The Hindu Business Line : High support levels distorting world agriculture markets: OECD report

In 2004, the value of support to producers in the OECD as a whole was an estimated $279 billion, equivalent to euro 226 billion, little changed since the late 1990s.

Including support for general services to agriculture such as research, infrastructure, inspection and marketing and promotion, total support to the agricultural sector was 1.2 per cent of OECD GDP in 2004, according to the latest Monitoring and Evaluation report on Agricultural Policies in OECD countries.

While policy reform has focused on changing the way in which support is provided to producers, the report concedes that production-linked measures still dominate producer support in most countries, encouraging output, distorting trade and contributing to lower world prices of agricultural commodities.

Several countries continued to provide support above the OECD average of 30 per cent, with the European Union (34 per cent), Japan and Korea (60 per cent) and Iceland, Norway and Switzerland (70 per cent) coming in for special mention, while the progress in reducing the level of support remained uneven across countries.

The report points out that sugar, rice and milk remain the most highly supported commodities, while big reduction in level of improvement in the composition of support has occurred in the sheep-meat and grain (other than rice) sectors.

An interesting feature of the report is the recognition that the growing number of WTO agricultural panel disputes will influence the reform process.

Two major OECD members — the US and the EU — have received ruling against their cotton and sugar subsidies respectively.

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High support levels distorting world agriculture markets: OECD report