Table Of Content«
AGRICULTURE AND FOOD
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Agricultural Policies in OECD Countries Agricultural
MONITORING AND EVALUATION
Policies in
This annual publication is the most comprehensive description and assessment of agricultural and
OECD Countries
related policy developments available for OECD countries. The report provides data on the level and
composition of support and protection to agriculture, and evaluates the extent to which countries are
reforming their agricultural policies.
Support and protection to OECD agricultural producers remain high, although there was a slight MONITORING AND EVALUATION
decrease in 2000 after a two-year rise. Total support to agriculture in 2000 amounted to
USD 327 billion or 1.3% of GDP in the OECD area, of which support to producers accounted
for 34% of total farm receipts. But that decrease reflected world price rises and exchange rate
movements rather than major agricultural policy changes. Despite some reduction in 2000, market
price support and output payments continue to be dominant in most countries, insulating farmers
AGRICULTURE AND FOOD
from world market signals and distorting global production and trade. Ad hoc measures were once
again applied in some countries to support farm incomes. Food safety issues were a high priority for
many governments in 2000.
Overall, the report concludes that progress towards further policy reform has been insufficient and
remains fragile.
ALSO AVAILABLE ON CD-ROM
For more detailed information on support to agriculture in OECD countries, please consult the yearly
OECD Producer and Consumer Support Estimates Database on CD-ROM. The database covers the
years 1986 through 2000 using Beyond 20/20TM software.
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Agricultural Policies in Emerging and Transition Economies 2001 u
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OECD Agricultural Outlook 2001-2006 tu
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ISBN 92-64-18685-9
51 2001 10 1 P
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2001 2001
© OECD, 2001.
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AGRICULTURAL POLICIES
IN OECD COUNTRIES
MONITORING AND EVALUATION
2001
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
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ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into
force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD)
shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising standard of
living in Member countries, while maintaining financial stability, and thus to contribute to the
development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member countries in the
process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in
accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark, France,
Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland, Turkey, the United Kingdom and the United States. The following countries
became Members subsequently through accession at the dates indicated hereafter: Japan
(28thApril1964), Finland (28th January 1969), Australia (7th June 1971), New Zealand (29th May 1973),
Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22ndNovember 1996), Korea (12th December 1996) and the Slovak Republic (14th December 2000). The
Commission of the European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
Publié en français sous le titre :
POLITIQUES AGRICOLES DES PAYS DE L’OCDE
SUIVI ET ÉVALUATION 2001
© OECD 2001
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FOREWORD
This is the 14th publication in a series on agricultural and related trade policies in OECD countries,
following the request by the OECD Council at Ministerial level to monitor annually the implementation
of the principles for agricultural policy reform adopted in1987. In1998, OECD Agriculture Ministers
agreed to a set of shared goals for the agro-food sector and operational criteria for policy instruments,
which also serve as a reference for this evaluation. The Secretariat has used a comprehensive system for
classifying support to agriculture in order to measure and provide insight into the nature of increasingly
complex policy measures.
This year’s report consists of two parts. PartI provides a description and an assessment of policy
developments and agricultural support in Member countries against a background of the main
macroeconomic and agricultural market developments. It also describes developments in selected
policy areas affecting the agro-food sector. Part II presents detailed information on policy
developments in individual Member countries (and for the member States of the European Union), and
describes the method used to estimate support to agriculture. It also contains the support estimates
and other background information referred to in PartI.
The OECD’s Committee for Agriculture and its Trade Committee approved the publication of PartI
of the report; PartII is published under the responsibility of the Secretary-General of the OECD.
