Agricultural policies and support

Ministerial communiqués related to agricultural policies

 

OECD Agriculture Ministerial Meeting 2010

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OECD Council at Ministerial level adopted a number of principles for agricultural policy reform.  These principles, reaffirmed and extended through subsequent Ministerial communiqués, provide the reference by which agricultural policy developments in Member countries are evaluated in the monitoring report.  Selected text from the most relevant communiqués are presented below.

 

OECD COUNCIL AT MINISTERIAL LEVEL, APRIL 1998
- Strengthening the multilateral system
- OECD’s current and future challenges OECD COMMITTEE FOR AGRICULTURE AT MINISTERIAL LEVEL, MARCH 1998
- Progress has been made in agricultural policy reform...
... but more needs to be done...
... and new challenges are emerging.
- Ministers outlined their Shared Goals...
... adopted a set of policy principles...
... and outlined a role for the OECD.

OECD COMMITTEE FOR AGRICULTURE AT MINISTERIAL LEVEL, MARCH 1992
- The reform of agricultural policies
- Structural adjustment
Agriculture and the environment
- Rural development
- Implications of developments in non‑Member countries

OECD COUNCIL AT MINISTERIAL LEVEL, MAY 1987

OECD COUNCIL AT MINISTERIAL LEVEL, APRIL 1998

The OECD Council at Ministerial level met on 27‑28 April 1998.  The communiqué issued at the conclusion of that meeting included the following text related to agricultural policy.

 

Strengthening the multilateral system

        In view of the upcoming WTO Ministerial, which is being held in conjunction with the 50th anniversary of the multilateral trading system, Ministers reaffirmed their strong commitment to the multilateral system.  They attached the utmost importance to maintaining open markets and sustaining the momentum of liberalisation.  They stressed their resolve to ensure full and timely implementation of the Uruguay Round agreements, to strictly adhere to WTO rules, and to pursue the process of broad‑based trade liberalisation, including in new areas.  To this effect Ministers encouraged vigorous efforts in the WTO based on the built‑in agenda agreed at the end of the Uruguay Round, together with the WTO work programme as agreed at Singapore.  Ministers welcomed that exploration of the possible scope and modalities for further liberalisation and rulemaking had begun and stressed the importance of advancing toward an international consensus.  In this context, Ministers expressed their support for complementing existing WTO mandates by addressing remaining barriers to trade in industrial products and for further liberalisation in the information technology area.  Ministers reaffirmed the OECD’s important role in support of the multilateral system and the WTO’s preparations for future negotiations.  They recognised that further integration of developing and transition countries into the multilateral system remains a high priority, and that it is important to remain responsive to their needs.  In this context, particular attention should be given to enhancing opportunities for the least developed countries, and to helping them build the capacities needed to benefit from those opportunities.  Ministers also supported the early accession on commercially viable terms of applicants to the WTO, while preserving the integrity of WTO rules.

Ministers noted that OECD Agriculture Ministers had, at their March meeting, reaffirmed that, in conformity with the conditions of Article 20 of the Uruguay Round Agreement on Agriculture and including all the elements contained therein, further trade negotiations are due to continue the ongoing process towards the long‑term objective of substantial progressive reductions in support and protection resulting in fundamental reform.  Ministers also noted that Agriculture Ministers had adopted a broad set of shared goals and policy principles covering all aspects of agricultural policy reform, and that those Ministers had:  stressed that agro‑food policies should seek to strengthen the intrinsic complementarities between the shared goals, thereby allowing agriculture to manifest its multifunctional character in a transparent, targeted and efficient manner;  and had agreed that the challenge in pursuing the shared goal is to use a range of well‑targeted policy measures and approaches which can ensure that the growing concerns regarding food safety, food security, environmental protection and the viability of rural areas are met in ways that maximise benefits, are most cost‑efficient, and avoid distortion of production and trade.

Ministers noted with satisfaction the 20th anniversary of the Export Credit Arrangement.  It has proved to be a highly successful means of achieving rules‑based disciplines on export credits.  They welcomed the positive efforts undertaken in the area of premia following the adoption of the 1997 Guidelines.  Ministers regretted, however, that an Understanding covering agricultural export credits has not been concludes, but remain convinced that the appropriate forum in which to continue debating the matter is proved by the meetings of the Participants to the Arrangement.  Noting the outstanding undertaking on this issue in the Uruguay Round Agreement on Agriculture, they urged the Participants to reach an agreement as soon as possible and to report back on this matter at their 1999 Ministerial meeting.

