EU farm subsidies rise despite downward trend: OECD

Preventing the coronavirus pandemic from morphing into a food security crisis is increasingly the focus of policy-makers.

Public support made up 19% of all EU farming revenues last year despite a historic downward trend, the OECD said in a report released yesterday (18 September).

The EU shelled out €83 billion in support of agricultural producers in 2012 – or 19% of total farm receipts – a rise of 1% from the year before, according to the Organisation for Economic Co-operation and Development (OECD). 

Support for farming has declined by some 10% since 1995-97, when the EU introduced direct payments to farmers to compensate for the decrease in price support.

Production and trade distorting measures, such as input subsidies and border interventions, still accounted for about 23% of EU farm support, according to the report, Agricultural Policy: Monitoring and Evaluation 2013. But this was still just half of the world total, with distorting measures particularly common in the developing world.

The OECD also said that the current spike in food prices was likely to continue.

“With world markets for food and commodities buoyant and higher commodity prices expected to continue, the time is ripe for governments to credibly commit to wide-ranging farm support reform,” said OECD Trade and Agriculture Director Ken Ash.

“Meeting the needs of a growing and richer world population requires a shift away from the distorting and wasteful policies of the past towards measures that improve competitiveness, allowing farmers to respond to market signals while  ensuring that much-needed innovation is fully funded,” he said.

The influential Paris-based think tank said that the June agreement on the EU’s Common Agricultural Policy (CAP) for the 2014-2020 period did not represent a significant departure from the direction or size of farm support.

“The CAP reform is not really a fundamental reform. It has more greening but it is still carrying on the same trajectory,” said Frank van Tongeren, policy head at the OECD’s trade and agriculture directorate.

“But the change is probably in the right direction.”

Launched in 1962, the Common Agricultural Policy, or CAP, is a system of EU agricultural subsidies and programmes comprising the biggest single budget outlay for the EU – some 38% of the overall budget compared to nearly 70% in the 1970s.

Under the agreement on the EU’s €960-billion budget for 2014-2020, spending for agriculture and rural development will be around €380 billion, with some €280 billion set aside for direct payments to farmers and around €80 billion for rural development. The rest goes mainly for export support.

>> Read our LinksDossier: CAP 2014-2020: A long road to reform

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