food and agriculture policy: a positive reform agenda
DESCRIPTION
OECD. OCDE. ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES. Food and Agriculture Policy: A Positive Reform Agenda. ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. Ken Ash Deputy Director, Food, Agriculture and Fisheries. California, 19-20 January 2003. - PowerPoint PPT PresentationTRANSCRIPT
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
1
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES
OECD OCDE
Food and Agriculture Policy: A Positive Reform Agenda
Ken AshDeputy Director, Food, Agriculture
and Fisheries
California, 19-20 January 2003
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
2
Agriculture Policies in Canada, Japan, the EU and US
• instruments and impacts
• recent and on-going developments
• alternative policy approaches
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
3
Producer Support Estimate (% PSE)
% PSE
0
10
20
30
40
50
60
70
US
Japan
Canada
EU
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
4
0%
20%
40%
60%
80%
100%
1986-88 2002
Payments based on input constraints, overall farm income, etc.
Payments based on historical entitlements
Payments based on area planted/animal numbersMarket Price Support and payments based on output and input use
Canada: Composition of PSE
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
5
0%
20%
40%
60%
80%
100%
1986-88 2002
Payments based on input constraints, overall farm income, etc.
Payments based on historical entitlements
Payments based on area planted/animal numbersMarket Price Support and payments based on output and input use
Japan: Composition of PSE
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
6
0%
20%
40%
60%
80%
100%
1986-88 * 2002
Payments based on input constraints, overall farm income, etc.
Payments based on historical entitlements
Payments based on area planted/animal numbersMarket Price Support and payments based on output and input use
EU: Composition of PSE*(simulated CAP Reform)
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
7
0%
20%
40%
60%
80%
100%
1986-88 2002
Payments based on input constraints, overall farm income, etc.Payments based on historical entitlementsCounter cyclical paymentsPayments based on area planted/animal numbersMarket Price Support and payments based on output and input use
US: Composition of PSE
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
8
0%
20%
40%
60%
80%
100%
Canada Japan EU US
Payments based on input constraints, overall farm income, etc.Payments based on historical entitlementsCounter cyclical payments
Payments based on area planted/animal numbersMarket Price Support and payments based on output and input use
Composition of PSE
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Production linked support is…
• inefficient: 25% goes to farm income
• ineffective: capitalisation increases costs and reduces profitability; can harm the environment
• inequitable: wealthiest farms receive most support
• trade distorting: relies on import protection and/or export subsidy, imposing a burden on other countries
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
10
55
60
65
70
75
80
85
90
95
100
0 10 20 30 40 50 60 70 80
55
60
65
70
75
80
85
90
95
100
0 10 20 30 40 50 60 70 80
Evolution of PSE Support *
55
60
65
70
75
80
85
90
95
100
0 10 20 30 40 50 60 70 80
US EU
Japan
%PSE
%
Canada2002
1986-88
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Alternative Policy Approaches
Food and Agriculture Policy• reduce border protection• eliminate export subsidies, and• pursue domestic objectives with
– decoupled support– targeted measures– tailored support
Non-Sectoral Policies• economic, social, environmental
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Farm Household Income:Which Policies?
• avoid broad, output-based measures• target uncontrollable income risks
(commodity markets, income insurance)• target on-farm performance (skills,
technologies) and/or diversify income sources (rural development )
• target systemic low incomes (social safety nets)
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
13
Rural Communities -Which Policies?
• agriculture policy is not rural policy
• target the root causes of economic disadvantages (local, multi-sectoral initiatives)
• target systemic policy bias against rural and remote areas (infrastructure, public services)
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Environmental Sustainability -Which Policies?
• avoid production-linked incentives• target the source of negative impacts of
farm production (“polluter-pays” taxes, regulations)
• target the provision of desired, positive impacts of farm production (direct payments)
• integrate policy approaches (link to broader environmental policy)
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
15
How Important is Capitalisation?
• much of existing support has been capitalised into asset values (perhaps 15-20% of land values, production quotas)
• the short-term economic adjustment is considerable
• the long-term offers benefits, but the “transition period” must be managed
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Conclusion
• international and domestic benefits of reform are generally accepted (?)
• the overall approach is widely understood (?)– decouple support from farm production– target clear objectives and beneficiaries– reduce amount and scope of support– limit duration of intervention– avoid unintended impacts (review and
revise policies)
OECD OCDEDirectorate for Food, Agriculture, and Fisheries
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Conclusion (cont.)
• sustainable reform requires a viable adjustment and compensation strategy (?)– adjustment within the sector (competitive
suppliers, diversified income sources)– transition out of the sector (into more viable
employment opportunities)– compensation for policy change and any
associated “losses” (limited duration)• what else is required?