The Organisation for Economic Co-operation and Development (OECD), an economic organisation of 34 countries, has today announced that, according to its latest statistics, government support to agriculture in developed countries fell to an average of 18per cent of farm income in 2010. The organisation said the 2010 figure, a record low, is linked to high commodity prices. image expired

Support to producers stood at €172 billion in OECD countries in 2010, which is a new low in the longstanding trend toward falling farm support. The OECD report Agricultural Policy Monitoring and Evaluation 2011 also concluded that most government support is still distributed in ways that distort production and trade while doing relatively little to improve productivity and competitiveness, ensure sustainable resource use or help farmers cope with risk.

OECD Director for Trade and Agriculture Ken Ash commented, "With tighter government budgets and farmers getting top prices for their crops, governments should begin to shift from payments that further support farm incomes and move to policies that have long-term benefits for the global food economy. The time is ripe for reforming farm support."

Support levels vary enormously among countries. The OECD revealed that between 2008-10 New Zealand had the lowest level of support at just 1per cent of farm income, followed by Australia (3per cent), and Chile (4per cent). The United States (9per cent), Israel, Mexico (both 12 per cent), and Canada (16per cent) were also shown to be below the OECD average.

EU remains above average

The European Union has reduced its level of support to 22per cent of farm income over the period, but remains above the OECD average. At the other end of the scale, support to farmers remains relatively high in Korea (47per cent), Iceland (48per cent), Japan (49per cent), Switzerland (56per cent) and Norway (60per cent). Worryingly, the report found that farm support in emerging countries is generally well below OECD levels.

The organisation concluded that growing global food demand, higher prices, more volatile markets and increasing resource pressures are arguments for moving beyond "status quo" policies; it said countries should focus on improving farm productivity, sustainability and long-term competitiveness, rather than policies that distort markets. Farm policy should also offer greater support to research, innovation and education.

It went on to suggest that, while high farm prices create opportunities for farmers in developed countries, high and volatile food prices have particularly severe impacts on the poorest people on the planet, who spend a large proportion of their available income on food.

It said, for this group of consumers, improved safety nets can help with immediate needs, but policies that improve agricultural productivity and long-term resilience will provide the long-term solution. To this end, the OECD recognises the importance of ongoing efforts in the G20 and in other international fora to improve policy coherence and strengthen global governance of the food system.