OECD review of agricultural policies
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CTA. 2003. OECD review of agricultural policies. Agritrade, September 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52623
An OECD document Agricultural Policies in OECD...
An OECD document Agricultural Policies in OECD Countries: Monitoring and Evaluation 2003 has found that 'the level of support to farmers in OECD as a whole has not changed since 2000. Despite some major policy initiatives in 2002 there was no notable change in the main policy instruments in most countries'. Any changes, it maintained, were a consequence of market developments such as the weakening of the US dollar, lower livestock prices and higher cereal prices. In terms of the long-term trajectory the report noted that 'overall, there was neither a reduction in market protection nor an improvement in market orientation, although there has been some progress since the mid-1980s'. It also found that support to farmers was equivalent to 31% of total farm receipts in the OECD area, down from 38% in 1986-88. For the EU the figure was 36% of farm receipts in 2002. There are now considerable variations in support levels by product in the EU as a result of the variable pace of reform. The report also found that prices received by farmers in the EU were 35% higher than world market prices, although this gap was down from 57% in the mid-1980s. The OECD describes the new forms of farm support as only 'potentially less distorting' noting that both production-related support and the new historical entitlement system of support 'may affect current production decisions through lowering production risks in so far as they reduce the variability of revenues' It concluded that 'given the size of these two forms of payments in the European Union and the United States, they may well contribute to depressing prices in world markets'. Comment: It may be significant that the OECD describes the new systems of farm support which the EU is moving over to as 'potentially less distorting', rather than 'non-trade distorting' as the EU claims. This is perhaps a subtle yet significant distinction because the final production and trade effects will depend on how the new systems of support are designed and implemented.