WASHINGTON, Sept. 5, 2014 -- Government support for
agriculture in the 34 member nations of the Organization for Economic
Co-operation and Development continued to trend downward in 2013, but much of
the support remained in a form that distorts markets, an OECD report shows.
Support to producers accounted for 18 percent of gross farm receipts last year, down slightly from 2012 but much less than the 30 percent figure of two decades ago, according to the report, OECD Agricultural Policy Monitoring and Evaluation 2014.
In the U.S., support for farmers accounted for about
8 percent of total agricultural revenues in the 2011-2013 period, the
fourth-lowest among OECD members and less than half of the OECD average,
according to the report. In 2013, the support figure came to just over $31
billion, versus total value of agricultural production of $389.9 billion.
The report pointed out that the level of support has
fallen sharply from 22 percent in the 1986-88 period. However, it notes that
the decline since 2002 has been mostly due to higher world commodity prices, as
several U.S. support policies are linked to changes in prices.
The OECD also cautioned that while the 2014 Farm
Bill eliminated direct payments to certain producers, “the ultimate impacts” of
the new programs in the legislation “will depend on price and revenue
developments.” And it called for a “rigorous evaluation of the
cost-effectiveness of crop insurance measures in reducing risks,” in light of
the increasing emphasis on crop insurance as a risk-management tool.
The report
also highlights the big differences among OECD countries in the level and
composition of farm support and finds unequal progress in reform. Despite an
overall trend of lower support and a shift to de-linking it from production,
some countries still rely heavily on market interventions that can affect
prices, the OECD said.
The report makes the following
recommendations:
-More market intervention mechanisms
should be dismantled in favor of support that is less connected to production
and more targeted to specific needs, in line with stated policy priorities of
increasing productivity and sustainability.
-Governments should make their farm
policies more coherent with macroeconomic, trade, structural, social and
environmental policies. They should reduce impediments to structural
adjustments to attract financial and human resources to the sector.
-Countries should consolidate past
farm support reforms and avoid any recoupling of support with production, which
can lead to higher costs and market disruption. Future reforms could usefully
include relaxing or ending production quotas.
-Funds freed up by more efficient
farm support practices should be invested in education, infrastructure and
research in the sector. Governments should be bolder about prioritizing the
environment and the sustainable use of natural resources.
-Payments to mitigate income risks
should not crowd out market-based risk management tools and farmers’ own
management of normal business risks.
Founded in 1961, OECD includes most of the world’s developed country, including
the nations of Europe and North America as well as Japan, South Korea,
Australia, New Zealand, Israel and Chile. It traces its origins to the
Organization for European Economic Cooperation which was established in 1948 to
run the U.S.-financed Marshall Plan for the reconstruction of Europe after
World War II.
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