A recent Organisation of Economic Co-operation and Development (OECD) report shows that government support to agriculture in OECD countries fell to 19% of total farm receipts in 2011, or $252 billion.
The report, entitled While Agricultural Policy: Monitoring and Evaluation 2012, confirms a long-standing trend toward falling farm support. This is due to a generalized move away from support directly linked to production. But support, which distorts production and trade, still represents near half of the total, according to OECD.
"The move toward lower farm support is a welcome trend, but we still see the need for better targeting and more cost-effective farm policy," says OECD Trade and Agriculture Director Ken Ash."Farm support should be more closely directed at increasing agricultural productivity and competitiveness. Governments should also be doing more to address environmental issues, ensure sustainable resource use and help farmers better cope with risk."
The report reflected widespread variation in terms of levels of support across OECD countries. The organization explains, "Over the 2009-11 period, New Zealand had the lowest level of support, at just 1% of farm income, followed by Australia (3%), and Chile (4%). The United States (9%), Mexico (12%), Israel (13%) and Canada (16%) were also below the OECD average (20%). The European Union has reduced its level of support to 20% of farm income. At the other end of the scale, support to farmers remains relatively high in Iceland (47%), Korea (50%), Japan (51%), Switzerland (56%) and Norway (60%)."
The report also showed that total support to ag as a percentage of national income is falling for OECD countries. It declined from 3% of GDP on average from 1986-88 to less than 1% in 2009-11.
OECD also projects that current high commodity prices will continue over the medium-term outlook, which translates to markets that provide farmers the income that many governments have until now sought to provide through cash payments or artificially high prices.
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