The usual suspects continue to subsidise

The OECD Agricultural Policy Monitoring and Evaluation Outlook 2024 has just been published and provides a comprehensive analysis and global reference on government support to agriculture across 54 countries, which 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. Although public support for agriculture has declined since 2021 it 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.

In this context, 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.https://doi.org10.1787/74da57ed-en

Farm subsidies up again across the world

A long-term trend towards a decline in farm support was reversed in 2012 according to the Organisation for Economic Cooperation and Development (OECD): OECD Report

This is perhaps a surprising development, given that government budgets are under pressure and farm subsidies offer a possible, although well-defended target. However, the OECD noted a particular trend towards increasing support in countries that emphasise self-sufficiency and they think that this has a poor relationship with food security.

This is a concern as self-sufficiency has been raised again recently in the UK debate by the NFU. Admittedly, there has been a decline in self-sufficiency in indigenous food between 1984 (95 per cent) and 2012 (76 per cent). (When foods from non-temperate climates are added in, the figure drops to 62 per cent). One might ask what the relevance of this is given that the UK operates within the CAP, but if the UK was to leave the EU this kind of discourse might become more relevant.

Admittedly, the overall increase in subsidies was 1 per cent, but that masked some sharp increases in emerging countries: 4 percentage points in China to 17 per cent of total income; 6 percentage points in Indonesia to 21 per cent; and 4 percentage points in Kazakhstan to 15 per cent. Norway provided the largest level of farm support with a 63 per cent share, up four percentage points. Switzerland, Japan and Korea were all over the 50 per cent of farmers' income level.

Farm support in the EU was consistent with the general trend, rising from 18 per cent to 19 per cent of farm incomes.

The challenge of feeding the world

The urgent need to increase farm production in order to feed a growing global population was a recurring theme last week with a number of reports and opinions published on the subject.

The words ‘productivity’ and ‘sustainability’ were the key elements of the latest Agricultural Outlook report from the OECD and the UN’s Food and Agriculture Organisation (FAO), covering the years 2012-2021. The UN predicts that the population of the world will increase by around a third from current levels, which will mean farm production will need to increase by 60 per cent over the next 40 years.

This translates into an additional one billion tonnes of cereals and 200 million tonnes of meat a year by 2050 compared to 2005-2007 levels. In order to achieve this level, the report suggests a number of ways that this can be achieved, particularly in developing countries, including supplemental irrigation, improving storage and transport links and the more efficient use of nutrients.

Whether or not this level of production can be reached is another matter and one that many analysts feel is not possible without a considerable overhaul of agricultural policy, the rapid introduction of new technology and in a way that meets the rather loose term of ‘sustainable’ or the contested term 'sustainable intensfication'.