The impact of taxes and subsidies on crop yields: Agricultural price distortions in Africa
This report (PDF) by The Netherlands Environmental Assessment Agency (PBL) elaborates on the impact of agricultural taxes and subsidies on crop yields in Africa. The key finding presented is that both taxes and subsidies wield a negative influence on crop yields. Clearly, levying taxes and subsidies have their merit, for raising public finances and providing rural income support respectively, but neither leads to a more intensified agriculture. A more explicit incorporation of the objectives of agricultural intensification, sustainable and efficient land use in the design of fiscal measures is thus desired. The analysis is based on data on subsidies, taxes and crop yields between 1961 and 2010 from 22 African countries. It includes the largest African economies and the most important commodities. The authors argue that a strong increase in agricultural intensification across Africa is needed in order to meet Africa’s growing demand for food and to safeguard the remaining pristine ecosystems. Altogether, these findings thus call for enhanced commitment to improve the fiscal capacity of African nations. A key aim should be to identify alternative solutions to raise taxes and distribute subsidies, without direct negative impacts on agricultural intensification.