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OECD Work on Agriculture

OECD Work on Agriculture. Stefan Tangermann Director for Food, Agriculture and Fisheries. Pretoria, 19 April 2006. What is the OECD?. Born after World War II as the Organisation for European Economic Co-operation to coordinate the Marshall Plan

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OECD Work on Agriculture

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  1. OECD Work on Agriculture Stefan Tangermann Director for Food, Agriculture and Fisheries Pretoria, 19 April 2006

  2. What is the OECD? • Born after World War II as the Organisation for European Economic Co-operation to coordinate the Marshall Plan • … transformed in 1961 into the Organisation for Economic Co-operation and Development • Today the OECD has 30 member countries • Working relationships with more than 70 developing and transition economies

  3. OECD's global outreach OECD Member Countries Countries/Economies Engaged in Working Relationships with the OECD

  4. The OECD: A tool for governments • A forum where governments work together on challenges of interdependence and globalisation: Economic, social, environmental • A provider of • comparative data • analysis • forecasts

  5. OECD’s Aims in Agriculture • Supporting the efforts of governments to improve the performance of their policies, domestically and internationally, through … • policy analysis • policy dialogue • policy design

  6. Monitoring and evaluation of farm policies Analysis of objectives, instruments and impacts Multifunctionality and non-trade concerns The agro-food economy Designing agricultural policies and institutions Agricultural Policy Reform

  7. Market outlook and alternative policy scenarios Export competition policies Market access and preferential trade agreements Benefits and costs of liberalisation, between and within countries Designing trade and adjustment policies Agriculture and Trade

  8. Agri-environmental performance (indicators) Measures addressing environmental issues in agriculture (inventory) Linkages between agriculture, trade, policies and the environment Designing agri-environmental policies Agriculture (and Fisheries) Sustainability

  9. Communication of Results • Reports discussed by Member Country delegates • Consensus principle in OECD • Publications widely distributed, data products • Communication through media important • Transparency through website:www.oecd.org/agr

  10. PSE in Percent of Gross Farm Receipts Korea Japan EU OECD USA Australia New Zealand Source: OECD

  11. Composition of PSE in OECD Area, 2002-04

  12. OECD's "Positive Reform Agenda" argues that reform … In OECD countries, agricultural policy reform is often believed to … • put pressure on farm incomes • threaten non-trade concerns • involve large political costs • serve other countries' interests • give away negotiating chips • is in the interest of farmers • helps non-trade concerns • improves sustainability of policies • is beneficial domestically • reduces trade distortions

  13. Main Policy Advice of « Positive Reform Agenda » • First priority: reduce tariffs, export subsidies, production subsidies • Pursue domestic objectives with effective domestic policies: • decoupled payments • targeted payments • reduced overall support • Reform brings benefits, domestically and internationally

  14. Why reduction of border protection is first priority • Tariffs, export subsidies (and deficiency payments) serve to provide price support • Price support not necessary for income support, non-trade concerns • But: 65% of OECD farm support is price support and deficiency payments

  15. Why Border Protection Is Inadequate Farm Income Policy • Price support is … • unneccessary:farm househould incomes not generally low • inefficient:$ 1 of extra price support transfers only $0.25 to farm income • inequitable:largest farms receive most support

  16. Non-Trade Concerns: Multifunctionality • Governments identify worthy objectives • environment, landscape, biodiversity • food security, heritage, rural development • But price support/border protection do not target these objectives • … and can offset desired impacts

  17. Strong Policy Conclusion: Decoupling and Targeting • Make sure that policy objectives are well defined • Avoid unwanted production of commodities, by decoupling support from production • Make sure measures are directly targeted to policy objectives

  18. Current Policies Not Yet in Line With These Suggestions • Do not meet their objectives • Put stress on environment • Distort trade • Shift adjustment burden onto other countries • … in particular on developing countries

  19. CONCLUSION • OECD work on agriculture is strongly reform-oriented • Reduced price support is first priority • Decoupling and targeting are key to reform • Significant gains result, for • farmers • society • international trade

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