 

OECD’s current and future challenges

(37.)        Ministers agreed that the achievement of sustainable development is a key priority for OECD countries.  They encouraged the elaboration of the Organisation’s strategy for wide‑ranging efforts over the next three years in the areas of climate change, technological development, sustainability indicators, and the environmental impact of subsidies. They welcomed the Shared Goals for Action adopted by OECD Environment Ministers at their April meeting.  Ministers recognised that all OECD countries, on the basis of their differentiated responsibilities, need to play their part in combating climate change by implementing national strategies, including measures such as clear targets and effective regulatory and economic measures, as well as through international co‑operation.  In this regard, OECD analysis will be critical in helping Member countries find  the most efficient and effective ways to meet Kyoto targets.  Ministers asked the OECD to enhance its dialogue with non‑Member countries in these areas and to engage them more actively, including through shared analyses and development of strategies for implementing sustainable development.  Ministers further noted that, as part of the Shared Goals, Environment Ministers stressed the crucial importance of strong environmental policies in the implementation of sustainable development.  Ministers agreed to interpret the term “sustainable” as including social and environmental, as well as economic, considerations.  The Organisation is well‑placed to exploit its multidisciplinary expertise in this area and to pursue the integration of economic, environmental and social policies to enhance welfare.  In this regard, Ministers stressed the importance of promoting effective integration of environmental consideration in the multilateral system.

OECD COMMITTEE FOR AGRICULTURE AT MINISTERIAL LEVEL, MARCH 1998

(1.)          The OECD Committee for Agriculture met at Ministerial level on 5‑6 March 1998 in Paris, under the chairmanship of Mr. J. van Aartsen, Minister for Agriculture, Nature Management and Fisheries, The Netherlands.  The Vice‑Chairs were Mr J. Anderson, Minister for Primary Industries and Energy, Australia, Mr D. Glickman, Secretary of Agriculture, United States, Mr Y. Shimamura, Minister for Agriculture, Forestry and Fisheries, Japan, and Mr F. Fischler, Commissioner for Agriculture and Rural Development, European Commission.  Prior to the meeting the Chair had a useful exchange of views with the International Federation of Agricultural Producers and the Confederation of European Agriculture.

(2.)         The world is adapting to the challenges of globalisation and evolving public expectations.  Ministers judged it timely to examine the future role of the agro‑food sector and related policies in the light of recent developments, in particular the outcome of the Uruguay Round Agreement on Agriculture, and of the World Food Summit.  Most OECD countries have adjusted their agricultural policies over the last decade, and many are actively exploring new initiatives.  Ministers undertook to further the process of the reform of agricultural policies as agreed in the 1987 OECD Council, through adoption of a set of shared goals and policy principles.  In this context, Ministers noted that, in conformity with the conditions of Article 20 of the Uruguay Round Agreement on Agriculture (URAA)[i]and including all the elements contained therein, further trade negotiations are due to continue the ongoing process towards the long-term objective of substantial progressive reductions in support and protection resulting in fundamental reform.

 

Progress has been made in agricultural policy reform...

(3.)         Ministers took note of the report prepared by the OECD Secretariat Agricultural Policy Reform:  Stocktaking of Achievements as a good basis for discussion.  They acknowledged that progress has been made since 1987, but more remains to be done.  According to OECD Secretariat calculations, support to agricultural producers, as measured by the Producer Subsidy Equivalent, has fallen from an OECD‑wide average of 45 per cent of the value of production in 1986‑88 to an estimated 35 per cent in 1997.  During the same period, total transfers from consumers and taxpayers due to agricultural policies decreased from a share of 2.2 per cent of GDP to 1.3 per cent, reaching a level of US$280 billion in 1997.  There has been some shift away from price support towards direct payments and other policy measures that are less distorting to production and trade, that allow a greater influence of market signals, and are more efficient in the targeting of support.  OECD countries have developed agricultural policy measures to address environmental, rural development and structural adjustment issues, and more attention has been paid to the impact of agricultural policy reforms on the agro‑food sector as a whole.  The growing importance of these issues had been identified by OECD Agriculture Ministers in 1992.

