14 June 2002

Ag policy reforms are insufficient

RECENT reforms in agricultural policy have been "slow, variable and insufficient", according to the latest annual review of farm subsidies from the Organisation for Economic Co-operation and Development.

"Despite some shift away from price support and output payments, these remain the dominant forms of support in most countries, impeding the transmission of market signals to producers and distorting production and trade," says the Paris-based organisation.

This imposes a burden on consumers and taxpayers, without transferring income effectively to farmers who need it.

Three-quarters of aid to producers in OECD countries distorts production and trade, with prices received by farmers on average 31% above world values, the study shows.

The downward trend in support to farmers also appeared to falter in 2001 with total aid to farmers coming to 31% of farm receipts in OECD countries, just 1% less than the previous year. "As in 2000, the decrease mainly reflected an increase in world prices, causing a fall in support."

But there is a significant difference in the level of aid between countries, with farmers in Iceland, Norway, Japan, Korea and Switzerland getting 60%-70% of their income from the taxpayer, compared with 35% in the EU and 20% in the US, Canada and Mexico.

The report points to the 7% increase in EU farm spending during 2001. At the same time it fails to comment on the recent 68% hike in US farm spending, as this does not feed in until next year.

EU officials are quick to point out that the increased spending was due to the exceptional costs of BSE and foot-and-mouth. &#42