The Hindu Business Line : OECD farm subsidies distorting trade: IBRD

THE World Bank has expressed concern over the huge farm subsidies doled out by Governments in industrialised countries, which, it says, is distorting world trade in agricultural products and resulting in income losses for farmers in developing economies.

Speaking to presspersons here, Mr Kevin Cleaver, Director of the Bank's Agriculture and Rural Development Department, noted that the average annual support to the farm sector of the rich-OECD (Organisation for Economic Cooperation and Development) during 2000-02 amounted to $315 billion.

Of this, $26 billion was in the form of budgetary transfers to consumers through food stamps, etc and $54 billion on account of support for general services such as research and development, rural roads, extension services and other infrastructure.

But the biggest chunk of subsidies ($235 billion) was constituted by support to producers, which included a direct taxpayer-financed component of $89 billion and an indirect consumer-financed component of $146 billion.

Mr Cleaver said `border protection' measures resorted to by rich economies was distorting world trade by denying market opportunities to farmers in developing countries such as India and Brazil. "To form an idea of what annual subsidies of $315 billion given to farmers in OECD economies means, one needs to juxtapose this with the total annual aid flows of around $50 billion to developing countries from all multilateral and bilateral sources. Further, compare this to the total annual budget of $400 million for all public funded agricultural research institutions (IRRI, CIMMYT, ICRISAT, etc) and the World Bank's contribution of $50 million," he pointed out.

Of the total farm support estimate of $315 billion, $104 billion was accounted for by the European Union, $94 billion by the US and $60 billion by Japan. The annual per farmer subsidy worked out to $23,000 in Japan, $19,000 in the US and $16,000 in the EU, while averaging $11,000 for the OECD countries as a whole," Mr Cleaver added.