OECD governments provided 265 billion US dollars in support to farmers last year, says a new OECD report. This represented 21 % of total farm receipts, down from 22% in 2007 and 26% in 2006. The falls were due mainly to the rise in agricultural commodity prices, rather than to policy decisions. With higher world prices, lower levels of support were needed to prop up domestic prices.

Agricultural Policies in OECD Countries: Monitoring and Evaluation argues that with public finances in many countries likely to remain under strain for years following the current economic crisis, governments should reassess and adapt their farm support policies to meet specific economic, social and environmental objectives.

This entails better targeting of support to tackle particular issue such as managing risks or protecting the environment. It also involves reducing subsidies which distort markets and cutting the link between government payments and agricultural production.

“As we move out of the global economic crisis, it will not be business as usual. Pressure on public finances will make further reform of market-distorting farm policies all the more urgent, “said Ken Ash, Director of Trade and Agriculture at the OECD.

The report recognises recent progress toward breaking support away from production – for example, the direct payments system in the United States and the single payment scheme to farmers in the European Union. Criteria such as land area or animal numbers are increasingly being used as the basis for payments. On average in OECD countries, one dollar in every four now provided to support farmers does not carry an obligation to produce a commodity.

But the most market-distorting forms of support continue to dominate in the majority of OECD countries. Support based on how much of a commodity is produced accounted for on average 56% of farm support in OECD countries in the 2006-2008 period. Payments are also still linked to producing specific commodities, in particular rice, sugar and some meats. Around 60% of the total receipts of rice farmers in OECD countries is provided by government support.

Reform has been uneven and the level of farm support varies widely across countries: it was 1% of total farm receipts in New Zealand, 6% in Australia, 10% in the United States, 13% in Mexico, 18% in Canada, 21% in Turkey, 27% in the European Union, 49% in Japan, 58% in Iceland, 60% in Switzerland, 61% in Korea and 62% in Norway.