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OECD: No progress in reform of farm subsidies

1 Jul 19

Global efforts to reform massive state aid to farmers worth $528bn per year have largely stalled, says the OECD. 

Little progress has been made by governments to modernise agricultural subsidies, which are often ineffective and distort trade, the organisation for developed economies has said. 

At the same time, countries that implicitly tax farmers through artificially depressed prices are reducing farm revenues by $83bn per-year.

In a report examining the farm policies pursued in 53 countries – including 12 key emerging economies – the Washington-based organisation calls for renewed efforts at reform.

“Governments can support farm households and rural communities without negative effects on global markets,” said Ken Ash, OECD director for trade and agriculture.

“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.”

The report, Agricultural Policy Monitoring and Evaluation 2019 shows that farm policies in OECD and European Union countries as well as 12 emerging economies provided on average $528bn per-year of direct support to farmers during the 2016–18 period.

The OECD finds that many agricultural support policies continue to distort farm production and trade decisions, and do not effectively target stated government objectives.

Some 54% of support is provided through policies that artificially maintain domestic farm prices above international levels, which the OECD argues harms consumers – especially the poor – 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 highlighted 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 also distorts international markets.  

  • Gavin O'Toole, expert on Latin America
    Gavin O'Toole

    A freelance journalist. He has written six books about Latin America and taught the politics of the region at Queen Mary, University of London.

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