Reforming agricultural policies for greater resilience

Key messages

• Government support to agriculture increased to a new high of more than USD 950 billion in 2025, a near 15% increase (or USD 121 billion) in just two years.

• Almost half of support continues to be delivered via measures with the strongest distorting potential for production and trade.

• Public investment in long-term performance has not kept pace with sector growth. General services support fell from 4.6% of agricultural production value in the early 2000s to just 2.4% in 2023‑25.

• Governments need to reinforce systemic risk management policies to minimise the need for short-term, ad-hoc responses to crises.

• Policy reform should involve rebalancing support towards less distortive and better-targeted measures, stronger agricultural knowledge and innovation systems, measurable sustainability outcomes and clearer approaches to handle risk.

What’s the issue?

The agricultural sector is operating in a context of more frequent and interconnected global shocks, with increasing economic impact. Recent disruption to the Strait of Hormuz has shown how shocks outside agriculture can rapidly transmit through energy and fertiliser markets to affect farm costs and food markets. These pressures are intensifying volatility in agricultural markets and exposing vulnerabilities in food systems

Government responses remain largely reactive. Short-term assistance can be necessary when severe shocks exceed farmers' capacity to cope, but repeated ad hoc interventions can weaken incentives to prepare, adapt and use market-based risk-management tools. More predictable and forward-looking policies are needed to help farmers anticipate risk, reduce exposure and recover more effectively.

Against this backdrop, support to agriculture increased substantially. Across the 56 countries covered in the Agricultural Policy Monitoring and Evaluation 2026 report, total support averaged USD 885 billion per year in 2023‑25 and exceeded USD 950 billion in 2025. This was USD 121 billion – or nearly 15% – above 2023 levels (Figure 1). Support also rose relative to the size of the sector; total support increased from 17.6% of the value of agricultural production in 2023 to 19.1% in 2025, a reversal of decades of decline in relative support.

In emerging economies, increased support was mainly higher market price support, while in OECD Member countries it was predominantly budgetary payments, including significant ad hoc disaster assistance. Emerging economies now account for 67% of agricultural production and 58% of government support across the countries covered, making their policy choices increasingly relevant for global support patterns, markets and trade.

Support to individual farmers averaged USD 661 billion per year in 2023‑25, equivalent to about 13% of gross farm receipts. However, the level and form of support vary widely (Figure 2). In Iceland and Switzerland, support represents around half of gross farm receipts. In Viet Nam and Argentina, by contrast, policies that hold domestic prices below international levels generate transfers from farmers to consumers exceeding 10% of farm receipts. Two new countries are covered for the first time in the 2026 report: producer support accounts for 12.6% of farm receipts in Egypt and 6.4% in Peru.

Nearly half of all support to the sector continues to be provided through potentially most distorting instruments. These include market price support, payments linked to output and support for unconstrained use of variable inputs. Such instruments alter relative prices and returns, reduce farmers' responsiveness to changing market and production conditions, and can lock resources into particular commodities or practices. Wide differences in support across countries and commodities further distort production and trade, reducing the capacity of global markets to move food from surplus to deficit regions when shocks occur.

Consumers are paying a significant share of the costs of support. In most countries, measures that raise domestic prices above international levels transfer resources from consumers to producers and reduce purchasing power. Direct budgetary assistance to consumers offsets only a small share of these costs in most countries. Overall, consumers bore an implicit tax averaging about USD 204 billion per year in 2023‑25, equivalent to 4.4% of spending on agricultural products measured at primary product prices.

Most transfers to farmers are provided without requirements linked to farming practices or policy outcomes. About 5.7% of support is conditional on farmers taking voluntary environmental action, and a further 15% requires compliance with existing regulations or complementary rules. Nearly four-fifths of transfers are provided without such requirements. Conditionality may improve the performance of existing programmes, but attaching conditions to support that targets other objectives is less effective than implementing policies that directly target such objectives.

Why is this important?

Resilience and sustainable productivity growth are the strongest long-term responses to systemic risk. Resilience helps farms and food systems prepare for, absorb and recover from shocks. Productivity growth sustains farm profitability and, when supported by appropriate incentives and safeguards, can improve environmental performance. Yet global total factor productivity growth slowed from 1.8% per year in 1991‑2000 to 0.8% in 2014‑23.

At the same time, investment in the services and systems underpinning long-term performance has declined relative to the size of the sector. Expenditure on general services, including infrastructure, research and development, innovation, inspection and knowledge transfer, averaged USD 118 billion annually in 2023‑25. Although this was higher in nominal terms than in the early 2000s, it fell from 4.6% to 2.4% of the value of agricultural production.

Well-functioning agricultural markets and an open, rules-based trading system are essential to food security and resilience. Markets allow producers to respond to changes in demand, costs and production conditions, while trade diversifies sources of supply and enables food to move from regions with surpluses to those facing shortages. Policies that insulate domestic markets, restrict trade or maintain production through commodity-specific and input-linked support can weaken these adjustment mechanisms. When adopted by several countries simultaneously, such measures can compound pressures on international markets and shift part of the cost of domestic policy choices onto producers and consumers elsewhere.

The way agricultural support is provided matters as much as its overall level. Support linked to domestic prices, production or unconstrained input use can alter relative returns, encourage resources to remain in supported activities and reduce producers’ responsiveness to changing market and environmental conditions. Market price support also raises costs for domestic consumers, while budgetary payments and input subsidies impose costs on taxpayers and may generate additional environmental pressures. Differences in support across countries and commodities further distort production and trade. These effects reduce the efficiency with which agricultural resources are used and can constrain the capacity of domestic and international markets to absorb shocks.

Governments have an important role in creating the conditions for sustainable productivity growth and greater resilience. Investments in research and development, agricultural knowledge and innovation systems, advisory services, infrastructure, biosecurity, market information and other general services can strengthen the sector. They can improve the development and adoption of technology, improve preparedness for pests, diseases and extreme events, and enable producers to adapt to changing economic and environmental conditions. A stronger focus of policy efforts towards investments that strengthen system-wide capabilities would therefore improve the effectiveness of public expenditure and the sector’s capacity to manage future risks.

What can policymakers do?

Among the 150 recommendations across 29 country chapters in the report, four key policy priorities emerge:

• Rebalance incentives. Reducing reliance on border measures and replace them with more targeted policies such as tailored payments with strong environmental conditions, risk management tools and outcome-oriented instruments.

• Strengthen the foundations of the sector. Scaling up investment in innovation, knowledge and advisory systems, infrastructure, and governance capacity can enhance sustainable productivity growth, improve soil health, increase resilience to shocks and support the adoption and diffusion of new technologies and practices across the sector.

• Target sustainability. Define measurable outcomes and use results-based payments, well-designed regulation and stronger monitoring and evaluation.

• Manage systemic risk. Support farmers’ capacity to anticipate, adapt and respond to changing conditions while maintaining stable and predictable policy environments and open international markets.

Further information

OECD (2026), Agricultural Policy Monitoring and Evaluation 2026: Enhancing Resilience in a World of Interconnected Risks, OECD Publishing, Paris, https://doi.org/10.1787/2c7f3be1-en.

Contact

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