Government insurance policies offering greater than USD 500 billion to farmers yearly distort markets, stifle innovation and hurt the atmosphere

30/06/2020 – The newest version of the OECD’s annual Agricultural Policy Monitoring and Evaluation report exhibits that the assist insurance policies applied by the 54 international locations studied – all OECD and EU international locations, plus 12 key rising economies – offered on common USD 536 billion (EUR 469 billion) per 12 months of direct assist to farmers from 2017 to 2019. Half of this assist got here from insurance policies that saved home costs above worldwide ranges; such insurance policies hurt shoppers, particularly poor ones, enhance the earnings hole between small and huge farms, and cut back the competitiveness of the meals business general. At the identical time, six of the international locations implicitly taxed farmers by USD 89 billion (EUR 78 billion) per 12 months by artificially miserable costs. These insurance policies additional added to market distortions.

By distinction, most international locations spend comparatively little to underpin the long-term efficiency of the agricultural sector: throughout all 54 international locations within the report, expenditures for analysis and growth, infrastructure, biosecurity and different enabling providers amounted to only USD 106 billion per 12 months. Subsidies to shoppers account for an extra USD 66 billion per 12 months. Total assist to the sector – comprising support to producers (USD 536 billion), shoppers (USD 66 billion) and for enabling providers (USD 106 billion) — due to this fact added as much as USD 708 billion per 12 months.

Despite productiveness positive aspects up to now a long time and a few current initiatives to enhance the sector’s environmental efficiency, the general tempo of coverage reform has stalled. Support ranges have modified little over the previous decade and there was little progress in shifting in the direction of devices that impose fewer distortions on manufacturing and commerce. As an extra consequence, the environmental efficiency has been combined. In specific, greenhouse gasoline (GHG) emissions from agriculture have elevated in most international locations.

The OECD report additionally gives info on authorities responses to the COVID-19 pandemic which embrace vital aid measures to assist shoppers, farmers and different agro-food actors and to maintain meals and agricultural provide chains shifting. While many international locations are centered on facilitating commerce as a part of their efforts to take care of provide chains, some have imposed non permanent commerce restrictions which may undermine provide in each the quick and longer-term. Going ahead, the OECD report says, international locations ought to shift to deeper investments in constructing the long-term resilience of the meals and agriculture sectors.

“Globally, more than one of every nine dollars of gross farm receipts continues to flow from public policies. In some countries, it is one in two dollars,” stated OECD Director for Trade and Agriculture, Ken Ash. “Governments need to invest in well-functioning food systems – but most current support to agriculture is unhelpful or even harmful. As countries struggle with strained budgets from COVID-19, this is a moment to reduce distorting agricultural support and refocus efforts and limited resources on achieving better results for agriculture and society overall.”

Governments can take various coverage actions to make their agriculture sector extra productive, sustainable and resilient:

  • Phase out distortive insurance policies, together with value assist and budgetary assist carefully linked with agricultural manufacturing and enter use.
  • Reallocate funds towards key public providers to the sector for enhancing productiveness, sustainability and resilience, or to well-targeted assist for the supply of public good outcomes corresponding to biodiversity.
  • Focus on extra bold environmental outcomes by way of much less distortive, extra environment friendly and extra focused insurance policies.

The OECD’s  annual Agricultural Policy Monitoring and Evaluation report gives up-to-date estimates of presidency assist to agriculture for all OECD members (together with Colombia, which joined the Organisation in April 2020) and the European Union as a complete, plus key rising economies:  Argentina, Brazil, People’s Republic of China, Costa Rica, India, Indonesia, Kazakhstan, the Philippines, the Russian Federation, South Africa, Ukraine, and Viet Nam.

On July 16, the OECD and FAO will situation the 2020-2029 version of the OECD-FAO Agricultural Outlook. This will present a complete medium-term baseline for projections for agricultural commodity markets at nationwide, regional and world ranges, together with an preliminary state of affairs exploring COVID-19 impacts. Based on this image, the report will present additional insights and coverage choices on easy methods to allow extra productive, sustainable and resilient world agricultural and meals techniques.

Read the OECD Agricultural Policy Monitoring report in English at https://www.oecd-ilibrary.org/agriculture-and-food/agricultural-policy-monitoring-and-evaluation_22217371.

More info on Agricultural Policy Monitoring and Evaluation on the OECD

For additional info, journalists are invited to contact Carol Guthrie within the OECD Media Office (+33 1 45 24 97 00).

 

Working with over 100 international locations, the OECD is a world coverage discussion board that promotes insurance policies to enhance the financial and social well-being of individuals around the globe.

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