, Canadian and U.S. prices are jointly elevated relative
to the rest of the world. To consider that possibility, an NRA was calculated with respect to the Australia wheat
price reported by IFS. This generated an NRA of roughly zero over the last ten years. A Thunder Bay price 20
percent over Minneapolis but not above Australia is the opposite of what the NAFTA protection-in-common
hypothesis would suggest (a common US-Canada price above the level of the Australian price).
                                                           12


Appendix Figure 1: Number of farms, United States, 1940 to 2005

                                              Figure 1. Number of U.S. Farms

            8000



            7000



            6000



            5000
thousands




            4000



            3000



            2000



            1000



              0
              1940    1945   1950   1955   1960   1965    1970   1975    1980   1985   1990   1995   2000   2005




                   Sources: Census of Agriculture, 2002, Agricultural Statistics, 2006, and Carter
                   (2006).
                                                              13


Appendix Figure 2: Number of farms and crop area, Canada, 1961 to 2003

                                          Figure 4. Canada: Farm Numbers and Cropland

                 600                                                                              14.0




                                                                                                  12.0
                 500



                                                                                                  10.0
                 400




                                                                                                         million hectares
thousand farms




                                                                                                  8.0
                                                                                                                            Farms
                 300
                                                                                                                            Cropland
                                                                                                  6.0


                 200
                                                                                                  4.0



                 100
                                                                                                  2.0




                  0                                                                               0.0
                  1960      1965   1970   1975     1980     1985    1990     1995       2000   2005




                         Source of data: FAOSTAT
                                                                14


Appendix Figure 3: Total factor productivity of farms, United States, 1950 to 2005


                                            Figure 2. Total Factor Productivity on Farms

                   140



                   120



                   100
Index (1996=100)




                    80



                    60



                    40



                    20



                    0
                    1950      1955   1960     1965    1970    1975    1980    1985    1990   1995   2000   2005




                           Source: U.S. Department of Agriculture (as reported in Economic Report of
                           the President, 2006, Table B-100)
                                                                   15


Appendix Figure 4: Land area and output per farm, Canada, 1961 to 2001

                                       Figure 5. Canada: Hectares per Farm and Output per Farm

                    300                                                                                    90.0



                                                                                                           80.0

                    250

                                                                                                           70.0

                                          hectares




                                                                                                                  Real Value per Farm (th. 2000 I$)
                    200                                                                                    60.0
Hectares per Farm




                                                                                                           50.0
                                                                    real output
                    150

                                                                                                           40.0



                    100                                                                                    30.0



                                                                                                           20.0

                     50

                                                                                                           10.0



                     0                                                                                     0.0
                     1960       1965   1970          1975   1980        1985      1990    1995   2000   2005




                            Source of data: FAOSTAT
                                                          16


Appendix Figure 5: Prices and nominal rate of assistance for raw sugar, United States,
1955 to 2005
                                          Figure 9. Raw Sugar Prices and NRA

                30.000



                                                                               US, New York
                25.000




                20.000



                                                                                 World, Caribbean
                15.000
cents per lb.




                10.000




                 5.000
                                                                                              NRA



                 0.000
                     1955   1960   1965   1970     1975        1980   1985      1990          1995   2000   2005



                -5.000
                                                      17


Appendix Figure 6: Area planted to corn, soybean and wheat, United States, 1970 to
2001


                                              Figure 10. U.S. Acreage Planted, 1970-2001


                           300,000




                           250,000




                           200,000



                                                                          Policy
          Thousand Acres




                                                                        Phase-out                 Three Crops
                                                                                                  Soybeans
                           150,000
                                                                                                  Wheat
                                                                                                  Corn




                           100,000




                            50,000




                                0
                                1970   1975   1980     1985      1990     1995      2000   2005
                                                                                     18


Appendix Figure 7: Area planted to and lagged price of corn, United States, 1980-
2002


                                                      Figure 11. Corn Acreage Planted and Lagged Price, 1980-2002


                                         6.000
 Price per bushel (real, 2000 dollars)




                                         5.000


                                         4.000
                                                                             1983

                                         3.000


                                         2.000
                                                                                                                      1998-2002


                                         1.000


                                         0.000
                                             40000   45000   50000   55000   60000    65000   70000   75000   80000        85000   90000
                                                                                Thousand Acres
                                                           19


Appendix Figure 8: Nominal rate of assistance for wheat, Canada, 1980 to 2003
                                  Figure 8. Nominal Rates of Assistance: Canadian Wheat

                    1



                  0.8



                  0.6



                  0.4
Percentage Rate




                                                                                          NRA1: Can. farm/(US Gulf-margin)
                  0.2                                                                     NRA2: Can. export value/Minn
                                                                                          NRA3: Can. T.B./Minn


                    0
                    1980   1985        1990         1995          2000          2005


                  -0.2



                  -0.4



                  -0.6
                                       20


Appendix Table 1: Average income of farm households, United States, 2000 to 2004
                                    (dollars)


                                    2000     2001    2002     2003     2004

     From farming                   2,598 5,539 3,473 7,884 14,201
     From off-farm sources         59,349 58,578 62,285 60,713 67,279
     Total household income        61,947 64,117 65,757 68,597 81,480

     U.S. average household
                                   57,045 58,208 57,852 59,087 60,528
     income


     Farm operator household
                                     109      110      114     116      135
     income as % of U.S. average

Source: USDA, Economic Research Service, Agricultural Outlook Tables, ERS
website.
                                         21


Appendix Table 2: Tariffs on imported products, United States, 1989 to 2005
                                     (percent)

                                                                 All
                     Agriculture
                                            Manufactures     merchandise
                                            Highly
                Primary       Lightly    processed Nonfood
                            processed         food   manuf.
        1989        0.9           3.2           6.3      4.2         12.0
        1990        1.0           3.2           6.4      4.2         11.9
        1991        1.0           3.1           6.2      4.3          5.8
        1992        0.9           3.0           6.2      4.3          5.5
        1993        0.8           2.7           6.3      4.3          5.2
        1994                                    6.3      4.2            5
        1995        0.8            2.6          7.0      3.7          5.1
        1996        5.7            2.9                                5.2
        1997        4.4            3.9          7.2      3.4          5.4
        1998        5.0            4.0          6.4      3.1          5.4
        1999        3.5            2.5          6.3      2.9          5.1
        2000        3.1            2.2          6.0      2.8          4.7
        2001        3.4            2.1          6.2      2.7          4.6
        2002        3.2            2.0                                4.7
        2003        2.7            1.9                                5.1
        2004        2.5            2.0                                4.8
        2005        2.5            1.8

Sources: UNCTAD-TRAINS, compiled through WITS (for agriculture), Kee, Nicita
and Olarreaga (2006) for manufactures, Carter (2006, Table Ee 424-430) for all
merchandise.
                                            22


