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202 CHAPTER 8


ally registered 2.8 million farms. The direct income support payments were approximately US$90 per hectare per year up to 50 hectares. Over 2001–04, the payments increased while price supports and input subsidies were phased out, so that by 2004 the payments accounted for over 70 percent of the total (Cakmak 2004; Olhan 2006).


The impact of the program has been mixed, though the interpretation of trends has been complicated by an economic crisis in 2001 during which real GDP fell by 7.5 percent. Between 1999 and 2003, the total area cultivated declined by 4 percent. The production of wheat, barley, and maize increased by 5–6 percent, while cotton output expanded by 21 percent. The area under olive groves and orchards increased by 5 percent and 7 percent, respectively. On the other hand, the production of sugar beets and tobacco fell by one- fourth and one-half, respectively, in response to the elimination of price supports (Olhan 2006). Overall, the agricultural value added per worker in agriculture rose 10 percent between 1998–99 and 2003 (Cakmak 2004). In summary, decoupled payments to farmers represent a promising approach to reducing the economic distortions associated with agricultural price sup- ports, import protection, and input subsidies while compensating farmers and minimizing any adverse impact on poverty. At the same time, it should be recognized that most MENA countries use import protection to support farm prices rather than as direct subsidies. In this situation, switching from import protection to a program of decoupled payments implies both a loss in tariff revenue and significant new expenditure.


Complementary Policies to Assist the Rural Poor


Decoupled payments are a political solution to the problems of phasing out costly programs involving support prices, input subsidies, and import protec- tion and of compensating farmers for their loss. Although the incidence of poverty is generally higher among farmers than among the general popula- tion, such programs cannot be considered safety net programs because they do not target poor households. Decoupled payments to farmers exclude poor nonfarmers, including agricultural wage laborers, owners of microenterprises, and the urban poor. Furthermore, among farmers, benefits are generally proportional to farm size, so the benefits are likely to be greater for richer farmers than for poor farmers.


If the objective is to assist poor and vulnerable households regardless of their occupation, a different type of program should be considered. A wide variety of safety net programs have been established in developing countries with the explicit objective of reducing poverty or at least some of the nega- tive effects of poverty. Although a thorough review of alternative safety net


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