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Switzerland has progressively reduced its support to agriculture and especially its most trade and production distorting forms of support since 1986-88. However, support remains high, at 56% of farm income, and the most distorting forms represent around a half of it. The level of price distortions has been significantly reduced, as shown by the Nominal Portection Coefficient (NPC).
Within direct payments, the area and headage payments dominate, but an increasing share of payments is targeted towards environment and animal welfare.
- Overall, progress has been achieved in market orientation, although the level of support remains relatively high. There has been a gradual fall in support since 1986-88, with the share of market price support gradually decreasing. However, production and trade distorting policies still account for half of the support in 2008-10.
- The removal of milk price controls and the elimination of the milk quota system in 2009 will contribute to improve the economic efficiency of the sector. The elimination of export subsidies to primary agricultural products in 2010 and the adoption of greater flexibility and transparency in the administration of the tariff rate quota system together with further reduction for some tariff barriers will also strengthen the role of markets in improving economic efficiency.
- The savings in budgetary expenditures to finance market regulation (e.g. removal of export subsidies) were reallocated to finance direct payments to farmers. An increasing part of these payments are ecological direct payments, which are targeted to animal welfare, environmental and landscape objectives. These payments are conditional on implementing specific farming practices and are among the potentially least production and trade distorting forms of support.
- The continuation of the gradual move away from market price support measures and the increase in direct payments (as a part of the Agriculture Policy 2011 reform) are consistent with OECD Ministerial policy reform principles. However, further efforts are still needed to reduce the overall level of support and better target direct payments to meet societal concerns more efficiently.
Switzerland: OECD Producer Support Estimates (PSE)
Level and composition by support categories, 1986-2010