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At 4% of total income, Chile provides a low level of support to its farmers, with virtually no market price support and a Nominal Protection Coefficient of close to unity. Payments to farmers are based mostly on input use (fixed capital and credit).
Government spending on agriculture has been rising, and payments to the sector as a whole (GSSE) have been rising more rapidly than payments to farmers. Nevertheless, support to agriculture places a low and declining burden on the economy.
- Chilean agricultural policy involves few market distortions, with virtually no border protection over the 2008 10 period and prices that are aligned with those on international markets. Measures at the farm level are directed principally to small farmers, through payments to improve farm capital (e.g. on-farm infrastructure, irrigation and soil quality) as well as through credit subsidies. In overall terms, however, these payments accounted to no more than 3% of gross farm receipts in 2008-10.
- Expenditures on the agricultural sector have been facilitated by strong copper revenues, and continued to rise in 2008-10, with the broad commitment to agricultural development augmented by responses to the global economic downturn and the earthquake of February 2010. Public expenditures on agriculture were 50% higher in 2008-10 than over the preceding three years. Half of this spending was on general services to develop agriculture as a whole (principally infrastructure, inspection and research) – a share that is nearly twice the OECD average.
- Chile’s agricultural policy increasingly supports agricultural development through supportive investments rather than market interventions. As the approach to agricultural development becomes progressively less based on the levers of agricultural policy, the need for co ordination across ministries, and strong systems of programme evaluation becomes increasingly important.
Chile: OECD Producer Support Estimates (PSE)
Level and composition by support categories, 1986-2010
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