15/03/2007 - Government support to agriculture is far lower in the major emerging economies than on average in the developed countries of the OECD. But it is nevertheless rising as pressure mounts to protect farmers in an increasingly competitive global marketplace, says a new OECD report.
Agricultural policies in non-OECD countries looks at eight nations which between them produce nearly one third of the world’s agricultural output - Brazil, China, India, South Africa, and the formerly planned economies of Russia, Bulgaria, Romania and Ukraine. In most of these countries the share of gross farm revenue made up of government support and subsidies is less than half the OECD average of 30%.
However this share is on the rise in most of the countries in the study and much of the support goes into propping up prices, the least efficient and most trade distorting form of government subsidy, according to the OECD.
Support to producers has risen over recent years in all the countries studied except Russia, where levels were already relatively high. A stronger economic environment is also contributing to the trend, says the report. Governments find they can afford to transfer more funds to the farm sector while consumers are often more able to tolerate higher food prices.
The report analyses how effectively governments are responding to common challenges such as alleviating poverty, promoting rural development, ensuring food security and helping farmers adapt to global competition.
The report criticises the relatively low level of government funding for general services to agriculture, such as research and development, training, marketing and infrastructure investment. And it adds that although all the countries surveyed have demonstrated that profound farm sector reform is possible and beneficial, inconsistent implementation of policies has undermined their effectiveness in many cases.
Central to the OECD’s recommendations is the need for a greater diversification of sources of income in rural communities, particularly in the subsistence farming sector. Improved education and health services, land rights and tax reform would encourage this diversification and reduce dependency on agriculture alone.
Some specific characteristics of agriculture in the eight countries reviewed are set out below:
To obtain a copy of the highlights of Agricultural policies in non-OECD countries, journalists are invited to contact the OECD Media Division (tel: + 33 1 4524 9700).