Although agricultural support has declined over the past two decades, it remains a non negligible item in public budgets in many OECD countries. After a period of substantial reform activity up until the early 2000s, recent reform activity has been primarily focused on reallocating or adapting existing support. Drawing on responses to the 2026 RPF Survey, this chapter sets out some of the current measures governments are pursuing to achieve savings in this area. These measures, which are generally modest, include limited reductions in producer support, discontinuations of temporary crisis measures, and the rationalisation of general support programmes. Achieving further budgetary savings can be achieved by redirecting support to general services and public goods, targeting support by increasing conditionality of payments, reducing the share of commodity-specific support and monitoring compliance and the performance of subsidies.
Restoring Public Finances
Enabling Effective Government
Abstract
Even though agricultural support relative to GDP has fallen over the past 20 years, it remains a non-negligible budgetary item in many OECD countries. In the RPF Survey, almost one third of respondents report ongoing savings measures focused on agriculture with an overall modest scope. In addition, there are opportunities for further reducing inefficiencies in agricultural support (OECD, 2025[1]), including:
Promoting productivity and resilience by reorienting budgetary support from open-ended support coupled to production to more beneficial support types such as general services.
Targeting support by linking payments to desired policy outcomes or performance.
Reducing the share of commodity-specific support to promote responsiveness to changing conditions.
Reform initiatives and savings measures
1. Limited reductions in producer support
Mostly incremental savings measures on producer support.
Examples of emergency support to ease adverse impacts from the war of aggression against Ukraine and inflationary pressures being phased out.
Gradually replacing untargeted income support with general service support.
2. Structural adjustments through crop diversification
Reorienting fiscal resources to address changing dietary patterns and promote crop diversification.
3. Rationalising general support programmes
Reducing general service support, primarily through the abolition or reallocation of niche programmes.
This chapter discusses budgetary saving measures in support for agriculture and primary sectors, defined in the RPF Survey as agriculture, fisheries and forestry. As most reported saving measures relate to agriculture, the introductory analysis focuses on agricultural support; however, reform initiatives concerning fisheries or other primary sectors are also included in the section discussing the survey results.
In many countries, support for agriculture constitutes a non-negligible item in national budgets. As seen in Figure 8.1, budgetary support for the agricultural sector is estimated to 0.4% of GDP in the OECD in 2024, down from 0.5% in 2004. In addition to direct government spending through budget transfers to producers, many countries support agriculture indirectly through price support mechanisms (see Box 8.1).
Overall, support to the agricultural sector as a share of GDP has fallen markedly over the past 20 years (OECD, 2025[1]). This reflects mainly the fact that agriculture has become a smaller share of overall economic activity. Yet, the relative importance of agriculture differs significantly across OECD countries, both in economic and employment terms, and this is an important factor behind cross-country differences in the level and composition of public support.
Budgetary support to the agricultural sector, Total Budgetary Support Estimate, 2024 and 2004
Note: European Union includes all EU countries, also non-OECD Member countries. The OECD total does not include the non-OECD EU countries. United Kingdom value for 2004 included in EU total.
Source: Producer and Consumer Support Estimates, OECD Agriculture policy monitoring (database) as of 30 October 2025, https://data-explorer.oecd.org/s/4ht.
The OECD calculates the Total Support Estimate (TSE) to account for the cost of all support policies for the agricultural sector. In 2024, the OECD estimated this to amount to 0.53% of GDP in the OECD area (see Figure 8.2). The measure combines three distinct elements:
Producer support (measured by the PSE) are transfers to or from (if negative) individual agricultural producers. It includes market price support (MPS, transfers from consumers through higher food prices) and budgetary support (taxpayer-funded payments through public budgets). In 2022-2024, 63% of agricultural support went to producers: 23% as MPS and 40% as budgetary support. Budgetary payments to farmers may be based either on production output, input used in production or other criteria, such as land area, animal number, revenue or income.
General services support (measured by the GSSE) is budgetary support that benefits the agricultural sector as a whole rather than individual producers. Investments in general services can help the sector become more productive, sustainable and resilient. Infrastructure is the largest component of general service support, but it also includes support for R&D and advisory services, biosecurity, inspections, and others. In 2022-2024, around 15% of total estimated support in the OECD went to general service support.