(4.)         The 1994 Uruguay Round Agreement was a major step on the path of agricultural policy reform, bringing agricultural trade policies and associated domestic policies within the scope of a comprehensive framework of multilateral trade disciplines.  Domestic and trade policy reform efforts have contributed to a reduction in the serious problem of over‑production that characterised the 1980s, to gains in economic efficiency, to an improvement in the functioning of world commodity markets, and a closer relationship between developments in domestic and world markets.

 

... but more needs to be done...

(5.)         Nonetheless, Ministers recognised that policy reform is an on‑going process, that policy reform is not complete and therefore more needs to be done.  Progress in policy reform has been uneven across countries and commodities, and the pace of reform has been affected by social and economic factors.  While some countries have made substantial reforms, in others the agricultural sector is still substantially supported and is not sufficiently responsive to market signals.  Some commodity sectors continue to be subject to production-limiting programmes, which can have positive and negative economic impacts.  Although decreasing, market price support remains the major form of support in most OECD countries.
And much support is linked to current production.  Many agricultural policies still involve substantial costs to consumers and taxpayers.  In many cases they either do not achieve their intended outcomes or do not do so in the most efficient and equitable ways.

(6.)         In many cases, agricultural trade is subject to relatively high import tariffs.  The use of export subsidies has been subject to discipline under the URAA, but remains a contentious issue.  Export credits for agricultural products are not yet disciplined.  Technical barriers to trade, sanitary and phytosanitary measures, labels of origin, quality standards, and export and import monopolies have also become important trade policy issues.  Ministers recalled that agricultural trade policy measures are closely linked to domestic agricultural policy measures, and that the further reform of domestic and trade policies has to be compatible.  In this context, Ministers noted that agricultural policy also needs to give due consideration to non‑trade concerns, as referenced in Article 20 of the Uruguay Round Agreement on Agriculture.

 

... and new challenges are emerging.

(7.)         Ministers took note of the report prepared by the OECD Secretariat Agricultural Policy:  The Need for Further Reform, and its suggested policy approaches, as a valuable contribution to the discussion on advancing the policy reform process.  Ministers stressed that a major challenge for agriculture and the agro‑food sector in OECD countries is to meet the growing demand for adequate and safe supplies of food in efficient and sustainable ways, while recognising the diversity of agricultural, economic and social situations and public preferences concerning the role of the agro‑food sector across OECD countries.

(8.)         On‑going structural adjustment, innovation, and a tendency in some countries or sectors towards vertical co-ordination with upstream and downstream industries are important developments, with implications for farm incomes.  Many farmers have responded to these developments, and to market signals, by adopting different farm practices, developing alternative products and supplying new markets.  The income sources of many farm households are becoming more diversified.  Problems of low farm incomes mainly affect specific farmers and less‑favoured regions, or occur during periods of severe and sudden income loss.  Producers in some countries, which previously had a high level of price support and protection, could face increased price variability.  Providing appropriate safety nets and associated measures in least production-and trade-distorting ways would allow governments to assist in particular the most vulnerable farmers, in cost-efficient ways.

(9.)         As globalisation advances, foreign investment in agro‑food industries is increasing and trade in agricultural goods is expanding rapidly, particularly for processed products.  There are closer agricultural trade and investment relations between OECD and non‑OECD countries, especially some Asian and South American countries, which are emerging as major players in agricultural markets.  The OECD area also has a responsibility to contribute to world food security, and Ministers stressed the importance of the 1996 World Food Summit declaration on global food security and the plan of action agreed upon. Food security requires a multifaceted approach involving national and international efforts, including:  ensuring the eradication of poverty, sufficient food production, and a fair and market-oriented world trade system.
(10.)       Beyond its primary function of supplying food and fibre, agricultural activity can also shape the landscape, provide environmental benefits such as land conservation, the sustainable management of renewable natural resources and the preservation of bio‑diversity, and contribute to the socio-economic viability of many rural areas.  In many OECD countries, because of this multifunctional character, agriculture plays a particularly important role in the economic life of rural areas.  There can be a role for policy where there is an absence of effective markets for such public goods, where all costs and benefits are not internalised.  The reform of agricultural policy according to the principles agreed upon in the OECD in 1987, including well‑targeted policy measures, will enable the sector to contribute to the viability of rural areas and address environmental issues, while enhancing efficient and sustainable resource use in agriculture.

(11.)       Rapid development and dissemination of new technologies, including biotechnology and information technology, is providing not only challenges but also opportunities for the agro‑food sector.  But there is growing public concern about food quality standards and food safety, including the effects of new technologies;  animal welfare standards in agriculture;  and those cases where agriculture causes environmental damage, such as degradation of water, soil and habitats.  Most of these issues have trans‑boundary and trans‑sectoral dimensions.  For many of them there is a need for further research, a better understanding of current scientific knowledge, and better information to consumers.