Appendix Table 3: Expenditures on farm support, by program type, United States,
1998 to 2005

                                      ($million)


          Direct    Counter-      Subsidy    Conservation      Ad hoc    Other**
       Payments      cyclical   payments*        Reserve    Assistance
  FY               Payments                      Program                            Total
1998       5,672           0       2,229           1,693           26       523    10,143
1999       5,476           0       5,763           1,435        5,306     1,243    19,223
2000       5,057           0      10,354           1,476       12,536     2,842    32,265
2001       4,105           0       7,409           1,625        7,845     1,121    22,105
2002       3,968           0       8,977           1,785          427       523    15,680
2003       3,857       1,743       3,206           1,785        4,317     2,517    17,425
2004       5,278         809       2,033           1,786        1,057      -388    10,575
2005       5,236       2,772       5,979           1,788        2,580     1,832    20,187
* Loan Deficiency Payments, Net CCC Purchases, Cotton User Payments, Dairy Payments
** Main items are export programs and conservation programs other than the CRP.
                                             23


Appendix Table 4: Support for main commodities, United States, 2004

                                         (crop year)



                     Million $                  Million $
                                           Payments                             Other Programs
               Value of                                                 Total   Features
              Production   Decoupled       Pct.    Coupled     Pct.     Prot.   and Notes
                                           prot.               Prot..   Pct.
                                                                                Some gains from feed
cattle            34,888                                                        crop progs.
dairy             27,549           295    0.011                                 classified pricing,
corn              24,381         4,551    0.187        2,889   0.118    0.305
chickens          20,505                                                        Same as cattle
soybeans          17,895          598     0.033         299    0.017    0.050
hogs              13,072                                                        Same as cattle
hay               12,211
eggs               5,903                                                        Same as cattle
cotton             5,731         1,879    0.328        1,809   0.316    0.644
wheat              4,950         1,140    0.230           78   0.016    0.246
turkeys            3,065                                                        Same as cattle
grapes             3,011
potatoes           2,575                                                        Program ended in 50s
almonds            2,189
tomatoes           2,158
citrus             2,099                                                        Program ended in 90s
lettuce            2,015
sugar crops        1,928                                 61    0.032    0.032   import quota
tobacco            1,752           18     0.010                         0.010   Prod quotas ending
rice               1,702         585 0.344            133 0.078         0.422
apples             1,648                                                        ad hoc. purchases
Top 25           191,227       9,066 0.047         5,269 0.028          0.075
The Rest          18,027                             611* 0.034         0.034
Total Agric.     209,254       9,066 0.043         5,269 0.025          0.069
* Payments for peanuts, sorghum, barley, oats, wool, and honey
                                               24


Appendix Table 5: USDA budget data, United States, 2001 and 2005

                                    ($million, fiscal years*)


                                                                          2001        2005

Contract Payments (2001) and Direct Payments (2005)                      4,105         5236
Supplemental Payments (2001) and Countercyclical (2005)                  5,455        2772
Loan Deficiency Payments                                                 5,293        3856
Price Support Loans and Sales                                            1,377         1532
Disaster Assistance                                                      3,146         2395
Other**                                                                  3,168         3060
Commodity Programs Outlays(CCC) (subtotal):                             22,544       18,851

Conservation Reserve                                                     1,358        1,788
EQIP and other                                                             288           22
Natural Resource Management Programs                                     1,000        1,198
Conservation Programs (subtotal):                                        2,646        3,008

Export Credit Guarantees***                                              3,227        2,625
Market Development Programs                                                119          184
Export Subsidy Programs                                                     15            1
Foreign Food Assistance                                                  1,659        1,719
Export Programs (subtotal):                                              5,020        4,529

Farm Loan and Grant Programs (Budget Authority)                            171         322

Crop Insurance, net indemnities paid                                     2,200        1,182

Administrative costs, above programs                                     2,223        2,440

Federal Research Funding                                                 1,999        2,381

Marketing and Regulatory Programs                                        1,279        1,385

Total activity in support of agriculture                                38,082       34,098

*Fiscal years are Oct-Sept., e.g., FY2001 is October 1, 2000 to September 30, 2001
**Includes cotton user payments, interest expenses, and "Section 32" commodity
purchases (the last not in the CCC budget but included here).
***Amount of loans guaranteed, not the government's costs

Source: U.S. Department of Agriculture, FY 2006 Budget Summary
                                         25


Appendix Table 6: Raw sugar tariff-rate quota allocations, United States



Countries                tons
Argentina               77,258            Madagascar                         7,258
Australia              149,126            Malawi                            17,968
Belize                  19,764            Mauritius                         21,560
Bolivia                 14,374            Mozambique                        23,357
Brazil                 260,522            Nicaragua                         37,730
Colombia                43,121            Panama                            52,105
Congo                   7,258             Papua New Guinea                   7,258
Cote D'Ivoire           7,258             Paraguay                           7,258
Costa Rica              26,951            Peru                              73,664
Dom. Republic          252,935            Philippines                      224,012
Ecuador                 19,764            South Africa                      41,324
El Salvador             46,714            Swaziland                         28,747
Fiji                    12,934            Taiwan                            13,953
Guatemala               86,241            Thailand                          25,154
Guyana                  21,560            Trinidad-Tobago                   12,576
Honduras                17,968            Uruguay                            7,258
India                  11,497             Zimbabwe                          21,560
Jamaica                 19,764            NAFTA                            830,015
                                          CAFTA TRQs (Calendar
                                          year)                              86,000
                                          All Sugar                        2,633,766

Source: U.S. Trade Representative
                                          26


Appendix Table 7: Increase in crop planted acreages, United States, 1994/95 to
2001/02*


                                                  Corn             Soybeans

   change in million acres (percentage change below each entry)

   Midwest                                        150                6,550
                                               0.3 percent        16.6 percent

   Plains                                         2,030              6,083
                                               12.0 percent       69.2 percent

   South                                           -293              -1,380
                                               -5.6 percent       -11.8 percent

   All other states                                564                876
                                               10.2 percent       41.8 percent

   US Total                                      2,452              12,128
                                               3.3 percent        19.5 percent

   * Averages of two crop years.
   Midwest: IA,IL,IN,MI,MI,MN,MO,OH,WI
   Plains: KS,ND,NE,OK,SD,TX
   South: AL,AR,FL,GA,KY,LA,MS,NC,SC,TN,VA
                                          27


Appendix Table 8: Applied tariff rates, Canada, 1988 to 2005
                                       (percent)

