How useful is the PSE in determining agricultural support?

Comparing the US Farm Bill with the European Common Agricultural Policy: Are the PSE indicators really useful?

“…En fait, force est de reconnaître que ces critiques ne sont pas fondamentalement nouvelles (Peters, 1988 ;Masters, 1993 ;Byerlee et Morris, 1993 ;Hertel, 1989aHertel, et 1989b. Plus récemment et dans le cadre des actuelles négociations agricoles à l'OMC, des écono-mistes canadiens (Doyon et al, 2002), suisses (Rieder et al, 2003) 3 et néerlandais (Oskam et Meester, 2006 ;Keyzer, 2006 4 ) ont repris ou émis de nouvelles critiques à l'utilisation ou la définition de ces ESP. En fait, la réponse à ces critiques nécessite de réaliser que les ESP ne sont pas une mesure des effets des politiques agricoles mais plutôt une mesure de l'effort des gouvernements respectifs pour soutenir leur secteur agricole.…”

Is the Concept of the Producer Support Estimate in Need of Revision?

“…It has been argued, for example by Doyon et al (2001 and 13 , Rieder et al (2003) and most forcefully in a recent paper by Oskam and Meester (2003), that this approach yields wrong and misleading results because current world market prices are distorted through policies.…”

“…Moreover, the agricultural policies of (some) individual OECD countries can be thought of as being, to some extent, no more than a defence against the world market price depression that results from other countries' policies. Looked at from this perspective, the net 15 Oskam and Meester (2003) also appear to suggest that rather than use actual quantities produced and consumed, quantities that would be observed in the absence of all policies should be used in the measurement of MPS. This point is not taken up here, though it could be discussed in the same way, and with the same conclusions, as the proposed use of equilibrium world market prices.…”

“…16 Oskam and Meester (2003) also make the point that the PSE (and CSE) does not represent the policy effect on producer (and consumer) surplus. This aspect is not discussed here as the OECD has never argued that its policy indicators represent welfare effects.…”

“…It would be even more wrong to suggest that the aggregate MPS indicates the extent by which farm incomes on aggregate in the OECD area would decrease if market price support policies were removed, as rightly argued by Oskam and Meester (2003).…”