 

Ministers outlined their Shared Goals...

(12.)       Against this background Ministers outlined a set of Shared Goals, stressing that the goals should be viewed as an integrated and complementary whole.  There was a broad consensus that OECD Member governments should provide the appropriate framework to ensure that the agro‑food sector:

·         is responsive to market signals;

·         is efficient, sustainable, viable and innovative, so as to provide opportunities to improve standards of living for producers;

·         is further integrated into the multilateral trading system;

·         provides consumers with access to adequate and reliable supplies of food, which meets their concerns, in particular with regard to safety and quality;

·         contributes to the sustainable management of natural resources and the quality of the environment;

contributes to the socio-economic development of rural areas including the generation of employment opportunities through its multifunctional characteristics, the policies for which must be transparent.

contributes to food security at the national and global levels.

(13.)       Ministers stressed that agro‑food policies should seek to strengthen the intrinsic complementarities between the shared goals, thereby allowing agriculture to manifest its multifunctional character in a transparent, targeted and efficient manner.  The challenge in pursuing the shared goals is to use a range of well‑targeted policy measures and approaches which can ensure that the growing concerns regarding food safety, food security, environmental protection and the viability of rural areas are met in ways that maximise benefits, are most cost-efficient, and avoid distortion of production and trade.

 

... adopted a set of policy principles...

(14.)       Ministers viewed future public policy as contributing to the achievement of the shared goals through appropriate well‑targeted policy measures to accompany competitive, market-led developments in the agro‑food sector.  They noted that agricultural policy cannot be isolated from influences that are shaping the economy of which the agricultural sector is a part, and saw a clear need to ensure that agricultural policies are compatible and mutually reinforcing with broader economy-wide policies in areas such as social welfare, employment, environment and regional development.

(15.)       In striving to realise the shared goals, Ministers adopted a set of policy principles, while recognising that governments will want to retain flexibility in the choice of policy measures and in the pace of reform, taking into account the diverse situations in Member countries.   These principles, which build on the agricultural policy reform principles agreed by OECD Ministers in 1987 and reiterated by Agriculture Ministers in 1992, are as follows:

·         reaffirm the support for Article 20 of the Uruguay Round Agreement on Agriculture* and the commitment to undertake further negotiations as foreseen in that Article and to the long-term goal of domestic and international policy reform to allow for a greater influence of market signals:

 

*“Recognising that the long‑term objective of substantial progressive reductions in support and protection resulting in fundamental reform is an ongoing process, members agree that negotiations for continuing the process will be initiated one year before the end of the implementation period, taking into account:

 

(a)   the experience to that date from implementing the reduction commitments;

 

(b)   the effects of the reduction commitments on world trade in agriculture;

 

(c)   non‑trade concerns, special and differential treatment to developing country Members, and the objective to establish a fair and market-oriented agricultural trading system, and the other objectives and concerns mentioned in the preamble to this Agreement;  and

 

(d)   what further commitments are necessary to achieve the above mentioned long‑term objectives”;

 

·         address the problem of additional trade barriers, emerging trade issues and discipline on export restrictions and export credits;

·         strengthen world food security in particular through the actions agreed in the Rome Declaration and Plan of Action of the 1996 World Food Summit;

·         promote innovative policies that facilitate responsiveness to market conditions by agricultural producers;

·         facilitate improvement in the structures in the agricultural and agro‑food sectors, taking into account the needs of farmers affected, in particular those in disadvantaged regions;

·         enhance the contribution of the agro‑food sector to the viability of the rural economy through, for example, efficient and well-targeted agricultural policy measures, facilitating the mobility of labour, new market opportunities, alternative uses of land (both within and outside agriculture), and the provision of rural amenities;

·         take actions to ensure the protection of the environment and sustainable management of natural resources in agriculture by encouraging good farming practices, and create the conditions so that farmers take both environmental costs and benefits from agriculture into account in their decisions;

·         take account of consumer concerns by improving the effectiveness and reliability of food safety regulations, strengthening standards on origin and quality, and improving the content and availability of information to consumers, within the framework of international rules;

·         encourage increased innovation, economic efficiency, and sustainability of agro‑food systems through, inter alia, appropriate public and private research and development efforts, respect for the protection of intellectual property, and improvements in public infrastructures, information, advice and training;

·         in a manner fully consistent with paragraph 13 of this communiqué, preserve and strengthen the multifunctional role of agriculture in order to combat territorial imbalances, to encourage the sustainable management of natural resources and to favour diverse farm development strategies.