                                        Primary
                                                     Processed   Manufact   Manufact
         Wheat    Oilseeds    Cattle   agriculture
                                                        food      food      nonfood
                                        average
  1988
  1989               0.0       0.0         2.6          5.3         7.2       7.5
  1990                                                              7.2       7.5
  1991                                                              7.2       7.6
  1992                                                              7.2       7.6
  1993               0.0       0.0         0.7          3.4         7.6       7.3
  1994                                                              7.6       7.3
  1995               0.0       0.0         5.3         25.6        32.6       6.5
  1996    87.6       0.0       0.0         5.9         24.3        29.9       5.2
  1997    85.5       0.0       0.0         0.7         2.1          8.0       4.8
  1998    64.9       0.0       0.0         2.2         16.6        25.2       3.4
  1999     3.4       0.0       0.0         1.5         16.2        25.1       3.1
  2000     1.3       0.0       0.0         0.2         1.4          5.4       3.0
  2001    28.3       0.0       0.0         0.3         1.7          5.3       3.1
  2002    64.2       0.0       0.0         0.5         1.4          5.3       3.1
  2003    30.5       0.0       0.0         0.3         1.3          4.9       3.1
  2004     1.3       0.0       0.0         0.2         1.0          4.1       3.1
  2005     1.3       0.0       0.0         0.2         1.0

  Sources: Agriculture, UNCTAD-TRAINS, compiled through WITS; Manufactures, Nicita
  A., and Olarreaga M. (2006)
                                        28


Appendix Table 9: Percentage by which farm producer price exceeds external price,
Canada, 2000 to 2003

                                     (percent)

                 2000        2001        2002        2003     2000-03        2005
                                                              average       market
                                                                             value
                                                                            (C$m)

wheat            17.1        18.3        18.7        17.0        17.8        3,985
beef            -19.4       -15.2        -1.8         1.7        -8.7        3,289
rapeseed        -27.7       -25.7         6.9         0.7       -11.4        2,399
pigmeat           7.4         4.4        11.5         8.8         8.0        2,359
milk            151.1       107.9        69.1       153.5       120.4        2,154
barley          -38.9       -27.8       -28.6       -42.1       -34.4        1,182
chicken          22.4         6.0        28.2       -42.1         3.6        1,137
maize             2.2         8.8        16.7        -3.0         6.2          975
soybeans         -3.3        -0.5        -1.1         0.4        -1.1          653
dry peas        -28.1       -10.4       -21.6       -16.6       -19.2          580
                                        29


Appendix Table 10: Annual distortion estimates, USA, 1955 to 2007
(a) Nominal rates of assistance to covered products
                                       (percent)
                                                      Pigmea
        Barley   Beef   Cotton   Egg   Maize   Milk        t   Potato   Poultry
 1955       na      0        0    na       0     21        0       na         0
 1956       na      0        0    na       0     22        0       na         0
 1957       na      0        2    na       0     22        0       na         0
 1958       na      0        9    na       0     21        0       na         0
 1959       na      0       18    na       0     15        0       na         0
 1960       na      0        0    na       0     14        0       na         0
 1961       na      0        0    na       2     15        0        0         0
 1962       na      0        0    na       2     30        0        0         0
 1963       na      0        0    na       2     31        0        0         0
 1964       na      0        1    na       1     28        0        0         0
 1965       na      2        2    na       2     25        0        0         0
 1966       na      2       83    na       2     15        0        0         0
 1967       na      2       90    na       2     25        0        0         0
 1968       na      2       71    na       3     20        0        0         0
 1969       na      2       80    na       3     20        0        0         0
 1970       na      2       85    na       3     21        0        0         0
 1971       na      2       60    na       4     22        0        0         0
 1972       na      2       40    na       6     19        0        0         0
 1973       na      2       25    na       4      5        0        0         0
 1974       na      2        6    na       0     18        0        0         0
 1975       na      2        5    na       0     22        0        0         0
 1976       na      2       30    na       0     15        0        0         0
 1977       na      2        1    na       0     35        0        0         0
 1978       na      2        7    na       2     25        0        0         0
 1979       na      2        3     4       0     30        0        0         0
 1980       na      2        9     5       3     52        0        0         0
 1981       na      2       13     6       0     60        0        0         0
 1982       na      2       21     6       4     65        0        0         0
 1983       na      2       17     6       0     80        0        0         0
 1984       na      2       18     6       6     52        0        0         0
 1985       na      2       29     6      11     70        0        0         2
 1986     115       2       55     0      21     60        0        0         4
 1987     115       3       25     8      11     56        0        0       25
 1988       12      0       31     8       7     52        0        0         4
 1989        6      0       23     1       2    247        0        0         0
 1990       41      1        9     2       2     59        0        0         1
 1991       61      1       21     4       0     68        0        0         2
 1992       38      0       43     6       0     62        0        0         1
 1993       89      2       40    15       0     58        5        0         0
 1994       70      0       10    13       0     52        5        0         1
 1995        3      0       10    10       0     34        0        0         1
 1996        0      0       20     1       0     64        0        0         0
 1997        0      0       30     0       1     69        0        0         0
 1998       14      0       28     0       8    114        0        0         0
 1999        7      0       51     0      15    113        0        0         0
 2000       10      0       93     0      15    100        0        0         0
 2001        3      0       84     0       7     83        0        0         0
 2002        1      0       90     0       0     66        0        0         0
 2003        0      0       53     0       1     46        0        0         0
 2004       12      0       30     0      12     38        0        0         0
 2005        8      0       77     0      20     23        0        0         0
 2006       2      0       77     0       0     20        0         0        0
 2007       0      0       77     0       0     29        0         0        0
                                           30