Consumer support (measured by the CSE) distinguishes between market transfers, which mirror MPS for producers and are generally negative, and budgetary support. Only the budgetary component is included in the total support estimate to avoid netting out MPS. In 2022-2024, budgetary consumer support represented 21% of TSE in OECD. These policies notably lower food prices for selected consumer groups, for example through subsidised school meals or food assistance programmes. Expenditures for these increased sharply during the COVID-19 pandemic but declined in 2024 (OECD, 2025[1]). In most OECD countries, the net effect of agricultural support policies is an implicit taxation of consumers, as market price support raises food prices.
Total Support Estimate for the agricultural sector, 2004 and 2024
Note: TSE is the annual monetary value of all gross transfers from taxpayers and consumers arising from policy measures that support agriculture, net of the associated budgetary receipts, regardless of their objectives and impacts on farm production and income, or consumption of farm products. It includes both market price support, budgetary payments, and budget revenue forgone. European Union includes all EU countries, also non-OECD Member countries. The OECD total does not include the non-OECD EU countries. United Kingdom value for 2004 included in EU total. Detailed information on data sources and methodology available in OECD Data Explorer.
Source: Producer and Consumer Support Estimates, OECD Agriculture policy monitoring (database) as of 30 October 2025, https://data-explorer.oecd.org/s/4ht.
Figure 8.3 shows that, relative to GDP, support to agriculture declined rapidly in the OECD from the late 1980s to the early 2000s, as many countries undertook significant efforts to reduce costly support policies, in particular market price support. While the budgetary component of support has also decreased over time, the reductions have been less important than for market support. The data and accompanying OECD monitoring (OECD, 2025[1]) suggest that there has been a slowdown in reform activity in later years. While agricultural policies continue to evolve, changes have focused mainly on reallocating or adapting existing spending – often towards sustainability or resilience objectives – rather than delivering significant spending reductions. Thus, recent reforms appear more incremental.
Total Support Estimate and Total Budgetary Support Estimate, OECD area
Source: Producer and Consumer Support Estimates, OECD Agriculture policy monitoring (database) as of 30 October 2025, https://data-explorer.oecd.org/s/4ht.
Figure 8.4 gives an overview of recent reform initiatives and measures to reduce spending on budgetary support for primary sectors, drawing on the responses to the RPF Survey.
Measures approved or submitted to parliament for the fiscal years of 2025 and 2026
Note: Results based on 39 RPF Survey responses. Measures reported as “other” in the RPF Survey have been split into the following two sub-categories, based on the qualitative information provided by respondents: “Measures to promote crop diversification” and “Other”.
Source: 2026 OECD Survey on Restoring Public Finances, Question 8: Support to primary sectors (agriculture, fisheries and forestry).
Almost one third of the survey respondents have reported ongoing or planned saving measures in 2025-2026. Most initiatives are smaller programme cuts or sectoral reallocations rather than large-scale reforms in producer support. The estimated fiscal savings are modest. The survey results align with broader OECD findings indicating that agricultural policy reforms in most OECD countries have been limited after the early 2010s. A full discussion of agricultural policy trends and developments is offered in the OECD Agricultural Policy Monitoring and Evaluation publication (OECD, 2025[1]).
8.2.1. Reduce or reform general support to primary sectors
Several respondents report savings on general support policies, i.e. subsidies aimed at benefitting a whole sector collectively as opposed to individual producers. Although such policies are generally beneficial to the sector’s performance, expenditure on general services has declined in the OECD relative to the size of the agricultural sector since the early 2000s (OECD, 2025[1]). One challenge might be that the benefits of general support are often indirect and take time to materialise. The savings reported in the RPF Survey on general support are often smaller reductions on niche programmes. Notable examples from the survey results include the following:
Canada is winding down selected non-core support programmes for agriculture and agri-food. The measures were identified in the government’s Comprehensive Expenditure Review, where the goal was, among others, to realign government activities with core mandates. The saving measures include the closing of a programme that brought together farmers, scientists, and other sector stakeholders to co-develop and test innovative technologies and on-farm practices to reduce greenhouse gas (GHG) emissions and sequester carbon.
