Agricultural Policies in OECD Countries: Monitoring and Evaluation says current policies are limiting the ability of farmers to respond to market signals, to become more competitive and innovative, and thus contribute to improving the global food situation.


The report shows that government support to farmers in OECD countries was USD 258 billion in 2007. This represented 23 per cent of total farm receipts, down from 26 percent in 2006, the lowest level since OECD estimates began in 1986. The latest fall was due mainly to the rise in farm commodity prices. With higher world prices, lower levels of support and subsidies were needed to prop up domestic prices.

The report calls on governments to seize the opportunity offered by higher farm incomes to remove the most trade-distorting measures which still dominate agricultural policies in many OECD countries. It adds that such measures have been less effective than targeted policies in tackling farm income problems and have created inequity in distribution of support and contributed to environmental problems in agriculture.

The report welcomes on-going efforts to weaken the link between government support and farm production, a change that will enhance the ability of markets to match supply with demand. Criteria such as land area or animal numbers are increasingly being used as the basis for payments although on average in OECD countries nearly 60 percent of support is still based on production.

Another indication of how agricultural policy is evolving is that around 30% of support is now provided with various constraints on use of inputs, specific production practices or other environmental and societal criteria. This share is increasing but more can be done to improve the efficiency and equity of farm policies by ensuring support is used to tackle specific policy objectives.

The report also warns governments against recourse to additional trade restrictions in the current situation – whether they relate to exports or imports. Such measures merely add to price volatility and uncertainty as they limit the capacity of global commodity markets to adjust.