              Sheepm    Sorghu                                             All
       Rice       eat       m    Soybean        Sugar   Wheat   Wool   covered
1955      0        na       na         0           47      0      na         4
1956      0        na       na         0           12      0      na         4
1957      0        na       na         0           53      0      na         5
1958      0        na       na         0           74      0      na         5
1959      0        na       na         0           66      0      na         5
1960      0        na       na         0           78      0      na         3
1961      0        na       na         0           75      0      na         4
1962      0        na       na         0            0      1      na         5
1963      0        na       na         0           26      8      na         6
1964      0        na       na         0          151      9      na         6
1965      0        na       na         0          175     13      na         6
1966      0        na       na         0          167     15      na         7
1967      0        na       na         0          177     18      na         9
1968      0        na       na         0           81     22      na         8
1969      0        na       na         0           71     21      na         8
1970      0        na       na         0           52     21      na         8
1971      0        na       na         0            9     22      na         8
1972      0        na       na         0            0     21      na         7
1973      0        na       na         0            0      7      na         3
1974      0        na       na         0           29      1      na         4
1975      0        na       na         0           63      1      na         4
1976      0        na       na         0           43      1      na         4
1977     11        na       na         0           27      2      na         5
1978      1        na       na         0           30     26      na         6
1979      1         5       13         0           39     18      na         6
1980      1         6       14         0            6      4      na         8
1981      2         7       22         0           16      9      na         9
1982     17         7       17         0          111     11      na        12
1983     25         8      113         0          152     21      na        15
1984     33         7       21         0          317     11      na        12
1985     48         7       21         0          341     39      na        17
1986     98         1       34         3          141     36       2        18
1987     27         1       13         0          164     48       1        17
1988      9         1        5         0           88     16       1        11
1989     12         1        1         0           58      7       0        17
1990     21         1        1         0           53     23       1        10
1991     13         1        0         0           95     38       1        12
1992     34         1        0         0           88     21       1        11
1993     21         1        0         0          101     27       1        13
1994     12         1        0         0           57     19       1         9
1995      1         1        0         0           64      2       1         3
1996      0         1        0         0           59      0       1         3
1997      0         1        0         0           57      0       1         4
1998      1         1        7         9           94      8       1         8
1999     36        14       16        23          207     17       2        13
2000     58        14        9        29           96     15       2        13
2001     83        18        1        29          121      4       2        16
2002     79        18        0         1           97      0      32        10
2003     33        10        1         1          147      1      23         8
2004     10        10       16         3          117      1      22        10
2005      6        10       21         1           66      0      29         9
2006     0        10        1          0          27       0     31          4
2007     0        10        0          0          50       0     25          5
                                                         31


   Appendix Table 10 (continued): Annual distortion estimates, USA, 1955 to 2007
  (b) Nominal and relative rates of assistance to all agricultural products, to exportable
  and import-competing agricultural industries, and relative to non-agricultural
  industries                                    (percent)
                  NRA, all agric products,a by component                   NRA, agric tradables
                   NRA,        NRA,         NRA,
       NRA,         non-        non-         all ag   NRA, all ag
       covere      covere     product-     product      products             NRA, ag        NRA, all      NRA, all
          d           d       specific      s (incl    (incl NPS   NRA, ag    import-         agric        non-ag
       produc      produc     support        NPS)         and      export-    competi       tradable      tradable
          ts          ts         (3)       (4)=1+2    decoupled)    ables        ng          goods c       goods      RRAb
         (1)         (2)                      +3           (5)       (6)        (7)         (8)=6+7          (9)       (10)
1955          4           9           2             8            8         2          9               8           6         2
1956          4           9           5           11            11         2          9              11           6         5
1957          5           8          11           16            16         2          9              16           6       10
1958          5           6          11           16            16         3          8              16           6         9
1959          5           9           6           12            12         5          7              12           7         5
1960          3           7           6           11            11         2          7              10           7         3
1961          4          10           6           11            11         3          8              11           7         3
1962          5           6           5           10            10         2          9              10           8         3
1963          6           7           5           11            11         3        10               11           7         4
1964          6           8           4           11            11         3        11               11           7         4
1965          6           7           3           10            10         4        10               10           8         2
1966          7           4           3           10            10         6          7              10           8         2
1967          9           5           4           12            12         7          9              12           8         4
1968          8           7           3           11            11         8          8              12           7         4
1969          8           8           2           10            10         8          8              10           7         3
1970          8           7           2             9            9         7          8              10           7         3
1971          8           5           2             9            9         7          7               9           6         3
1972          7           6           1             8            8         7          6               8           6         2
1973          3           4           0             4            4         4          3               4           5       -1
1974          4           3           1             4            4         1          7               4           4         0
1975          4           3           1             5            5         1          8               5           4         1
1976          4           3           1             5            5         3          6               5           4         1
1977          5           5           2             7            7         2        10                7           4         3
1978          6           7           1             7            7         5          8               8           4         3
1979          6           6           1             7            8         4        10                7           4         3
1980          8           5           1             8            9         3        13                9           3         6
1981          9           5           2           10            12         4        15               11           3         7
1982         12           7           3           13            15         6        18               13           4         9
1983         15          10           2           15            30         7        22               15           4       11
1984         12           6           1           12            17         6        16               12           4         8
1985         17          10           1           16            25       12         21               17           4       13
1986         18          12           3           19            31       14         20               20           4       15
1987         17          12           3           18            29       14         18               18           4       14
1988         11           9           5           16            24         8        15               17           3       13
1989         17          11           2           17            23         5        31               18           3       14
1990         10           9           4           14            20         5        16               14           3       11
1991         12           9           4           14            20         6        17               15           3       11
1992         11           8           4           14            20         6        16               15           3       11
1993         13           9           3           15            21         8        18               15           3       12
1994          9           7           4           12            17         5        16               13           3         9
1995          3           5           4             8           10         3          6               7           3         5
1996          3           7           4             9           13         3          7               9           2         6
1997          4           7           5             9           14         3          7               9           2         7
1998          8          11           2           11            20         8        12               12           2         9
1999         13          13           1           14            25       13         13               15           2       13
2000         13          12           2           15            26       15         11               16           2       14
2001         16          11           3           18            27       11         21               19           2       17
2002         10           9           6           16            25         5        17               17           2       15
2003          8           7           6           14            21         5        13               15           2       13
2004         10           8           5           15            22         7        13               15           2       13
2005          9           8           7           16            23         9        10               16           1       15
2006          4           4           4             7           12         3          6               7           1         5
2007          5           4           3             7           10         2        10                7           1         5
                                           32


a. NRAs including assistance to nontradables and via inputs and other forms of non-
product-specific (NPS) assistance without and (in column (5)) with decoupled
support.
b. The Relative Rate of Assistance (RRA) is defined as 100*[(100+NRAagt)/
(100+NRAnonagt)-1], where NRAagt and NRAnonagt are the percentage NRAs for
the tradables parts of the agricultural and non-agricultural sectors (columns 8 and 9),
respectively, so it excludes decoupled payments but includes all NPS support.
c. Including NPS but excluding decoupled payments, so more than the weighted
average of columns (6) and (7).
                                       33


