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Support to agriculture has risen in response to global crises, while reforms to combat climate change and market distortions remain essential

Public support for agriculture has reached record levels as governments enacted measures to shield both consumers and producers from the COVID-19 pandemic and other crises, according to a new report from the OECD. Only a small share of this support has been directed at longer-term efforts to combat climate change and other food systems challenges.

Agricultural Policy Monitoring and Evaluation 2022 shows that the 54 countries monitored – including all OECD and EU economies, plus 11 key emerging economies – provided on average USD 817 billion of support to agriculture annually over the 2019-21 period, a 13% increase over the USD 720 billion reported for 2018-20. Support has remained substantial among OECD countries, and has increased significantly in the 11 emerging economies.

While support is also provided to consumers, individual producers received USD 611 billion per year in positive support over the 2019-21 period, representing 17% of gross farm receipts in OECD countries, and 13% of receipts in the 11 emerging economies. More than half of this support to producers (USD 317 billion annually) was delivered through higher market prices paid by consumers, while the remainder (USD 293 billion annually) was paid by taxpayers through budgetary transfers.

On the other hand, in a small number of emerging economies policies actually suppress prices for some or all commodities, generating an opposite transfer of USD 117 billion annually away from agricultural producers.

Although support has increased overall, the share of general services, such as innovation, biosecurity or infrastructure, has declined to 13% of support directed to the sector in 2019-21, down from 16% two decades earlier. These services are key for increasing sustainable productivity growth and therefore reducing greenhouse gas (GHG) emissions from agriculture. The report stresses that agriculture faces a complex climate change challenge due to its vulnerability to its effects, its role as a major source of GHG emissions and its potential to remove carbon from the atmosphere.

“Public support to agriculture has reached record levels, but the share of support allocated to spurring sustainable productivity growth has decreased,” said OECD Director for Trade and Agriculture Marion Jansen. “This is not a good signal, as a significant boost to sustainable productivity growth is needed to address the challenges facing food systems while simultaneously keeping agricultural emissions on track to reach the Paris Agreement targets. I expect this challenge to feature high on the agenda of the forthcoming OECD Meeting of Agriculture Ministers in November.”

With the Russian invasion of Ukraine having a major impact on markets for food, feed, fertilisers and energy, policymakers will need to remain vigilant regarding the impacts on low-income countries and consumers, according to the report. Several countries have already begun implementing policies to alleviate emerging pressures on their producers and consumers. While some measures, such as reducing import restrictions, facilitate food supply, others may be counter-productive. Export restrictions add to global price and supply pressures and should be avoided or dismantled rapidly. Relaxing environmental restrictions to boost domestic production may also have pro-cyclical effects, and come at the cost of reducing sustainability, according to the report.

Beyond today’s short-term responses to global crises, agricultural policies must simultaneously address current challenges and support long-term reforms to combat climate change. Of the 54 countries covered by the report, only 16 have set agriculture-specific emission reduction targets, which could support mitigation efforts and measure progress. Countries have significant opportunities to intensify and accelerate emissions reduction in the sector, including via reform of existing policies that can contribute to emissions.

The report lays out a six-point policy agenda for reducing greenhouse gas emissions while achieving wider food systems objectives related to food security, livelihoods and sustainability:

Phase out market price support and payments with strong potential to harm the environment and to distort markets and trade

► Re-orient budgetary support to the provision of public goods and key general services to improve the performance of the agricultural sector

► Target income support to those households most in need

► Enhance the resilience toolkit for a world of diverse risks and increasing extreme weather events and natural disasters

► Implement an effective pricing system for agricultural GHG emissions to incentivise the transition to low-emission agriculture

► Where agriculture is not included in broad carbon pricing or equivalent schemes, or complementing those, develop a package of approaches to ensure significant emissions reductions in agriculture
Source: OECD

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