Agricultural Policies

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OECD Agricultural Policies 2004

Organisation For Economic Co-Operation And Development (OECD)2004

In 2003 support to producers across the OECD area, as measured by the percentage PSE, accounted for 32% of farm receipts, a slight increase from 2002, but down from 37% in 1986-88. The PSE in 2003 is estimated at USD 257 billion, or EUR 229 billion. Reform has been reflected in the composition of support. The share of the most production and trade distorting forms of support - output and inputlinked support - has declined from over 90% of producer support in 1986-88 to about 75% in 2001-03. There has also been a slight narrowing of the spread of support levels between commodities. While this progress is notable, there is only a very modest use of policies targeted to specific objectives and beneficiaries, and hence a need for further efforts in these directions. Further efforts are also needed to ensure that policies are more transparent, tailored to specific outcomes, flexible in responding to changing priorities, and equitable. The still large share of output and input-linked support encourages domestic production, distorts trade and contributes to depressing world prices of agricultural commodities. Agricultural policies in OECD countries sometimes impose unnecessary costs on domestic consumers and taxpayers, and many support policies put pressure on the environment and penalise competitive suppliers, including those in developing countries. Reform of agricultural policies remains highly uneven across countries. There are large and increasing differences in the levels of support among OECD countries, and the extent to which further reform is necessary varies considerably. While a number of countries continued to pursue needed policy reforms on a unilateral basis, multilateral trade negotiations stalled at the Ministerial meeting in Cancún. Making progress at the WTO would invigorate the process of agricultural policy reform.

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