Acknowledgements
This edition of Agricultural Policies in OECD Countries – Monitoring and Evaluation was prepared by the
Food, Agriculture and Fisheries Directorate of the OECD with support from the Trade Directorate, and
the active participation of the Member countries. The following people from the OECD Secretariat (under
the overall direction of GérardViatte) contributed to drafting this report: OutiHonkatukia (co-ordinator),
Jesús Antón, Ken Ash, Denis Audet, Ellie Avery, Carmel Cahill, Bong Hwan Cho, Joe Dewbre,
DimitrisDiakosavvas, Darryl Jones, Wayne Jones, Nobunori Kuga, Wilfrid Legg, SabrinaLucatelli,
Catherine Moreddu, Kevin Parris, Luis Portugal, Véronique de Saint-Martin, Vaclav Vojtech and
Peter Walkenhorst. Statistical assistance was provided by Alexandra de Matos Nunes (co-ordinator),
Stéphane Guillot, Laetitia Reille and Samantha Tiller. Secretarial services were provided by
FrançoiseBenicourt, Marina Giacalone, Michèle Patterson and Theresa Poincet. Technical assistance in
the preparation of the PSE/CSE database CD-Rom was provided by FranoIlicic. Many other colleagues
in the OECD Secretariat furnished useful comments on various drafts of the report.
3
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TABLE OF CONTENTS
Executive summary.............................................................................................................................................................. 11
Part 1. MONITORING AND EVALUATION.................................................................................................................. 13
1. ECONOMIC AND AGRICULTURAL MARKET BACKGROUND................................................................. 15
The macroeconomic environment............................................................................................................. 15
International agricultural markets.............................................................................................................. 16
Structural developments............................................................................................................................. 17
2. MAIN POLICY DEVELOPMENTS IN 2000................................................................................................... 19
Developments in domestic policy............................................................................................................. 19
New multi-year policy programmes introduced............................................................................... 19
Support prices rose for commodities in some OECD countries but fell in others....................... 19
Modifications to programmes to achieve structural change........................................................... 19
More changes in the dairy sector........................................................................................................ 20
New tax and interest concessions granted........................................................................................ 20
Some significant measures in response to falling farmer incomes…............................................ 20
…and in response to emergencies................................................................................................... 20
New agri-environmental policies introduced................................................................................... 21
Attempts to streamline the provision of support............................................................................. 21
High priority to food safety issues...................................................................................................... 21
Increase in food labelling requirements........................................................................................... 21
Few changes in competition policy.................................................................................................... 22
Developments in trade policy.................................................................................................................... 22
Expansion of import access................................................................................................................. 22
Decrease in export subsidies.............................................................................................................. 22
Some new bilateral trade agreements............................................................................................... 23
3. EVALUATION OF POLICY DEVELOPMENTS ......................................................................................... 24
Overview........................................................................................................................................................ 26
Support and protection decreased on average,…........................................................................... 28
but with wider variations among countries, …................................................................................. 30
… and across commodities...................................................................................................... 32
While payments based on past entitlements and overall income increased….......................... 32
… area/headage payments and support for using inputs declined,…......................................... 33
… and policies increasingly address environmental concerns...................................................... 34
Market orientation improved, but remained very low in a number of countries......................... 35
Support for general services to agriculture remains low relative to support
to producers.................................................................................................................................... 35
Overall support to OECD agriculture decreased, but remained significant................................. 36
4. DEVELOPMENTS IN SELECTED POLICY AREAS..................................................................................... 37
Food safety and related policy developments........................................................................................ 37
Food safety systems continue to evolve........................................................................................... 37
Focus on transparency and co-ordination......................................................................................... 37
A broader food chain approach.......................................................................................................... 39 5
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Agricultural Policies in OECD Countries
Increased international consultation and co-ordination................................................................. 39
Different approaches to regulation of GM foods and feeds........................................................... 39
Emphasis on labelling and consumer choice................................................................................... 40
Dealing with scientific uncertainty is an issue.................................................................................. 42
Policies to improve environmental performance.................................................................................... 43
Continuing concern with environmental issues in agriculture….................................................... 43
… policies aim to improve environmental quality.......................................................................... 44
Economic instruments becoming more widespread…................................................................... 44
… use of regulations increases........................................................................................................... 45
Market-led co-operative approaches gaining momentum….......................................................... 45
Managing income risk in agriculture.......................................................................................................... 46
Wide range of income risk management tools and programmes in OECD countries.................. 46
Income safety nets are important in Canada.................................................................................... 46
Private-public insurance partnerships can be costly....................................................................... 47