Appendix Table 10 (continued): Annual distortion estimates, USA, 1955 to 2007
(c) Value shares of primary production of covereda and non-covered products,
                                      (percent)
                                                       Pigmea
        Barley   Beef   Cotton   Egg   Maize    Milk        t   Potato   Poultry
 1955       na      8        8    na      14     12         8       na         4
 1956       na      8        7    na      14     12         8       na         4
 1957       na    10         6    na      12     13        10       na         4
 1958       na    11         5    na      11     11        10       na         4
 1959       na    12         6    na      11     12         8       na         4
 1960       na    11         7    na      12     12         8       na         4
 1961       na    10         6    na      12     11         8        2         4
 1962       na    11         6    na      12     10         8        2         4
 1963       na    10         6    na      13       9        8        2         4
 1964       na    11         6    na      13     10         8        2         4
 1965       na    11         6    na      13       9        9        2         4
 1966       na    12         1    na      14     11        10        2         4
 1967       na    13         1    na      14     11         9        2         4
 1968       na    13         2    na      12     11         9        2         4
 1969       na    14         1    na      13     11        10        2         4
 1970       na    14         1    na      12     11        10        2         4
 1971       na    14         2    na      13     10         8        1         4
 1972       na    14         2    na      15       9        8        2         3
 1973       na    11         3    na      16       8        8        2         3
 1974       na    10         3    na      16       8        8        2         3
 1975       na      9        2    na      17       8        9        2         4
 1976       na    10         3    na      15     10         8        1         4
 1977       na    10         4    na      15       9        8        1         4
 1978       na    12         3    na      15       9        8        1         4
 1979       na    11         3     2      15       8        7        1         3
 1980       na    10         3     2      15       8        6        1         3
 1981       na    10         3     3      15       8        7        1         4
 1982       na    10         2     2      15       8        8        1         4
 1983       na    11         2     3      11       8        8        2         4
 1984       na    10         3     3      14       8        7        2         5
 1985       na    10         2     3      14       8        7        1         5
 1986        0    12         1     3       9       9        9        2         6
 1987        0    12         3     2      10       9        9        1         4
 1988        1    13         2     2       9       8        7        2         6
 1989        1    12         2     3      13       4        7        2         7
 1990        0    12         3     3      12       8        8        2         6
 1991        0    12         3     3      12       7        8        1         6
 1992        0    11         2     2      13       7        7        2         6
 1993        0    12         2     2      11       8        7        2         7
 1994        0    10         4     2      14       8        5        2         7
 1995        1    10         4     2      15       2        6        2         8
 1996        1      9        3     3      14       2        7        1         8
 1997        1    10         3     3      13       2        7        2         8
 1998        0    11         2     3      12       2        6        2       10
 1999        0    12         2     3      11       2        6        2       11
 2000        0    13         2     3      11       2        8        2       10
 2001        0    12         1     3      11       8        7        2       10
 2002        0    11         1     3      13       7        5        2         9
 2003        0    11         2     3      13       7        5        1         8
 2004        0    10         3     3      11       9        6        1       10
 2005        0    10         2     2       9     11         6        1       10
 2006        0    15         1     2      13       8        5        1         9
 2007        0    13         1     2      17       8        4        1         9
                                               34


                  Sheepm    Sorghu                                            Non-
           Rice       eat       m    Soybean        Sugar   Wheat   Wool   covered
 1955         1        na       na         3            1      7      na        33
 1956         1        na       na         4            1      7      na        34
 1957         1        na       na         4            1      7      na        33
 1958         1        na       na         4            1      9      na        34
 1959         1        na       na         4            1      7      na        35
 1960         1        na       na         4            1      8      na        34
 1961         1        na       na         5            1      7      na        33
 1962         1        na       na         5            1      7      na        34
 1963         1        na       na         5            1      6      na        34
 1964         1        na       na         6            1      5      na        34
 1965         1        na       na         6            0      4      na        34
 1966         1        na       na         7            0      5      na        33
 1967         1        na       na         7            0      5      na        34
 1968         1        na       na         7            1      4      na        34
 1969         1        na       na         7            1      4      na        34
 1970         1        na       na         7            1      3      na        34
 1971         1        na       na         8            1      4      na        34
 1972         1        na       na        10            1      4      na        31
 1973         1        na       na        10            1      7      na        29
 1974         1        na       na         9            2      8      na        30
 1975         1        na       na         9            1      9      na        29
 1976         1        na       na        10            1      6      na        31
 1977         1        na       na        12            1      5      na        31
 1978         1        na       na        12            1      4      na        31
 1979         1         0        1        11            1      5      na        29
 1980         1         0        1        10            2      7      na        30
 1981         1         0        1         9            1      7      na        30
 1982         1         0        1         9            1      7      na        31
 1983         1         0        1        11            1      6      na        33
 1984         1         0        1         8            0      6      na        31
 1985         0         0        1         9            0      4      na        34
 1986         0         0        1         8            1      3       0        35
 1987         1         0        1         9            0      3       0        34
 1988         1         0        1         9            1      5       0        34
 1989         1         0        1         8            1      5       0        34
 1990         1         0        1         7            1      4       0        33
 1991         1         0        1         8            1      3       0        34
 1992         1         0        1         8            1      4       0        33
 1993         1         0        1         8            1      4       0        35
 1994         1         0        1         9            1      4       0        32
 1995         1         0        1         9            1      6       0        33
 1996         1         0        1        10            1      6       0        34
 1997         1         0        1        10            1      5       0        34
 1998         1         0        1         8            1      4       0        37
 1999         1         0        1         7            0      4       0        38
 2000         0         0        1         7            1      4       0        38
 2001         0         0        1         6            0      3       0        35
 2002         0         0        1         9            1      4       0        34
 2003         1         0        1        10            0      4       0        33
 2004         1         0        0         9            0      4       0        33
 2005         1         0        0         9            0      4       0        34
 2006         1         0        0         8            1      3       0        33
 2007         1         0        1         9            1      4       0        29
a. At farmgate undistorted prices
                                       35


Appendix Table 10 (continued): Annual distortion estimates, USA, 1955 to 2007
(d) Trade status of of covered productsa

