Agricultural policy monitoring

Ensuring food and nutritional security, supporting farmers’ livelihoods and growing rural economies have long been core objectives of agricultural policy. New priorities, such as environmental sustainability, social inclusion, and equitable growth, have also been reflected in policy design. The need to build resilience and to adapt to and mitigate the effects of climate change has brought additional complexity. Addressing these multiple objectives with limited public budgets requires policymakers to make efficient use of available resources and carefully consider trade-offs and synergies. By shedding light on the outcomes of government action, regular agricultural policy monitoring helps guide reforms that make policies more coherent, targeted, and effective.

In 2022, agriculture ministers from around the globe agreed to Transformative Solutions for Sustainable Agriculture and Food Systems, which articulates a shared vision for governments on the actions needed to transform agriculture and food systems with a view to i) ensuring food security and nutrition, ii) strengthening sustainability and iii) ensuring inclusive livelihoods.

A substantial share of agricultural support comes in forms that have a strong potential to distort markets and trade and damage the environment. Market price support, output-based payments, and subsidies for fertilisers, fuel, or water are particularly problematic, especially when no usage limits are in place. These policies incentivise production beyond market needs, increase the use of polluting inputs, and encourage and perpetuate unsustainable practices. Currently, these types of policies account for two-thirds of the producer support covered by the OECD PSE database.

These types of support also tend to favour larger farms. They can drive up prices for land and inputs, reducing their net benefit to farmers by up to 75%. These policies also delay the structural shifts needed to improve long-term resilience, adapt to climate change, and ensure access to safe, nutritious, and affordable food. Similarly, food security policies that elevate domestic prices above global levels, often through tariffs or import restrictions, can backfire by disproportionately harming low-income households. In some cases, governments attempt to counteract these effects through costly consumer payments or public food distribution systems, which can be poorly targeted and inefficient.

Effective food security strategies should instead combine investment in sustainable domestic production with open access to global food markets.

International trade is a cornerstone of productive, resilient, and sustainable food systems. Today, around 20% of global calories consumed cross at least one international border, and no country is entirely self-sufficient in producing all the foods it consumes. Without the smooth flow of food across borders, consumers would face higher prices and fewer choices, while farmers would lose access to key markets and income opportunities. Trade also plays a critical role in food security, allowing regions with poor harvests to rely on supplies from others, and supports the spread of innovations that improve both productivity and sustainability. 
However, trade barriers such as import tariffs, export bans, quotas, and other restrictive measures remain widespread.  In fact, import restrictive measures accounted for USD 334 billion of transfers to producers annually in 2022-24, whereas export restrictive measures generated USD 179 billion per year benefiting consumers and public budgets at the cost of farmers.

Since the Green Revolution of the 1960s, growing productivity has enabled farmers to meet rising food demand without greatly expanding land use. Advances in genetics, farm management, equipment, and materials have been enabled by public investment in research and development, extension services, training, and on-farm advice. 

Additional targeted long-term investments in public goods such as biosecurity systems, infrastructure, and digital services can create an enabling environment for continued growth. Here is an area where governments can do more. In 2022–24, only 13% of total agricultural support across 54 countries went to innovation, infrastructure, and other general services, in spite of evidence of the long-term benefits of such investments. This is equal to 2.4% of the value of production of the sector, a drop from the 4.7% measured in 2000-02.

In some cases, governments link farm payments to specific voluntary action to improve the environmental performance of farming. Such as reduced use of fertilisers. Yet, such payments remain a tiny share of support to the sector. Only 5% of support is provided for voluntary adjustments to production methods for environmental purposes.