OECD calls for farm subsidy reforms

Sept. 18, 2013 at 2:32 PM
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PARIS, Sept. 18 (UPI) -- The Organization of Economic Cooperation and Development in Paris says the time is "ripe" for agriculture subsidy reforms as commodity prices are high.

"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," OECD Trade and Agriculture Director Ken Ash said in a statement released Wednesday that accompanied the organization's annual report on agriculture.

"Meeting the needs of a growing and richer world population requires a shift away from distorting and wasteful policies of the past," he said.

The OECD called for public investment to support innovation. "Investments in research and development, technology transfer, education, and extension and advisory services have high social returns in the long run," the report said.

"Expenditures on other general services to the farm sector, such as food safety and food quality assurance systems, also contribute to long-term profitability, competitiveness and sustainability," the report said.

Moreover, the OECD called for breaking the link between farm support and production, a system in which "payments tend to be based on past entitlements or on farm area, and as a result favor the largest farms."

"There is considerable scope to re-orient spending towards specific goals such as those related to low incomes, rural community well-being and environmental sustainability," the organization said.

The OECD said it examined agricultural policies in 47 countries that account for nearly 80 percent of the world's farm output.

The organization includes 34 members, but it said in the report, titled "OECD Agricultural Policy: Monitoring and Evaluation 2013," that it had included several agriculturally important non-members in the study, including Brazil, China, Indonesia, Kazakhstan, Russia, South Africa and Ukraine.

OECD said public support for agriculture bucked a long-term trend in 2012, turning higher.

The study also found agricultural support varies significantly from country to country and "the countries that offer farmers the highest levels of support [are] recording increases, while relatively low-support countries fell further."

Among countries that have high subsidy levels, OECD included Japan, which has subsidy levels at 56 percent of the country's gross farm receipts. South Korea at 54 percent, Norway at 63 percent and Switzerland at 57 percent are also considered countries with high subsidy levels.

By comparison, low-level countries include Israel, Mexico and the United States, where subsidies are 11 percent, 12 percent and 7 percent of gross farm receipts.

In addition, several countries have what are considered very low levels of support. Those include Australia and Chile, where support comes to 3 percent of gross farm receipts and New Zealand, where support is at 1 percent.

The OECD said support is also rising in several emerging economies. In China, support rose to 17 percent of gross farm receipts. In Indonesia it rose to 21 percent. Kazakhstan increased farm subsidy support to 15 percent in 2012. In Brazil and South Africa, support remained low at 5 percent and 3 percent, respectively.

In the 34 countries that make up the OECD membership, support to producers stood at $258.6 billion in 2012, the report said.

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