                                                       Pigmea
        Barley   Beef   Cotton   Egg   Maize    Milk        t   Potato   Poultry
 1955      na      M        X     na        X    M         M        H         X
 1956      na      M        X     na        X    M         M        H         X
 1957      na      M        X     na        X    M         M        H         X
 1958      na      M        X     na        X    M         M        H         X
 1959      na      M        X     na        X    M         M        H         X
 1960      na      M        X     na        X    M         M        H         X
 1961      na      M        X     na        X    M         M        H         X
 1962      na      M        X     na        X    M         M        H         X
 1963      na      M        X     na        X    M         M        H         X
 1964      na      M        X     na        X    M         M        H         X
 1965      na      M        X     na        X    M         M        H         X
 1966      na      M        X     na        X    M         M        H         X
 1967      na      M        X     na        X    M         M        H         X
 1968      na      M        X     na        X    M         M        H         X
 1969      na      M        X     na        X    M         M        H         X
 1970      na      M        X     na        X    M         M        H         X
 1971      na      M        X     na        X    M         M        H         X
 1972      na      M        X     na        X    M         M        H         X
 1973      na      M        X     X         X    M         M        H         X
 1974      na      M        X     X         X    M         M        H         X
 1975      na      M        X     X         X    M         M        H         X
 1976      na      M        X     X         X    M         M        H         X
 1977      na      M        X     X         X    M         M        H         X
 1978      na      M        X     X         X    M         M        H         X
 1979      na      M        X     X         X    M         M        H         X
 1980      M       M        X     X         X    M         M        H         X
 1981      M       M        X     X         X    M         M        H         X
 1982      M       M        X     X         X    M         M        H         X
 1983      M       M        X     X         X    M         M        H         X
 1984      M       M        X     X         X    M         M        H         X
 1985      M       M        X     X         X    M         M        H         X
 1986      M       M        X     X         X    M         M        H         X
 1987      M       M        X     X         X    M         M        H         X
 1988      M       M        X     X         X    M         M        H         X
 1989      M       M        X     X         X    M         M        H         X
 1990      M       M        X     X         X    M         M        H         X
 1991      M       M        X     X         X    M         M        H         X
 1992      M       M        X     X         X    M         M        H         X
 1993      M       M        X     X         X    M         M        H         X
 1994      M       M        X     X         X    M         M        H         X
 1995      M       M        X     X         X    M         M        H         X
 1996      M       M        X     X         X    M         M        H         X
 1997      M       M        X     X         X    M         M        H         X
 1998      M       M        X     X         X    M         M        H         X
 1999      M       M        X     X         X    M         M        H         X
 2000      M       M        X     X         X    M         M        H         X
 2001      M       M        X     X         X    M         M        H         X
 2002      na      M        X     na        X    M         M        H         X
 2003      na      M        X     na        X    M         M        H         X
 2004      na      M        X     na        X    M         M        H         X
 2005      na      M        X     na        X    M         M        H         X
 2006      na      M        X     na        X    M         M        H         X
 2007      na      M        X     na        X    M         M        H         X
                                              36


                 Sheepm    Sorghu
          Rice       eat       m    Soybean        Sugar   Wheat   Wool
 1955       X        na       na         X           M        X      na
 1956       X        na       na         X           M        X      na
 1957       X        na       na         X           M        X      na
 1958       X        na       na         X           M        X      na
 1959       X        na       na         X           M        X      na
 1960       X        na       na         X           M        X      na
 1961       X        na       na         X           M        X      na
 1962       X        na       na         X           M        X      na
 1963       X        na       na         X           M        X      na
 1964       X        na       na         X           M        X      na
 1965       X        na       na         X           M        X      na
 1966       X        na       na         X           M        X      na
 1967       X        na       na         X           M        X      na
 1968       X        na       na         X           M        X      na
 1969       X        na       na         X           M        X      na
 1970       X        na       na         X           M        X      na
 1971       X        na       na         X           M        X      na
 1972       X        na       na         X           M        X      na
 1973       X        M        X          X           M        X      na
 1974       X        M        X          X           M        X      na
 1975       X        M        X          X           M        X      na
 1976       X        M        X          X           M        X      na
 1977       X        M        X          X           M        X      na
 1978       X        M        X          X           M        X      na
 1979       X        M        X          X           M        X      na
 1980       X        M        X          X           M        X      M
 1981       X        M        X          X           M        X      M
 1982       X        M        X          X           M        X      M
 1983       X        M        X          X           M        X      M
 1984       X        M        X          X           M        X      M
 1985       X        M        X          X           M        X      M
 1986       X        M        X          X           M        X      M
 1987       X        M        X          X           M        X      M
 1988       X        M        X          X           M        X      M
 1989       X        M        X          X           M        X      M
 1990       X        M        X          X           M        X      M
 1991       X        M        X          X           M        X      M
 1992       X        M        X          X           M        X      M
 1993       X        M        X          X           M        X      M
 1994       X        M        X          X           M        X      M
 1995       X        M        X          X           M        X      M
 1996       X        M        X          X           M        X      M
 1997       X        M        X          X           M        X      M
 1998       X        M        X          X           M        X      M
 1999       X        M        X          X           M        X      M
 2000       X        M        X          X           M        X      M
 2001       X        M        X          X           M        X      M
 2002       X        na       na         X           M        X      na
 2003       X        na       na         X           M        X      na
 2004       X        na       na         X           M        X      na
 2005       X        na       na         X           M        X      na
 2006       X        na       na         X           M        X      na
 2007       X        na       na         X           M        X      na

Source: Anderson and Valenzuela (2008), based on author's spreadsheets
                                                 37


Appendix Table 11: Annual distortion estimates, Canada, 1961 to 2007
(a) Nominal rates of assistance to covered products
                                       (percent)
                                                                                                     All
                                                  Pigme                 Rapese Soybea             covere
       Barley   Beef   Egg Maize   Milk   Peas        at Potato Poultry     ed      n Sugar Wheat      d
1961        2      1    na     5    34       0        2       0     17       0      0    na    3      10
1962        2      1    na     5    34       0        2       0     17       0      0    na    3       9
1963        2      1    na     5    34       0        2       0     17       0      0    na    3       8
1964        2      1    na     5    34       0        2       0     17       0      0    na    3       8
1965        2      1    na     5    34       0        2       0     17       0      0    na    3       7
1966        2      1    na     4    34       0        2       0     17       0      0    na    3       7
1967        2      1    na     5    34       0        2       0     26       0      0    na    3       8
1968        2      1    na     5    34       0        2       0     20       0      0    na    3       8
1969        2      1    na     5    34       0        2       0       8      0      0    na    3       7
1970        2      1    na     4    34       0        2       0     21       0      0    na    3       7
1971        2      1    na     4    34       0        2       0     33       0      0    na    3       8
1972        2      1    na     4    34       0        2       0     49       0      0    na    3       7
1973        2      1    na     3    34       0        2       0     14       0      0    na    3       5
1974        2      1    na     2    34       0        2       0     51       0      0    na    3       7
1975        2      1    na     2    34       0        2       0     13       0      0    na    3       7
1976        2      1    na     2   115       0        2       0     40       0      0    na    3      14
1977        5      3    na     3   126       0        2       0     29       0      0    na    3      16
1978       10      1    na     2   275       0        2       0     18       0      0    na    3      20
1979       10     -1    25     2   264       0        2       0     22       0      0     9    3      23
1980       10      1    42     2   275       0        2       0     14       0      0    21    4      18
1981        5      3    46     2   275       0        2       0     32       0      0    37    4      25
1982        5      3    46     2   309       0        2       0     35       0      0    52    5      23
1983       10      1    45     2   332       0        2       0     27       0      0    25    6      23
1984       10      5    26     2   344       0        2       0       8      0      0    27    8      24
1985       15      4    38    13   378       0        2       0     19      10      2   122   12      30
1986       19      4     0    27   368       0        2       0     19      20      5   139   17      32
1987       16      5    29    14   480       0        2       0     36      18      0    67   19      34
1988        1      4    54     4   203       0        7       0     22       0      0    40    4      26
1989        1      3    29     5   142       0       18       0     23       0      6    30    0      21
1990        5      4    20     6   149       0        2       0     36       2      1    43    4      22
1991        2      5    28     2   226       0        6       0     41       0      0    37    1      23
1992        2      3    41     3   154       0        9       0     27       0      0    26    1      21
1993        2      6    38     0   163       0        3       0     19       0      0    29    0      19
1994        1      2    39     1   220       0        5       0       2      0      0    20    0      18
1995        1      2    39     1   108       0        5       0       2      0      0    19    1      13
1996        2      2    25     2    73       0        4       0       4      0      0    17    1       9
1997        1      2    30     3   110       0        1       0       5      0      0    na    0      12
1998        1      3    22     3   128       0        3       0       2      0      0    na    0      14
1999        2      2    22     7   128       0        6       0       1      0      2    na    0      14
2000        3      2     4    11   172       0        4       0       1      0      2    na    1      16
2001        3      1    12     9    77       0        2       0       1      0      2    na    1      11
2002        3      2    15     4   160       0        1       0       2      0      0    na    1      15
2003        2      2     0     8   132       0        2       0       7      0      1    na    1      15
2004        4      2    23    11    89       0        1       0       3      0      1    na    1      12
2005        3      2    55     9    81       0        1       0       1      0      1    na    1      11
2006       0      0    57     0    143      0         0       0     11       0      0    na    0      14
2007       0      0    82     0     60      0         0       0       9      0      0    na    0       9
                                                         38


