Agricultural Policies and Risk Management: A Holistic Approach

This paper discusses the main issues and driving forces of government policies in the area of risk management in agriculture, with particular emphasis on good policy practices and the international environment. Four main ideas are developed. First, good policy and good policy analysis requires a holistic approach. This is particularly so in this policy area because risks interact prominently with both farm household strategies and government programs and regulations in terms of risk reduction impacts and the development of market tools and strategies. Second, the rational for government actions which are based on market failure or equity concerns need to be defined in order to analyze its nature and scope, as well as to develop appropriate government measures. Third, the context of all support measures to agriculture must be considered because there are potential risk-related effects associated with most forms of support, particularly in OECD countries with high level of support to agriculture. Fourth, risk management measures need to comply with international agreements, particularly the Agreement on Agriculture of the World Trade Organization. Implications for good policy in this area have already been drafted by OECD and are useful for policy analysis.