As part of an effort to consolidate and simplify grants and funds in its 2025 budget, New Zealand reformed its primary sector innovation funds, closing the Sustainable Food and Fibre Futures Fund to new applications and re-allocating future funding towards the newly established Primary Sector Growth Fund. The Primary Sector Growth Fund places a stronger focus on improved economic outcomes as a key determinant in assessing potential projects while other factors, such as environmental benefit, are also a consideration. The new fund also shifts the focus of funding towards larger scale projects with greater funding provided by the private sector participants. This reshaping of primary sector innovation funding will improve funding efficiency while continuing to support projects that are business-led, market-driven, and commercially focused. The measure is estimated to produce savings of NZD 40 million (equivalent to around 0.01% of GDP) across the forecast period (2024/25 to 2028/29).
Other measures reported in this category include Denmark abolishing its support for cattle derogation inspection and the Netherlands reducing its contribution to the animal health reserve. In Thailand, the Department of Marine and Coastal Resources has established the Thailand Mangrove Alliance, a collaborative network designed to mobilise non-governmental resources for coastal resilience and risk mitigation, thereby reducing the long-term fiscal burden on the national budget.
8.2.2. Reduce producer support for agricultural and other food products
Although nearly two-thirds of agricultural support across OECD countries is allocated to producers (OECD, 2025[1]), current efforts to achieve savings by scaling back producer support appear modest in scope and size, as per the information collected through the RPF Survey.
As part of its 2025-2026 consolidation package, Austria seeks to reduce spending on agriculture, forestry and water management by EUR 110 million (equivalent to around 0.02% of GDP), including EUR 55 million in co‑financing for rural development interventions under the EU’s Common Agricultural Policy (CAP). The measures require changes to Austria’s Strategic Plan under the CAP and is therefore pending approval by the European Commission. In France, the agricultural budget was reduced by EUR 89 million from 2025 to 2026, with reductions centred on programmes supporting forest renewal, crop insurance, and the reduction of phytosanitary product use.
Since the EU’s Common Agricultural Policy (CAP) falls under shared competence between the EU and Member States, national CAP initiatives in EU Member States are designed within the common framework. While the CAP 2023-2027 has introduced a new delivery model with more flexibility, any change to a member state’s CAP Strategic Plan requires approval by the European Commission. Consequently, several of the producer support savings reported by EU Member States in the RPF Survey involve national support policies that fall outside the scope of the CAP, such as Bulgaria phasing out temporary relief measures to cushion adverse impacts from the war of aggression on Ukraine and savings on financial guarantees for farming investments in the Netherlands.
The United Kingdom is in the process of phasing out unconditional income support for individual producers in England and shifting fiscal resources toward more targeted support types to boost productivity and protect natural ecosystems (see Box 8.2). The case illustrates that gradual phase-out combined with time-limited compensatory measures to help producers adjust can help enable a reorientation of support away from untargeted and open-ended income payments over time.
As part of the seven-year Agricultural Transition Programme (2021-2028), direct, unconditional payments to English farmers are gradually being phased out, and fiscal resources are instead being invested in targeted payments for farmers that take actions that benefit the environment.
As a part of the transition, farmers continue to receive transitional support based on historic receipts, however, these payments are automatically being reduced each year and will end entirely in 2027. By committing to legally defined annual cuts, the government ensures a rules‑based and predictable decline of payments with a clear end-date.
The government is reallocating the budgetary space toward environmental and productivity‑enhancing support. The new Environmental Land Management schemes provide ongoing payments for a range of environmental actions and one-off productivity and innovation grants to help farmers invest in new technologies and innovation. The phase‑out also supports structural adjustment by allowing recipients to continue receiving declining payments even if they exit farming.
Source: HM Treasury, United Kingdom.
In addition to the expenditure measures outlined above, some revenue measures reported in the RPF Survey are also likely to impact producers in primary sectors. While most of these will affect a range of economic actors, for example through changes to VAT rates or excise duties, a few are specific to agricultural producers. For example, Ireland has reduced the compensation of unregistered farmers for VAT expenses from 5.1% to 4.5% in 2026 and Norway has increased the CO₂ tax rate for the sector involved in the cultivation of plants with controlled environments.
8.2.3. Measures to promote crop diversification
A few respondents are taking steps to incentivise producers to diversify agricultural crops in response to changing consumption patterns. For example, Korea reports efforts to reorient fiscal resources away from rice stocks. Declines in rice consumption has led to recurrent government purchases of rice surpluses and high expenditures on storage and logistics. To make its agricultural spending better aligned with Korea’s food security needs, the government aims to reduce the cultivation area for rice and make inventory management more efficient. The fiscal space generated will be used on more effective instruments for stabilising rice market balances and encouraging farmers to grow strategic crops with high import dependency (such as wheat and soybeans). As commodity-specific support remains the dominant support type in Korea (OECD, 2025[1]), such measures can help support structural shifts, although market price support for rice remains significant.
