Governments should renew efforts to reform support to agriculture, says new OECD report
Governments worldwide provide more than USD 500 billion in often ineffective and trade distorting support to farmers each year, and efforts to reform these policies have largely stalled, according to a new OECD report.
Agricultural Policy Monitoring and Evaluation 2019 shows that farm policies in the 53 countries studied in the report – all OECD and EU countries, plus 12 key emerging economies – provided on average USD 528 billion (EUR 465 billion) per-year of direct support to farmers during the 2016-18 period. At the same time, countries that implicitly taxed farmers through artificially depressed prices reduced farm revenues by USD 83 billion (EUR 73 billion) per-year.
The OECD finds that little progress has been seen this decade in reforming agricultural support policies. Many agricultural policies continue to distort farm production and trade decisions and do not effectively target stated government objectives.
The report shows that 54 % of support is provided through policies that artificially maintain domestic farm prices above international levels. This type of support harms consumers – especially poor consumers – while increasing the income gap between small and large farms and reducing the competitiveness of the food industry.
Relatively little of the current policy mix in most countries targets agricultural productivity growth and the sustainable use of land, water and biodiversity resources. The report also highlights large variations in support for different commodities, both within and across countries. This can result in significant price support for some products, while others are artificially depressed, and contributes to distortions in international markets.
“Governments can support farm households and rural communities without negative effects on global markets,” said OECD Director for Trade and Agriculture Ken Ash. “By removing the link between support and farm production decisions, and investing instead in needed public services, governments can build an enabling environment in which farmers have the freedom to make business decisions in response to evolving market opportunities at home and abroad. At the same time farm policy should be better targeted, improving access to technologies that will drive both productivity growth and sustainable resource use,” Mr Ash said.
The annual Agricultural Policy Monitoring and Evaluation report provides up-to-date estimates of government support to agriculture for all OECD and the European Union as a whole, plus key emerging economies. The 2019 edition includes Brazil, People’s Republic of China, Colombia, Costa Rica, Kazakhstan, the Philippines, the Russian Federation, South Africa, Ukraine, Viet Nam, and for the first time, both India and Argentina.
Agricultural Policy Monitoring and Evaluation is free to read online on the OECD iLibrary. You can also access the indicators for 53 countries in our interactive Compare Your Country tool or download the raw data.
Working with over 100 countries, the OECD is a global policy forum that promotes policies to improve the economic and social well-being of people around the world.