  Appendix Table 11 (continued): Annual distortion estimates, Canada, 1961 to 2007
  (b) Nominal and relative rates of assistance to all agricultural products, to exportable
  and import-competing agricultural industries, and relative to non-agricultural
  industries    (percent)
                  NRA, all agric products,a by component                   NRA, agric tradables
                   NRA,        NRA,         NRA,
       NRA,         non-        non-         all ag   NRA, all ag
       covere      covere     product-     product      products             NRA, ag        NRA, all      NRA, all
          d           d       specific      s (incl    (incl NPS   NRA, ag    import-         agric        non-ag
       produc      produc     support        NPS)         and      export-    competi       tradable      tradable
          ts          ts         (3)       (4)=1+2    decoupled)    ables        ng          goods c       goods      RRAb
         (1)         (2)                      +3           (5)       (6)        (7)         (8)=6+7          (9)       (10)
1961         10           7          na             9            9         4        16                9           9         0
1962          9           7          na             8            8         4        15                8          10       -2
1963          8           7          na             8            8         4        15                8           9       -1
1964          8           6          na             7            7         4        13                7           8       -1
1965          7           6           5           12            12         4        12               12           8         4
1966          7           6           5           11            11         3        11               11           8         3
1967          8           6           5           12            12         3        13               12           7         5
1968          8           5           5           12            12         3        12               12           6         5
1969          7           5           5           11            11         3        10               11           6         5
1970          7           5           6           13            13         3        11               13           6         7
1971          8           5           6           13            13         3        12               13           6         6
1972          7           5           5           12            12         3        13               12           6         5
1973          5           5           3             8            8         3          9               8           6         2
1974          7           6           3           10            10         3        15               10           6         4
1975          7           5           6           13            13         3        13               13           5         7
1976         14           9           7           20            20         4        29               20           5       14
1977         16          10           7           21            21         5        30               21           5       15
1978         20          12           5           24            24         5        41               24           5       18
1979         23          13           4           26            30         6        42               26           5       20
1980         18          11           9           27            31         6        35               27           5       21
1981         25          14           9           32            36         6        51               32           5       26
1982         23          13           9           31            34         6        49               31           5       25
1983         23          13           9           30            35         7        46               30           5       24
1984         24          14           9           32            39         7        45               32           4       27
1985         30          16          14           42            56       11         53               42           4       37
1986         32          17          15           44            53       14         53               44           4       39
1987         34          18          15           47            56       14         62               47           4       41
1988         26          13          13           37            44         7        48               37           4       31
1989         21          10          11           29            32         6        39               29           3       25
1990         22          11          14           34            41         6        44               34           3       29
1991         23          12          22           43            59         5        49               43           3       39
1992         21          11          13           33            42         6        41               33           3       29
1993         19          10           9           27            31         4        38               27           2       24
1994         18           9           5           22            25         4        38               22           2       20
1995         13           6          13           24            32         3        27               24           2       22
1996          9           5           8           17            23         2        28               17           1       15
1997         12           6           5           15            18         2        41               15           1       14
1998         14           7           7           19            23         3        42               19           1       18
1999         14           7           7           20            25         4        43               20           1       19
2000         16           8           9           23            31         4        54               23           1       23
2001         11           5           9           18            26         2        31               18           1       17
2002         15           8          12           25            36         4        44               25           1       24
2003         15           8          16           29            42         4        45               29           1       28
2004         12           6          14           24            36         3        36               24           1       23
2005         11           6           2           12            26         3        36               12           1       12
2006         14           9           2           13            24         0        65               13           1       12
2007          9           5           2             9           20         0        34                9           1         8
  a. NRAs including assistance to nontradables and via inputs and other forms of non-
  product-specific (NPS) assistance without and (in column (5)) with decoupled
  support.
  b. The Relative Rate of Assistance (RRA) is defined as 100*[(100+NRAagt)/
  (100+NRAnonagt)-1], where NRAagt and NRAnonagt are the percentage NRAs for
                                           39


the tradables parts of the agricultural and non-agricultural sectors (columns 8 and 9),
respectively, so it excludes decoupled payments but includes all NPS support.
c. Including NPS but excluding decoupled payments, so more than the weighted
average of columns (6) and (7).
                                          40


