Support to OECD Farmers Falls to Lowest Level Since 1980s
Government support to OECD farmers last year fell to the lowest level since the mid-1980s, due largely to the spike in agricultural prices, according to the OECD’s Agricultural Policies in OECD Countries 2009.
In 2008, support to producers in the OECD area was estimated at USD 265 billion or EUR 182 billion, as measured by the Producer Support Estimate (PSE). This is equivalent to 21% of aggregate gross receipts of OECD farm producers, down from 22% in 2007 and 26% in 2006.
The decline in support in 2008, as in the previous year, was largely due to exceptionally high world agricultural prices, rather than explicit policy reforms decided by governments. Although falling in the second half of 2008, world prices remained on aggregate above their long-term averages. With high world prices, policies to support domestic prices and countercyclical support generated smaller transfers and the overall support to producers was reduced.
However, as the past and most recent experience shows once world prices begin to decline from extremely high levels, border protection and price-related domestic support measures once again become active.
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