(16.)       Ministers agreed to seek innovative ways and appropriate institutional frameworks to integrate public, private and co‑operative initiatives, which take into account local and regional conditions.  They agreed that in designing and implementing cost‑effective policy measures, these should be regularly monitored and evaluated with respect to their stated objectives.  Ministers also agreed that policy measures should seek to meet a number of operational criteria, which would apply in both the domestic and the international context, and should be:

-        transparent:   having easily identifiable policy objectives, costs, benefits and beneficiaries;

-        targeted:   to specific outcomes and as far as possible decoupled;

-        tailored:   providing transfers no greater than necessary to achieve clearly identified outcomes;

-        flexible:   reflecting the diversity of agricultural situations, be able to respond to changing objectives and priorities, and applicable to the time period needed for the specific outcome to be achieved;

-        equitable:   taking into account the effects of the distribution of support   between sectors, farmers and regions.

... and outlined a role for the OECD.

(17.)       In order to contribute to the achievement of the shared goals, Ministers agreed on a number of priority areas for future work by the OECD, which they recommended be reflected in the overall programme of work determined by the OECD Council.  Ministers asked the OECD to:

·         develop the analysis and analytical tools to monitor and evaluate developments in agricultural policies against the shared goals, policy principles, and operational criteria of policy measures;

·         continue and strengthen the analysis of main agricultural markets and trade developments, taking into account market developments in non‑OECD countries;

·         examine ongoing and new agricultural trade and trans‑boundary policy issues and their impacts, provide analytical support, as appropriate, to the process of agricultural trade liberalisation, without duplicating the work of the WTO.   In this connection, Ministers noted the contributions that the OECD Committees, within their existing work programmes, might make to the process of information exchange and analysis now underway in the various WTO Committees, while avoiding unwanted duplication with work in other fora.

·         identify and analyse existing and new policy approaches to address issues related to structural adjustment in the agro‑food sector, rural development, farm incomes, farm employment, income risk management, and food security and food safety;

·         foster sustainable development through analysing and measuring the effects on the environment of domestic agricultural and agri‑environmental policies and trade measures;

·         promote an active policy dialogue with non‑Member countries in particular those that are relevant players   in agricultural production and trade;

·         improve the dialogue with non‑government organisations, in particular those representing farmers, other actors in the agro‑food sector including consumers, and those concerned with agriculture and the environment.

(18.)       Ministers recommended that the communiqué be drawn to the attention of the OECD Ministerial Council.

OECD COMMITTEE FOR AGRICULTURE AT MINISTERIAL LEVEL, MARCH 1992

(1.)          The Committee for Agriculture of the OECD met at Ministerial level at the Château de la Muette on 26 and 27 March 1992, under the chairmanship of Mr. K.‑E. Olsson, Minister of Agriculture of Sweden.  The other Members of the Bureau were Mr. S. Crean, Minister for Primary Industries and Energy of Australia, Mr. R. MacSharry, Member of the Commission of the European Communities with responsibility for Agriculture and Rural Development and Mr. E. Madigan, Secretary of Agriculture of the United States.

(2.)         The Ministers[ii] discussed the current situation and likely future developments in agricultural policies and markets.  They considered the state of policy reform and its domestic and international dimensions.  They recognised that it was necessary to examine in a coherent manner the relationships among structural adjustment in the agricultural sector, environmental issues, and rural development, and any measures used to address them.  They also discussed the significant changes occurring in parts of the world and how these affect the agricultural relationships between the OECD countries and non‑Member countries.

 

The reform of agricultural policies

(3.)         Ministers confirmed all the agricultural reform principles set out in 1987 and reaffirmed in subsequent meetings of the OECD Council at Ministerial level.  They reaffirmed the commitment to the long‑term objective of the reform.  They noted the very limited and uneven progress that has been made in implementing the 1987 principles.

