Reforms needed as agricultural support reaches record highs
Total support to agriculture reached record levels of USD 851 billion per year during 2020-22 for the 54 countries covered by a new OECD report, as governments sought to shield consumers and producers from global crises and high inflation. Just under half of this government support was in the form of measures with the greatest potential for market distortions, such as border tariffs and subsidy payments based on output. The OECD’s Agricultural Policy Monitoring and Evaluation 2023 report shows this historically high level of support is nearly a 2.5-fold increase compared to two decades ago, though still behind the overall growth of production. Support remains highly concentrated in a few large producing economies, with China, India, the United States and the European Union representing 36%, 15%, 14% and 13% of total support provided, respectively. Individual producers received USD 630 billion per year in positive support over the 2020-22 period, up from USD 525 billion prior to the COVID-19 pandemic (2017-2019). More than half of it (USD 333 billion annually) was paid by consumers through border tariffs and other policies which push domestic prices above reference prices. The remainder (USD 297 billion annually) was paid by taxpayers through budgetary transfers, such as subsidies on the use of fertilisers and electricity, as well as payments based on output or land area. Most support reinforces existing production structures. The continued prominence of market price support in many countries, together with other forms of support that are potentially production and market distorting or commodity specific, discourage changes in production systems. These types of support also distort international markets, which remain a key mechanism to smoothen the impacts of shortfalls or bumper harvests. “Our annual flagship report Agricultural Policy and Monitoring Evaluation provides transparency on the nature and scale of government support provided to the agricultural sector, by measuring […]
