NOMINAL RATE OF PROTECTION (NRP)

The Nominal Rate of Protection (NRP) measures the extent to which a set of agricultural policies affect the market price of a commodity relative to world prices. It is computed as the price difference, expressed as a percentage, between the farm gate price received by producers and an undistorted reference price at the farm gate level. 

The NRP receives more attention than other support measures partly because measures captured by the NRP influence the behavior and the welfare of both producers and consumers. A tariff on food, for instance, causes producers to expand output and consumers to lower their consumption. The combined impact on imports is greater than for a subsidy that provides the same level of support to farmers. Little wonder that a country’s NRP rates are of great interest to trading partners. Their domestic impacts are of intense political interest. Do the benefits of higher food prices to producers outweigh the higher costs of food to consumers—and particularly poor consumers?

This NRP alone is not aimed to provide a complete measure of the impacts of agricultural policies, in contrast with the Nominal Rate of Assistance (NRA).

For an introduction to the database, please see Laborde, D., Lallemant, T., Majeed, F. Mamun, A., Martin, W., and Tokgoz, S. (2023). Introducing the Updated AgIncentives Database. AgIncentives Working Paper, IFPRI, Washington DC.