(4.)         Ministers reaffirmed the commitment of their Governments to the achievement of a swift and successful conclusion of the Uruguay Round negotiations under the General Agreement on Tariffs and Trade.  To this end, they stressed the need for a further political impetus to bring to conclusion the negotiating process currently under way.  They recognised that agriculture is one of the most important elements in the negotiations, and that the resolution of the outstanding issues in this sector, among others, is therefore essential.  A successful conclusion of the negotiations will represent a major multilateral contribution towards the implementation of the agricultural reform agreed upon in 1987, and subsequently.  In contrast, there would be significant down‑side risks for the world trading system and costs for the world economy of a failure to conclude quickly the Uruguay Round.  It will be important to assess in depth the various impacts of reform.  In this regard, Ministers stressed the fruitful role that the Organisation has played in the preparation of the negotiations and requested it to continue its analytical function following their conclusion.

(5.)         Ministers stressed the central function of agriculture and the rest of the agro‑food sector as a provider of food and raw materials, including raw materials for new uses, and its role as a source of employment.  As a user of land and other natural resources, agriculture is a major custodian of the environment.  In order for agriculture and the rest of the agro‑food sector to fulfil these multiple functions and to contribute to overall economic growth, adjustment is necessary.  In this context, the reform of agricultural policies is essential to ensure a more market‑oriented agricultural system producing high quality products and to contribute to trade liberalisation, and to promote environmentally sustainable agriculture.  In addition to policies within the sector, appropriate policies outside the sector, such as macro‑economic policies, including monetary policies, contributing to sustained economic growth, and labour market policies, are also necessary to facilitate the adjustment of agriculture and the rest of the agro‑food sector.

(6.)         Many of the agricultural policy measures currently in use are costly.  The large consumer, taxpayer and other costs of agricultural policies are a continuing source of concern.[iii]   While successful in achieving some stated objectives, many policy measures have limited success in achieving some of their aims, such as improving farm incomes and aiding disadvantaged rural areas.  In some countries, policies have resulted in burdensome production surpluses with consequent negative effects on international markets, in particular for food exporting countries.  Measures to control production have, in some cases, reduced market imbalances, but they have to be applied in an appropriate mix with other policy instruments in order to be able to address the fundamental need for adjustment in agriculture and an improved allocation of resources.  Despite recent improvements in the balance of supply and demand, the medium‑term outlook is one of continuing surpluses for many commodities in the OECD area.  This prospect makes the reform of policies even more urgent.  Ministers noted with appreciation the work done by the Organisation in monitoring developments in the agricultural policies of Member countries, in analysing medium‑term market outlook, in assessing the domestic and international implications of policies, including those in the income field, and in analysing the ways and means of implementing policy reform.  With the increasing need for reform, Ministers requested the continuation and deepening of work in these areas.

 

Structural adjustment

(7.)         Ministers agreed that adjustment of the agricultural sector in order to make it more viable necessitates greater market orientation through progressively less distorted market signals, a progressive reduction in assistance, and enhanced self‑reliance by producers.  While noting that meaningful reform would have benefits for the economy as a whole as well as for the agro‑food sector, Ministers recognised that such reform would also impose hardship, in certain OECD countries, on segments of the population and on some regions heavily dependent on agriculture.  Some of those adversely affected will be capable of accommodating adjustment on their own.  Others will need appropriate help to transform their farm operations and off‑farm activities in order to remain viable, or to seek other alternatives.  In addition, analysis of the economic utilisation of agricultural products for non‑food purposes should be enhanced.  In any event, any measures taken should not erect further impediments to structural change, but should reduce economic distortions, and adhere to the principles of transparency and efficiency.  They should strengthen competitiveness in the agro‑food sector as a whole.  To clarify the choices involved, Ministers requested that the Organisation strengthen its work on structural adjustment in the agro‑food sector with a view to evaluating appropriate measures which could be used to support reform.

 

Agriculture and the environment

(8.)         Ministers stressed the growing importance of the two‑way relationships between agriculture and forestry on the one hand, and the environment on the other hand, and the fact that both sectors contribute both positively and negatively to the environment.  They recognise that in some countries many of the most valuable landscapes have been shaped and preserved by agricultural and sylvicultural activities.  Such activities, in all countries, could contribute increasingly and positively to environmental sustainability, and the conservation of rural resources.  The sectors will also be affected increasingly by environmental changes largely outside their control and by policy responses to those changes, such as those associated with the threat of global warming.  It was agreed that agricultural policy reform could be beneficial for the environment, and that a new set of responses may be needed to internalise environmental costs and benefits into agricultural decision‑making.  The new set of responses encompasses both regulatory and market‑based solutions, for example, environmental management agreements, financial measures, research and development initiatives, and the pricing of previously unpriced environmental services.  Ministers noted that the polluter pays principle should be applied to the extent possible, as indicated by OECD Environment Ministers[iv] among others.  They also stressed the need for transparent policy responses to reduce economic and trade distortions.  Ministers endorsed the view that the international dimensions of environmental impacts or the policy responses to them can best be addressed through multilateral approaches.  Finally, Ministers endorsed the need for further analysis by the Organisation of the linkage between agriculture and the environment and its implications for policy.