Appendix Table 11 (continued): Annual distortion estimates, Canada, 1961 to 2007:
(c) Value shares of primary production of covereda and non-covered products,
                                                       (percent)
                                                                                                  Non-
                                               Pigmea                Rapese Soybea               covere
       Beef Barley   Egg Maize   Milk   Peas        t Potato Poultry     ed      n   Sugar Wheat      d
1961      3     17    na     1    16       0       12      2       4      1      1     na     13     29
1962      5     14    na     1    12       0       10      1       4      0      0     na     23     30
1963      5     13    na     1    11       0        8      1       4      0      0     na     26     30
1964      4     17    na     2    11       0        8      2       4      1      0     na     22     29
1965      4     18    na     2    10       0       10      1       4      1      0     na     19     30
1966      6     20    na     2      9      0       11      2       4      1      1     na     24     21
1967      5     23    na     2    11       0       12      2       4      1      0     na     18     22
1968      6     24    na     2    11       0       11      2       4      1      0     na     16     23
1969      5     24    na     2    11       0       12      2       5      2      0     na     15     23
1970      6     24    na     3    11       0       14      2       4      3      1     na      8     24
1971      8     25    na     3    11       0       11      2       4      4      1     na     12     20
1972    10      22    na     3    10       0       12      2       3      3      1     na     14     20
1973    11      18    na     3      6      0       11      2       4      3      1     na     21     20
1974    10      17    na     3    10       0       11      2       3      4      1     na     19     20
1975      9     15    na     3    11       0       12      2       4      4      1     na     19     19
1976      9     20    na     3      8      0       11      2       3      2      1     na     22     17
1977      9     20    na     4      8      0       11      2       4      6      1     na     18     17
1978      6     22    na     4      5      0       11      1       4      8      1     na     21     15
1979      6     23     2     5      6      0       11      1       4      7      1      0     19     14
1980      9     20     2     5      4      0       10      3       4      4      1      0     21     14
1981    10      19     2     5      6      0       11      2       4      3      1      0     24     14
1982      8     19     2     5      5      0       14      2       3      4      1      0     24     13
1983      7     19     2     5      4      0       11      3       4      6      1      0     24     14
1984      7     19     2     6      5      0       12      2       6      7      2      0     19     14
1985      7     21     2     5      5      0       13      2       6      5      2      0     18     14
1986      6     20     3     3      5      0       15      3       7      4      1      0     17     17
1987      7     20     2     4      4      1       14      3       5      4      2      0     16     17
1988      7     20     2     4      8      0       12      3       6      6      2      0     13     17
1989      8     17     2     4      9      0        9      3       5      4      1      0     20     18
1990      8     16     2     4      9      0       11      3       5      4      2      0     18     18
1991      5     17     2     5      6      0       11      3       5      6      2      0     19     18
1992      5     18     2     3      8      1       11      3       6      6      2      0     15     19
1993      5     17     2     5      7      1       12      3       6      8      3      0     12     19
1994      4     16     2     4      6      1       11      3       6     12      3      0     11     19
1995      6     13     2     5      8      1       10      3       5     10      3      0     14     20
1996      7     11     2     6      8      1       10      2       5      7      3      0     17     20
1997      6     14     1     5      7      1       11      3       6      9      4     na     13     20
1998      5     15     1     5      7      1        8      3       6     11      3     na     11     22
1999      4     17     1     5      7      1        9      3       6      9      3     na     11     23
2000      4     19     2     3      6      1       13      3       6      6      3     na     11     23
2001      4     19     2     4      9      1       14      3       7      5      1     na      9     22
2002      4     18     2     6      6      1       12      4       6      6      3     na      8     23
2003      4     13     2     4      7      1       11      4       6      8      3     na     11     25
2004      4     14     1     4      8      2       12      3       6      9      3     na      9     25
2005      3     16     1     3      9      1       12      3       6      7      3     na     14     23
2006      4     17     1     4      7      1       11      3       5      8      3     na     12     25
2007      5     15     1     4      9      1        9      2       5      8      2     na     15     24
   a. At farmgate undistorted prices
                                             41


Appendix Table 11 (continued): Annual distortion estimates, Canada, 1961 to 2007
(d) Trade status of of covered productsa

              Barle         Maiz                  Pigm    Potat   Poult   Rape   Soyb   Suga   Whe
       Beef       y   Egg      e   Milk   Peas      eat       o     ry    seed    ean      r    at
1961     X      M      na     M     M       X        X       H      M       X      M     na     X
1962     X      M      na     M     M       X        X       H      M       X      M     na     X
1963     X      M      na     M     M       X        X       H      M       X      M     na     X
1964     X      M      na     M     M       X        X       H      M       X      M     na     X
1965     X      M      na     M     M       X        X       H      M       X      M     na     X
1966     X      M      na     M     M       X        X       H      M       X      M     na     X
1967     X      M      na     M     M       X        X       H      M       X      M     na     X
1968     X      M      na     M     M       X        X       H      M       X      M     na     X
1969     X      M      na     M     M       X        X       H      M       X      M     na     X
1970     X      M      na     M     M       X        X       H      M       X      M     na     X
1971     X      M      na     M     M       X        X       H      M       X      M     na     X
1972     X      M      na     M     M       X        X       H      M       X      M     na     X
1973     X      M      na     M     M       X        X       H      M       X      M     na     X
1974     X      M      na     M     M       X        X       H      M       X      M     na     X
1975     X      M      na     M     M       X        X       H      M       X      M     na     X
1976     X      M      na     M     M       X        X       H      M       X      M     na     X
1977     X      M      na     M     M       X        X       H      M       X      M     na     X
1978     X      M      na     M     M       X        X       H      M       X      M     na     X
1979     X      M      M      M     M       X        X       H      M       X      M     M      X
1980     X      M      M      M     M       X        X       H      M       X      M     M      X
1981     X      M      M      M     M       X        X       H      M       X      M     M      X
1982     X      M      M      M     M       X        X       H      M       X      M     M      X
1983     X      M      M      M     M       X        X       H      M       X      M     M      X
1984     X      M      M      M     M       X        X       H      M       X      M     M      X
1985     X      M      M      M     M       X        X       H      M       X      M     M      X
1986     X      M      M      M     M       X        X       H      M       X      M     M      X
1987     X      M      M      M     M       X        X       H      M       X      X     M      X
1988     X      M      M      M     M       X        X       H      M       X      X     M      X
1989     X      M      M      M     M       X        X       H      M       X      X     M      X
1990     X      M      M      M     M       X        X       H      M       X      X     M      X
1991     X      M      M      M     M       X        X       H      M       X      X     M      X
1992     X      M      M      M     M       X        X       H      M       X      X     M      X
1993     X      M      M      M     M       X        X       H      M       X      X     M      X
1994     X      M      M      M     M       X        X       H      M       X      X     M      X
1995     X      M      M      M     M       X        X       H      M       X      X     M      X
1996     X      X      M      M     M       X        X       H      M       X      X     M      X
1997     X      X      M      M     M       X        X       H      M       X      X     na     X
1998     X      X      M      M     M       X        X       H      M       X      X     na     X
1999     X      X      M      M     M       X        X       H      M       X      X     na     X
2000     X      X      M      M     M       X        X       H      M       X      X     na     X
2001     X      X      M      M     M       X        X       H      M       X      X     na     X
2002     X      X      M      M     M       X        X       H      M       X      X     na     X
2003     X      X      M      M     M       X        X       H      M       X      X     na     X
2004     X      X      M      M     M       X        X       H      M       X      X     na     X
2005     X      X      M      M     M       X        X       H      M       X      X     na     X
2006     X      X      M      M     M       X        X       H      M       X      X     na     X
2007     X      X      M      M     M       X        X       H      M       X      X     na     X

Source: Anderson and Valenzuela (2008), based on author's spreadsheets