In Chinese Taipei, there has been longstanding support for rice production through guaranteed prices. Over the past years, the cultivated area, production volume, and farmers’ reliance on the support programme for rice have all increased significantly, while per capita rice consumption has gradually declined. This has led to persistently high levels of public rice stocks, imposing an increasing fiscal burden on the government. To address high costs and promote better food security, the government is adopting measures to promote crop diversification into coarse grains (such as corn, soybeans, wheat). Through policy guidance, the government aims not only to reduce rice cultivation areas and ease the fiscal burden arising from rice overproduction, but also to enhance self-sufficiency. Although the reform involves increased incentives for grain production in 2026, the government estimates that the measures can reduce rice-growing acreage by approximately 30 000 hectares, thereby resulting in net government savings. The size of the estimated savings will depend on the behavioural response of producers.
8.2.4. Other measures
A few respondents report administrative savings or reassignments of responsibilities among ministries or agencies responsible for agricultural and food sectors. For example, Denmark is seeking administrative savings following the government’s multi-year work programme and is reassigning certain responsibilities between agencies to improve efficiency.
As agricultural productivity has stalled in many OECD countries, the need to achieve sustainable productivity growth and improve food security have become important drivers of policies (OECD, 2025[1]). In the RPF Survey, some respondents reported regulatory changes or other measures that do not involve fiscal savings but are aimed at modernising agricultural and other food sectors. For example, Luxembourg has adopted measures to accelerate digitalisation in farms. Furthermore, Slovenia has adopted several reforms, including a consolidation of national regulation covering food safety, feed, supplements, production and distribution conditions, the simplification of legal procedures and stricter penalties for violations. The aim of the reforms is, among others, to improve transparency in the food supply chain and ensure a systematic implementation of standards. Although these sorts of measures do not involve short-term savings, modernisation could support productivity gains and thereby potentially reduce public support dependence over time.
8.2.5. Achieving further budgetary savings by reducing inefficiencies
Beyond the specific savings measures reported in the RPF Survey – which are consistent with limited saving activity in recent years – there is scope for further reducing inefficiencies in agricultural support. While public support for agriculture has long been justified on grounds of food security, rural development, and other considerations, certain types of support can lead to inefficiencies, market distortions, and harmful practices (see Box 8.3). Exploring options to reorient budgetary support to the most efficient support types could deliver a “double dividend” by freeing up fiscal space while also improving economic outcomes. As highlighted by recent OECD analysis, (2025[1]), this could include:
1. Redirecting support to general services and public goods. An effective agricultural policy should, to the greatest extent possible, allow prices to be determined by the market, and fiscal resources should be redirected to the least distorting types of support promoting public goods. A first step for countries seeking to reduce distortions, would be to identify their potentially most distorting policies, and map alternative policies that could support policy goals more efficiently. Next step would be to reform and reorient – phasing out when possible – the most distorting forms of support, including market price support and support based on output quantities or the unconstrained use of variable inputs. Even if not seeking large savings, less-distorting forms of support that are targeted and tailored to their objectives would allow for a more efficient use of public resources.
2. Targeting support by increasing conditionality of payments. Just one-quarter of producer support is delivered subject to constraints, with a majority of these being mandatory input constraints which are generally less ambitious. Voluntary environmental constraints apply only to 5% of all transfers to producers. Increasing conditionality or linking payments to desired outcomes can be a strategy for countries to target support while also improving the sector’s performance. Performance- or results-based payments have been found to be effective in delivering environmental outcomes (Lankoski, Nales and Valin, 2025[2]).
3. Reducing the share of commodity-specific support. Research shows that support focused on a small number of commodities has a more distortionary effect than non-commodity specific support (Martini, 2011[3]). Moreover, commodity-specific support can make structural adjustments more difficult, as it reduces the sector’s capacity to adapt to changing conditions. This strategy is especially suitable for countries seeking to promote market responsiveness and, more broadly, support resilience and preparedness.