 

Rural development

(9.)         Rural development relates to a broad range of social as well as economic dimensions.  Agriculture is a major part of the rural economy in OECD countries.  Ministers emphasised that rural development should be addressed primarily through an integrated rural development policy, rather than only through agricultural policy.  The primary focus of rural development policy should be the reduction of impediments to, and the promotion of, viable economic activities.  Such a focus would contribute to efficient adjustment in agriculture.  This in turn would improve the long‑term viability of the agricultural sector and its economic and social contribution to rural areas.

(10.)       Ministers noted the work underway in the Organisation on the inter‑related issues of agricultural reform, the environment, and rural development, and stressed the need for an integrated approach to these issues.

 

Implications of developments in non‑Member countries

(11.)       Ministers noted the growing importance of relationships between the OECD countries and non‑Member countries, and the major changes in some of these relationships in recent years.  They affirmed the need for further expansion of dialogue on agricultural issues between the OECD countries and non‑Member countries.  In this context, Ministers discussed the need to provide food aid in specific circumstances, to provide technical assistance for the development of the agro‑food sector as a whole, and within the multilateral system to improve access to OECD markets as a contribution to the process of economic reform in non‑Member countries.  They suggested a deepening of the monitoring and analysis of developments in non‑Member countries, and their implications for the OECD countries and world markets.

(12.)       Ministers noted the increased emphasis being placed by the OECD on central and eastern European countries (CEECs).  The agro‑food system has an important role to play in their transition to a market economy.  Ministers encouraged the expansion of co‑operation, particularly in the form of technical assistance by OECD countries, to aid this process by facilitating the transition to an efficient, market‑oriented private agro‑food sector.  They noted the concrete steps already taken by the OECD countries in this regard.  They welcomed the opportunity for dialogue provided by their meeting with the Agricultural Ministers of the Partners in Transition (PIT) countries, held on 26 March.  In relation to the Commonwealth of Independent States (CIS), Georgia, and the Baltic States, Ministers noted that, in the short‑term, food aid will be vital to prevent hardship, particularly among poorer segments of the population in food‑deficit areas, while it is necessary to ensure that such aid does not impair the development of the food and agricultural sectors of these countries.  Ministers endorsed the need for continued co‑ordination among OECD countries in the provision of food aid and technical assistance.

(13.)       Ministers recognised that the increasingly diverse situations in developing countries require different policy responses.  They noted the role that OECD countries play in the development process and as markets for developing country exports.  Ministers reaffirmed the commitment to assist in the improvement of the food situation in developing countries by helping to strengthen the agro‑food sectors in those countries, and by pursuing food aid efforts.  They recognised that agricultural policy reform, in both the OECD countries and in the developing countries, should aid, in the long run, the development process.

 

OECD COUNCIL AT MINISTERIAL LEVEL, MAY 1987

       The Council of the OECD met at Ministerial level on 12 and 13 May 1987.  The following is the full text of the section on agriculture in the communiqué issued at the conclusion of that meeting:[v]

 

The 1987 OECD Ministerial Principles for agricultural policy reform

(19.)       "The joint report of the Trade and Agricultural Committees[vi] was approved.  This important work clearly highlights the serious imbalances that prevail in the markets for the main agricultural products.  Boosted by policies which have prevented an adequate transmission of market signals to farmers, supply substantially exceeds effective demand.  The cost of agricultural policies is considerable, for government budgets, for consumers and for the economy as a whole.  Moreover, excessive support policies entail an increasing distortion of competition on world markets; run counter to the principle of comparative advantage which is at the root of international trade and severely damage the situation of many developing countries.  This steady deterioration, compounded by technological change and other factors such as slow economic growth or wide exchange rate changes, creates serious difficulties in international trade, which risk going beyond the bounds of agricultural trade alone.

