SLU AFEPA European MSc in Agricultural, Food & Environmental Policy Analysis · Sweden / EU · SLU with Bonn, UCLouvain and Cattolica
Original practice questions written to the published syllabus · not past papersThe part agriculture plays in economic development, the classic theories of that role, and how price, land, credit, research, trade and subsidy policy are made and judged.
In the exams: agricultural economics PhD entrance and fellowship examinations, agricultural development and policy (heavy); agricultural development bank officer recruitment, economic and social issues (heavy); agricultural scientist eligibility tests, agricultural development and policy (heavy)
How our questions for SLU AFEPA European MSc in Agricultural, Food & Environmental Policy Analysis spread across the units of Agricultural Development & Policy Analysis. Difficulty: 2 easy, 10 medium, 12 hard.
| Trade and subsidy policy | 5 | |
| Household, multi-market, CGE and programming models (PhD level) | 5 | |
| The policy process and implementation | 3 | |
| Role of agriculture in economic development | 2 | |
| Price policy and minimum support prices | 2 | |
| Food and nutrition security | 2 | |
| Water, energy and environment policy | 2 | |
| Schultz and Mellor on agricultural transformation | 1 | |
| Induced innovation | 1 | |
| Land policy | 1 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
In the World Development Report 2008 typology, a country where agriculture is no longer a major source of growth but where most of the poor still live in rural areas is classed as
D. a transforming country
WDR 2008 grouped countries by agriculture's contribution to growth and the rural share of poverty. Agriculture-based countries get a large share of growth from agriculture; transforming countries get little growth from agriculture but poverty remains mostly rural (much of South and East Asia was placed here); urbanised countries have mostly urban poverty. 'Post-industrial' is not one of the categories.
Further reading: World Bank, World Development Report 2008
A labour-abundant developing country heavily subsidises tractors and cheap credit for machinery. Induced innovation theory predicts that this will
B. bias technical change toward labour-saving methods that do not fit the country's factor endowment
Distorting factor prices sends false scarcity signals: making capital artificially cheap induces mechanisation that displaces abundant labour. That is why Hayami and Ruttan warn against factor-price distortions. It would reduce, not raise, the demand for hired labour.
Further reading: Hayami and Ruttan (1985)
Compared with a support price backed by government procurement, a deficiency (price-gap) payment
C. pays farmers the gap between a target price and the market price without the state buying the crop, so consumers face the lower market price
Under a deficiency payment the market price finds its own level and the budget pays the gap, so consumers gain and there are no stocks to hold. Procurement at a support price raises the market price and requires storage and disposal.
Further reading: Timmer, Falcon and Pearson, Food Policy Analysis, 1983
The EU's MacSharry reform of 1992
B. cut support prices for cereals and compensated farmers with area-based direct payments
MacSharry cut intervention prices and introduced compensatory area payments with set-aside. The CAP itself dates from 1962; full decoupling came with the 2003 reform; export refunds were a long-standing CAP instrument being reduced, not introduced.
Further reading: EU CAP history
Taiwan's post-war land reform sequence consisted of
A. rent reduction to 37.5% of the main crop, sale of public land, then land-to-the-tiller
Taiwan cut rents to 37.5% (1949), sold public land (1951) and implemented land-to-the-tiller (1953), compensating landlords partly with shares in state enterprises. Collectivisation followed by household contracting describes China; willing-buyer willing-seller describes South Africa and Brazil's market-assisted reforms.
Further reading: Standard land reform literature
In the WTO aggregate measurement of support, market price support for a product is calculated as
D. (applied administered price - fixed 1986-88 external reference price) x eligible production
The AoA uses a fixed 1986-88 external reference price and the quantity eligible to receive the administered price. Because the reference price is frozen, rising administered prices can breach limits even if they are below current world prices - the root of the public stockholding dispute and the Bali (2013) peace clause.
Further reading: WTO Agreement on Agriculture, Annex 3
A food subsidy scheme reaches 150 of 200 poor households and also 100 non-poor households. What share of beneficiaries are wrongly included (inclusion error)?
D. 40%
Beneficiaries = 150 + 100 = 250; inclusion error = 100/250 = 40%. The exclusion error is a different ratio: 50 poor households missed out of 200 = 25%. 50% divides the 100 non-poor beneficiaries by the 200 poor households, mixing bases. 33% divides the 100 non-poor by 300, the 200 poor plus the 100 non-poor, instead of by beneficiaries.
Mexico's PROGRESA programme (1997) is best known for
A. being a conditional cash transfer whose randomised phase-in allowed rigorous evaluation
PROGRESA (later Oportunidades) paid cash to poor mothers conditional on children's school attendance and health visits; its phased roll-out across randomly selected villages made it a model for evaluation. Food for work describes programmes such as Ethiopia's PSNP public works.
Further reading: Skoufias, PROGRESA evaluations
Costa Rica's national programme started in 1997 that pays landholders for forest conservation is an example of
A. payments for ecosystem services
Paying landholders for the positive externalities of forests (watershed protection, carbon, biodiversity) is payment for ecosystem services. A Pigouvian tax penalises negative externalities; cross-compliance links EU direct payments to environmental rules.
Further reading: Costa Rica PSA programme literature
Robert Bates's Markets and States in Tropical Africa (1981) explained African agricultural policies as
B. governments using marketing boards and overvalued currencies to tax export crops and keep urban food cheap, rewarding supporters with input subsidies
Bates gave a political-economy explanation: policies served urban constituencies and political patronage (selective subsidies) at farmers' expense. It predates the WTO.
Further reading: Bates (1981)
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