Policies to tax farmers in low-income countries and policies to subsidize them in high-income countries have been identified as a major source of the disequilibrium of world agriculture. Recently, as many high-performing economies in Asia advanced from the low-income to the middle-income stage through successful industrialization, they are confronted with the problem of a widening income gap between farm and non-farm workers corresponding to rapid shifts in comparative advantage from agriculture to manufacturing. In order to prevent this disparity from culminating in serious social and political instability, policies have been reoriented toward supporting the income of farmers. At the same time, governments in middle-income countries must continue to secure low-cost food to the urban poor who are still large in number. The need to achieve the two conflicting goals under the still weak fiscal capacity of governments tends to make agricultural policies in the middle-income stage tinkering and ineffective.
This paper aims to identify the nature of a new agricultural problems emerging in high-performing economies in Asia, as they have advanced from low-income to middle-income stage. The “agricultural problem” is here defined as the problem of an overriding concern to policymakers with respect to designing and implementing policies for agriculture as part of policies to promote national economic development in their own country. As such, it may well be called the “basic problem in determining agricultural policies”.