How green is farm support?

OECD Observer

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Overall support to agriculture in OECD countries fell slightly in 2001, which could help reduce pressure on the environment, but generally agricultural policy reform has been slow, variable and insufficient, the latest report on Agricultural Policies in OECD Countries: Monitoring and Evaluation 2002 found.

Several countries introduced new measures to address environmental concerns in 2001, including setting environmental targets, reducing pollution or encouraging more sustainable agricultural production. Australia and the European Union announced goals for biodiversity conservation, while measures to reduce pesticide levels were introduced in Denmark, France and the Netherlands. The Czech Republic, Norway and Switzerland meanwhile increased spending to encourage organic farming. Much environmental spending is in the form of payments to farmers in return for changing production methods to reduce environmental damage or to remunerate them for providing environmental services. Such payments account for most of support classified as “measures of payments based on input constraint”, which rose to 3% of total support to farmers in 1999-2001 from 1% in 1986-1988.

Still, support to agricultural producers accounted for 31% of total farm receipts in the OECD area in 2001, compared with 32% in 2000 and 38% in 1986-88. Three-quarters of support to producers in OECD countries distort production and trade, and prices received by farmers in 2001 were still on average 31% above world prices, shielding farmers in many countries from world prices, although the difference is lower than a 58% gap in the mid-1980s. Total support to agriculture in 2001 came to US$311 billion, or 1.3% of GDP, compared with an average 2.3% in 1986-1988. Significant differences remain across countries and commodities. Producer support levels range from 1% of farm receipts in New Zealand to some 60% or more in Japan or Switzerland. Producer support is 21% of farm receipts in the US and 35% in the EU.

References

• Agricultural Policies in OECD Countries: Monitoring and Evaluation 2002

• OECD Agricultural Outlook 2002

©OECD Observer No. 233, August 2002




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