Impact of state support on Russian agricultural producers and consumers

Abstract

State support plays an important role in the development of the agricultural sector, ensuring food security and sustainability. In this article the PSE/ CSE methodology, developed by OECD, is applied to analyzing the impact of support to Russian agriculture in 2021 on the welfare of all market participants: agricultural producers, consumers and the agricultural sector as a whole. We present the results of the estimation of the total level of support to agriculture and, in particular, to agricultural producers, provided at the expense of consumers and financed from budget transfers as well as the impact of agricultural policy on consumers. The level of state support to general services for the sector and to small-scale agricultural producers is also investigated. The interpretation of the PSE/CSE indicators in the situation of underdeveloped market infrastructure and regionalization of budget transfers is discussed. Policies aimed at moderating the price hikes for grains resulted in positive transfers to consumers of those commodities, while consumers of the majority of livestock commodities paid more than in the case of absence of support to agricultural producers. Based on this analysis recommendations are suggested for increasing efficiency of the agricultural policy transfers.