(20.)       "All countries bear some responsibilities in the present situation.  The deterioration must be halted and reversed.  Some countries, or groups of countries, have begun to work in this direction.  But, given the scope of the problems and their urgency, a concerted reform of agricultural policies will be implemented in a balanced manner.

(21.)       "Reform will be based on the following principles:

a)    The long‑term objective is to allow market signals to influence by way of a progressive and concerted reduction of agricultural support, as well as by all other appropriate means, the orientation of agricultural production; this will bring about a better allocation of resources which will benefit consumers and the economy in general.

b)    In pursuing the long‑term objective of agricultural reform, consideration may be given to social and other concerns, such as food security, environmental protection or overall employment, which are not purely economic.  The progressive correction of policies to achieve the long‑term objective will require time; it is all the more necessary that this correction be started without delay.

c)    The most pressing need is to avoid further deterioration of present market imbalances.  It is necessary:

                         -               on the demand side, to improve prospects as much as possible inside as well as outside the OECD area;

                         -               on the supply side, to implement measures which, by reducing guaranteed prices and other types of production incentives, by imposing quantitative production restrictions, or by other means, will prevent an increase in excess supply.


 

d)    When production restrictions are imposed or productive farming resources withdrawn by administrative decision, these steps should be taken in such a way as to minimise possible economic distortions and should be conceived and implemented in such a way as to permit better functioning of market mechanisms.

e)    Rather than being provided through price guarantees or other measures linked to production or to factors of production, farm income support should, as appropriate, be sought through direct income support.  This approach would be particularly well suited to meeting the needs of, amongst others, low‑income farmers, those in particularly disadvantaged regions, or those affected by structural adjustment in agriculture.

f)     The adjustment of the agricultural sector will be facilitated if it is supported by comprehensive policies for the development of various activities in rural areas.  Farmers and their families will thus be helped to find supplementary or alternative income.

g)    In implementing the above principles, Governments retain flexibility in the choice of the means necessary for the fulfilment of commitments.

(22.)       "The Uruguay Round is of decisive importance.  The Ministerial Declaration of Punta del Este and its objectives provide for the improvement of market access and the reduction of trade barriers in agriculture and will furnish a framework for most of the measures necessary to give effect to the principles for agricultural reform agreed upon by OECD Ministers, including a progressive reduction of assistance to and protection of agriculture on a multi‑country and multi‑commodity basis.  As agreed in paragraph 16,[vii] the Uruguay Round negotiations will be vigorously pursued and comprehensive negotiating proposals tabled over the coming months, in this as in other fields.  In the Uruguay Round, appropriate account should be taken of actions made unilaterally.

(23.)       "In order to permit a de‑escalation of present tensions and thereby enhance prospects for the earliest possible progress in the Uruguay Round as a whole, OECD governments will carry out expeditiously their standstill and rollback commitments and, more generally, refrain from actions which would worsen the negotiating climate: they will, inter alia, avoid initiating actions which would result in stimulating production in surplus agricultural commodities and in isolating the domestic market further from international markets;  additionally, they will act responsibly in disposing of surplus stocks and refrain from confrontational and destabilising trade practices.

(24.)       "Agricultural reform is not solely in the interests of Member countries.  Developing countries which are agricultural exporters will benefit from a recovery on world markets.  Developing countries which are importers of agricultural produce will be encouraged to base their economic development on more solid ground, by strengthening their own farm sector.

(25.)       "Agricultural reform poses vast and difficult problems for Member countries.  Strengthened international co‑operation is needed to overcome these problems.   The OECD will continue to contribute to their solution by deepening further its work; by updating and improving the analytical tools it has begun to develop and which will prove particularly valuable in many respects;  by monitoring the implementation of the various actions and principles listed above.  The Secretary‑General is asked to submit a progress report to the Council at Ministerial level in 1988."

NOTES AND REFERENCES



[i].                 Paragraph 15 of this Communiqué contains the full text of Article 20 of the URAA.

[ii].                All references to “Ministers in this Communiqué also include the Commissioner for Agriculture and Rural Development of the European Communities”.

[iii].               Ministers recognised that OECD has done substantial work in this regard.

[iv].               OECD Environment Committee at Ministerial Level, Communiqué [SG/PRESS(91)9]

[v].                OECD, “Communiqué” PRESS/A(87)27, Paris, 13 May 1987.

[vi].               OECD, National Policies and Agricultural Trade, Paris, 1987.

[vii].              See paragraph 16 of the Communiqué cited in note 5, above.

 

 

 

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