Source: OECD

The share of farm receipts provided by government programmes rose slightly in OECD countries to $252.5bn or 22% of total farm receipts in 2009, reversing a declining trend in state support since 2004, according to a new OECD report.

Agricultural Policies in OECD Countries (highlights of the publication) says the producer support estimate (PSE) rose to around 252.5 billion dollars or 22 percent of total farm receipts in 2009. This compares with a 21 percent share in 2008 and 22 percent in 2007. The latest rise in support across the OECD countries was due to the easing back of agricultural commodity prices after they hit record highs in 2008. The falls triggered government programmes aimed at propping up domestic prices or farm income.

The sharpest rises in support to farmers (in relation to total receipts) last year occurred in Canada, where the PSE rose to 20% from 13% of farm receipts, in Korea (52% from 46%) , Norway (66% from 60%) and Switzerland (63% from 57%). In each of these countries the main cause was increased price support for dairy products.

In the US, support to farmers rose to 10% of total farm receipts from 8% last year while in the EU the rise was to 24% from 22%. In Australia, the ending of exceptional payments linked to the restructuring of the dairy industry reduced the overall share of government support to farmers.

The report argues that with public budgets under pressure in the wake of the economic crisis, governments need to reassess and adapt their farm support policies to meet specific economic, social and environmental objectives.

It says better targeting of support is needed to tackle particular issues such as managing risks or protecting the environment. Policy makers should reduce subsidies which distort markets and cut the link between government payments and agricultural production.

Compensating farmers for low prices or insulating consumers from price fluctuations through export controls merely contributes to higher volatility in world prices, the report says.

Ken Ash, the OECD’s Director of Trade and Agriculture, said: “More focus should be placed on improving risk management while better functioning and more transparent global markets could reduce price volatility.”

The Paris- -based OECD think thank for governments has 31 mainly developed country members: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Slovak Republic, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.