In the four dozen major agricultural countries of the world, government support accounted for 18 percent of gross farm receipts, or an average $736 billion from 2012-14, says the Organization for Economic Cooperation and Development. “Average levels of support to producers in OECD countries and in emerging countries are converging,” says the organization. Developing countries that used to tax agriculture as a way to raise revenue now provide significant support to farmers, while the “historically very high level of support” of OECD members is coming down.
Support rates may be converging, but industrialized nations are moving toward policies that do not directly influence farm production decisions, and developing nations “are moving in the opposite direction, increasing the use of price and production-linked support policies,” says the OECD. “Across all 49 countries, 67 percent of support to farmers is directly linked to prices, output or input use without constraints.” Nearly three dozen nations are members of the OECD, based in Paris. The report included developing nations such as Brazil, China, Colombia, Indonesia, Kazakhstan, Russia, South Africa and Ukraine.
In the immediate term, the OECD recommended reductions in market price support and input subsidies with a goal of eventual elimination. “The design of income and revenue stabilization measures should be carefully assessed. They sometimes deliver only modest benefits at high cost to taxpayers,” said the OECD. Direct payments can be an efficient way to achieve public goals, such as environmental benefits, but blanket support to land owners “is seldom justified.” The report said farm policy “matters a great deal but wider economic, social and environmental policies also play an important role” in the sector.