4. Monitoring compliance and the performance of subsidies. Monitoring compliance and the performance of existing subsidies would enhance transparency and could help pave the way for more long-term reform options.
Through long-standing research to quantify the relative effects of agricultural support policies, the OECD has identified market price support, and support coupled to output or the unconstrained use of variable inputs as having the strongest potential to distort markets (Martini, 2011[3]; OECD, 2001[4]; OECD, 2025[1]). These types of support have several disadvantages:
They distort production and trade. Price support mechanisms distort market signals directly by artificially increasing domestic prices and can hereby discourage efficient production and lead to overconsumption or waste. When budgetary support for producers is provided based on output (e.g. quantity of a specific agricultural commodity) or input use (e.g. reduce the cost of purchased inputs like fertiliser or chemicals) it can affect production or encourage the overuse of specific inputs.
They have low transfer efficiency. The same OECD research finds that the potentially most distorting support types also tend to have low-income benefits to farmers. This is because market distortions can shift some of the benefits of the government transfer to other recipients, such as the companies that sell fuel, seeds and fertiliser. Input support is estimated to have the lowest transfer efficiency, with only 25% of the transfer to producers accruing to additional income for farmers (Dewbre, Antón and Thompton, 2001[5]; OECD, 2001[4]).
They can have detrimental effects. The effects of policies considered potentially most distorting also have less clear-cut effects on the environment (Henderson and Lankoski, 2019[6]; Lankoski, Nales and Valin, 2025[2]). Policies whose benefits are coupled to production appear to be the most likely to generate harmful impacts on the environment, although these impacts vary depending on the type of production or input being targeted.
Budgetary support for individual producers based on area, animal numbers, receipts or income, or on non-commodity criteria, tend to be less distorting because they are not directly tied to the price or production quantity of commodities. General service support, for innovation, infrastructure, biosecurity or other, is generally beneficial to the sector’s performance.
Source: (OECD, 2025[1]).
In the OECD, Chile is one of the countries with consistently low and non-distorting agricultural support. The country demonstrates how targeted investments in innovation and infrastructure can foster a competitive, export-oriented agricultural sector while advancing environmental goals.
Key features of Chile’s agricultural support policies
Minimal producer support: Chile’s producer support is estimated to be below 3% of gross farm receipts, compared to an OECD average exceeding 12%. This reflects a strong reliance on market signals rather than price support or production-linked subsidies.
Focus on general services: Around half of Chile’s budget support is directed toward general services such as infrastructure, innovation, and sanitary controls. Investments in agricultural knowledge and innovation systems strengthen productivity and export competitiveness.
Trade orientation: Chile maintains an open trade regime with negligible tariff protection and no export subsidies. This has enabled the country to integrate into global agro-food value chains.
Environmental integration: Recent policies emphasise sustainable resource use, including water management and adaptation for drought-prone regions.
Source: (OECD, 2025[1]).
References
[5] Dewbre, J., J. Antón and W. Thompton (2001), “The Transfer Efficiency and Trade Effects of Direct Payments”, American Journal of Agricultural Economics, Vol. 83/5, pp. 1204-1214, https://doi.org/10.1111/0002-9092.00268.
[6] Henderson, B. and J. Lankoski (2019), “Evaluating the environmental impact of agricultural policies”, OECD Food, Agriculture and Fisheries Papers, No. 130, OECD Publishing, Paris, https://doi.org/10.1787/add0f27c-en.
[2] Lankoski, J., E. Nales and H. Valin (2025), “Assessing the impacts of agricultural support policies on the environment: Economic analysis, literature findings and synthesis”, OECD Food, Agriculture and Fisheries Papers, No. 223, OECD Publishing, Paris, https://doi.org/10.1787/808f110c-en.
[3] Martini, R. (2011), “Long Term Trends in Agricultural Policy Impacts”, OECD Food, Agriculture and Fisheries Papers, No. 45, OECD Publishing, Paris, https://doi.org/10.1787/5kgdp5zw179q-en.
[1] OECD (2025), Agricultural Policy Monitoring and Evaluation 2025: Making the Most of the Trade and Environment Nexus in Agriculture, OECD Publishing, Paris, https://doi.org/10.1787/a80ac398-en.
[4] OECD (2001), Market Effects of Crop Support Measures, OECD Publishing, Paris, https://doi.org/10.1787/9789264195011-en.