Public support for agriculture has declined since 2021 but remains near historic highs and is still not sufficiently directed at critical innovation, productivity and sustainability goals, according to a new report from the OECD.
, the global reference on government support to agriculture across 54 countries, shows that total support to agriculture averaged USD 842 billion per year during the 2021-23 period. Support remains concentrated in a few large economies, with China, the United States, India and the European Union representing 37%, 15%, 14% and 13% of the total respectively.
The share of estimated support dedicated to general services such as innovation, biosecurity or infrastructure averaged only 12.6% of total support in 2021-23. While it has been fairly stable since 2020, this share is well below the 16% seen at the beginning of the 21st century. These services are key elements in countries’ efforts towards sustainable productivity growth – the ability to produce more with less while reducing demands on the environment.
“Government efforts towards sustainable productivity growth in agriculture are a positive step forward, and can help to future-proof the sector,” OECD Secretary-General Mathias Cormann said. “However, overall levels of farm subsidies remain high, and much of it is counter-productive to these key objectives. Smart reforms are the key to further progress.”
To encourage innovation, governments are developing strategies and frameworks, investing in research and development (R&D), strengthening institutions, enhancing agricultural knowledge as well as innovation systems, and providing targeted incentives to producers to develop and adopt new production methods. Reorienting support could benefit such efforts.
Individual farmers received USD 628 billion per year in positive support over the 2021-23 period, still above pre-COVID-19 levels. More than half of this support (USD 334 billion annually) came from policies lifting domestic prices above reference prices, and was paid by consumers, while the remainder (USD 295 billion annually) was paid by taxpayers through budgetary transfers. Most of the decline in support in the past two years was due to higher world market prices rather than policy reforms. Higher world commodity prices have seen market price support drop by 8% between 2021 and 2023, while budgetary support is down by 10%.
Consumers and other first-level buyers of agricultural commodities received USD 107 billion per year in budgetary support during 2021-23, well above what was seen pre-COVID-19. On average, however, this did not offset the negative effect of higher prices for consumers induced by trade barriers and other price-distorting policies. Taken together, public policies increased consumers’ expenditures by 3.2% in that period, down from 10.3% in 2000-02, the earliest period for which there is full data for all 54 countries studied.
The OECD has laid out a strong policy agenda to reform and reorient support. To make agriculture more sustainable, productive and resilient, governments should:
- Set clear objectives for sustainable productivity growth strategies and invest in the capacity to measure results and adjust policies. The OECD’s work on measuring productivity and its agri-environmental indicators are possible avenues for measuring sustainable productivity growth in the future.
- Reduce the negative environmental impact from agricultural support by identifying and addressing environmentally harmful measures and reorienting agricultural support towards environmentally beneficial measures, agricultural knowledge and innovation systems, biosecurity services and key physical and digital infrastructure.
- Increase the share of producer support that is linked to environmental practices and make sustainable management and use of natural resources a core part of agricultural policy. Use results-based policies and continuously monitor, measure and evaluate them to improve their effectiveness.
- Better target innovation systems towards the combined objective of improved productivity and environmental performance.
While doing so, governments should increase the effectiveness and efficiency of agricultural support and markets.
