OECD report calls for global farm support reform

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



BRUSSELS, Sept. 18, 2013- Although countries are moving away from providing government support directly linked to agricultural production, the Organisation for Economic Cooperation and Development (OECD) found that support that distorts production and trade still represents about half of the world total.

While OECD countries are increasingly de-linking support from production, emerging markets are relying more on border protection and market price support measures that tax consumers, according to the OECD annual report, OECD Agricultural Policy: Monitoring and Evaluation 2013.

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“With world markets for food and commodities buoyant and higher commodity prices expected to continue, the time is ripe for governments to credibly commit to wide-ranging farm support reform,” said OECD Trade and Agriculture Director Ken Ash. “Meeting the needs of a growing and richer world population requires a shift away from the distorting and wasteful policies of the past towards measures that improve competitiveness, allowing farmers to respond to market signals while ensuring that much-needed innovation is fully funded.”

According to the report, some of the sharpest increases in farm support occurred in countries that have turned their policy focus to self-sufficiency. However, the OECD sees only weak links between higher self-sufficiency and improved food security, particularly in less developed economies. Access to food would be more effectively improved by reducing poverty and developing safety nets, the report said.

OECD stated that public investments for the sector overall should receive more attention. “Investments in research and development, technology transfer, education, and extension and advisory services have high social returns in the long run,” noted the report.

OECD believes further de-linking of farm support and production is necessary. “Even where a large share of support is now delinked from production, payments tend to be based on past entitlements or on farm area, and as a result favour the largest farms,” the report stated. OECD prefers that spending be focused towards specific goals such as those related to low incomes, rural community well-being and environmental sustainability.

This year's OECD report examined the state of agricultural policy in 47 countries that account for nearly 80 percent of global farm output, including seven emerging economies that are major players in food and agriculture markets: Brazil, China, Indonesia, Kazakhstan, Russia, South Africa and Ukraine.

Government support for agriculture in the world's leading farming nations rose during 2012, reversing historic lows recorded in 2011, according to the report. Support to producers stood at $258.6 billion in 2012, representing 19 percent of farm receipts in the OECD, up one percentage point from 2011.

The report noted countries that offer farmers the highest levels of support recorded increases (Japan 56%, Korea 54%, Norway 63% and Switzerland 57%) while relatively low-support countries fell further (Israel 11%, Mexico 12%, United States 7%). Support remained very low in others (Australia 3%, Chile 3%, New Zealand 1%).

Some emerging economies which are key players in agriculture continued to increase support - in China farm support rose to 17 percent, in Indonesia it rose to 21 percent, and in Kazakhstan support reached 15 percent. Others maintained low levels of support, like Brazil (5%) and South Africa (3%).

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