INCOME VARIABILITY AND AGRICULTURAL POLICY

Abstract

In Mexico, the policies of Guarantee Prices (PG) and direct support for the income of the producer, known as procampo (PC), have been applied in an alternative way. Such policies have a different effect on the variability of producers' incomes. Variance was used as a measure of variability of producer income. Information was used from 1980 to 1994 for PG and from 1995 to 2018 for PC. Agricultural income was taken as the product of price by yield, and then the cyclical effect of the trend was decomposed. The selected crops were maize and wheat. For corn, the states used were: Sinaloa, Jalisco, Edo. Mexico, Michoacán and Chiapas; while for wheat the states were: Sonora, Baja California Norte, Guanajuato, Sinaloa and Michoacán. Agricultural income was found to be more volatile in the period of the guarantee price policy than in the period of direct payments.