The performance of agrifood value chains of vital importance for smallholder farmers in developing countries. Measuring and understanding how government policies, such taxes, subsidies, minimum support prices, and government procurement, impact particular value chains is essential to minimize unintended consequences for value chain actors. This analysis of distortions in value chains in Ethiopia (sheep and goats) and Nigeria (cacao and palm oil) uses nominal rates of protection (NRPs) to measure the impact of policies on domestic prices for producers and consumers. Using the NRP methodology is effective for highlighting the significant impact of agricultural policies on prices from the local to the country level and along entire agrifood value chains.

Agricultural value chains are enormously important for development and poverty reduction in developing countries. Unfortunately, the wide array of forms of intervention used creates serious difficulties in understanding its impacts on agricultural value chains and on the economy in general. This paper reviews recent work to increase transparency of agricultural support measures and to assess their impacts on key outcomes. To do this, it draws lessons from various studies on agricultural incentives, including the global Ag-Incentives database, studies exploring the link between agricultural incentives and value chain development, and studies exploring the links between agricultural incentives and environmental outcomes. Studies highlighted in the Report will allow future researchers to use the described methodologies and tools and apply them to different countries, different contexts, and different commodities. This research portfolio has created a foundation for future work relevant to the five Impact Areas of One CGIAR; namely, nutrition, health, and food security; poverty reduction, livelihoods, and jobs; gender equality, youth, and inclusion; climate adaptation and mitigation; and environmental health and biodiversity.

Agricultural support has changed substantially in both rich and poor countries in recent years. In rich countries, there has been a strong move to decoupled subsidies and a fall in average rates of protection. In developing countries, market price support remains the dominant form of protection and average rates of support have risen—breaking the traditional pattern of taxing agriculture. Emissions from agriculture and land use change have contributed up to a third of total greenhouse gas emissions, with beef, milk and rice production accounting for more than 80 percent of agricultural emissions. Agricultural support was biased against emission-intensive goods until recent years and is now only slightly biased towards them. Although emission intensities are relatively higher in the developing countries, they have fallen far more rapidly in developing countries than in the rich countries in the past quarter-century, as agricultural productivity has grown in developing countries. Policy reform will be challenging given the strong political-economy support for the current structure of protection. Increasing investments in research and development to raise productivity and lower the emissions intensity of agricultural output would help agriculture and the environment.

The 2015 Global Hunger Index suggests that despite progress in reducing hunger worldwide, hunger levels in 52 of 117 countries in the 2015 Global Hunger Index remain “serious” or “alarming.” Since achieving and maintaining food and nutrition security (FNS) remains a goal for all countries, it is important to understand the individual, national, and global factors that affect FNS. This paper proposes an analytical framework to identify and analyze the respective roles of key long-term drivers of FNS. We start by identifying what the key variables affecting FNS are at the household and country level, and then we continue by defining what the main exogenous or endogenous drivers affecting these variables are. We discuss the key drivers of both aggregated food supply and demand and therefore their impact on prices. Specifically, for aggregated food demand, we discuss demographic factors, income growth, changes in dietary preferences, aggregated domestic distortions, and overall quality of the food system. With respect to the drivers of aggregated food supply, we discuss land available for food products and the drivers behind land availability, the share of waste/losses generated by the food system, and the normalized average yield. We define yield as the amount of nutrients produced by unit of land. It depends both on the physical yield of the crop or the livestock and on the quality of the food produced. It also can be affected by the changes in production patterns linked to the different dietary patterns of the consumers and by climate change. We emphasize the fact that in many cases, key drivers may have ambiguous effects on the FNS situation of different agents. For instance, more liberal trade policies will affect real income, terms of trade, demand and supply, returns of factors, foreign direct investments, and food prices and thus may lead to the improvement of the global-level FNS, that is, the FNS of the majority of the population. At the same time, more liberal trade policies may bring food insecurity to some households. Therefore, careful quantitative assessment is needed for each policy option. Finally, we propose a typology of variables that will help modelers adapt their models to study the different drivers through both direct and indirect effects.