Governments generally compensate for natural disaster damage................................................ 48
5. Decoupling agricultural support: key factors affecting farmers’ decisions........................................... 49
The relative prices and quantitative constraints impacts...................................................................... 49
The insurance effect............................................................................................................................. 49
The income and wealth effect............................................................................................................. 51
The expectations effect........................................................................................................................ 52
6. The multilateral trade negotiations in agriculture................................................................................... 53
Agricultural trade negotiations now underway......................................................................................... 53
Agricultural trade negotiations move to the second phase............................................................ 54
Notes...................................................................................................................................................................... 55
LIST OF TABLES
I.1. Macro-economic indicators for OECD countries................................................................................................... 15
I.2. Macro-economic indicators for selected non-OECD countries........................................................................... 16
I.3. Number of reported BSE cases by country............................................................................................................ 42
I.4. Variability of wheat prices and revenues in OECD countries 1986-2000........................................................... 51
Annex Table I.1. Main agricultural indicators................................................................................................................ 58
Annex Table I.2. Selected structural indicators............................................................................................................ 60
Annex Table I.3. Selected agri-environmental indicators........................................................................................... 61
LIST OF GRAPHS
I.1. Total support estimate by country....................................................................................................................... 27
I.2. Producer support estimate by country................................................................................................................ 27
I.3. Composition of producer support estimate by country, 1986-1988 and 1998-2000...................................... 29
I.4. Consumer support estimate by country.............................................................................................................. 29
I.5. Producer nominal protection coefficient by country......................................................................................... 30
I.6. Producer support estimate per farmer, 1998-2000............................................................................................. 31
I.7. Producer support estimate per hectare, 1998-2000........................................................................................... 31
I.8. Producer support estimate by commodity......................................................................................................... 32
I.9. Producer nominal protection coefficient by commodity.................................................................................. 33
I.10. Producer nominal assistance coefficient by country........................................................................................ 35
I.11. US wheat producer’s price distribution, 1988-2000........................................................................................... 50
I.12. US wheat producers’ revenue distribution, 1988-2000...................................................................................... 50
LIST OF BOXES
I.1. Policy principles..................................................................................................................................................... 24
I.2. Operational criteria................................................................................................................................................ 24
6 I.3. Definitions of the OECD indicators of support................................................................................................... 25
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Table of Contents
I.4. Key messages on food safety............................................................................................................................... 38
I.5. Codex activities addressing food safety issues.................................................................................................. 40
I.6. New approaches to the regulation of GM foods and feeds.............................................................................. 41
I.7. What have been the impacts of policies on the environment?....................................................................... 43
I.8. Assessing the role of governments in risk management................................................................................... 47
Part II. BACKGROUND INFORMATION...................................................................................................................... 63
I. AGRICULTURAL POLICY DEVELOPMENTS.............................................................................................. 65
Australia......................................................................................................................................................... 65
Canada........................................................................................................................................................... 70
Czech Republic............................................................................................................................................. 73
European Union............................................................................................................................................ 77
Austria.................................................................................................................................................... 84
Belgium.................................................................................................................................................. 85
Denmark................................................................................................................................................. 85
Finland................................................................................................................................................... 86
France..................................................................................................................................................... 86
Germany................................................................................................................................................. 87
Greece.................................................................................................................................................... 88
Ireland.................................................................................................................................................... 89
Italy......................................................................................................................................................... 89
The Netherlands................................................................................................................................... 90
Portugal.................................................................................................................................................. 91
Spain....................................................................................................................................................... 91
Sweden................................................................................................................................................... 93
United Kingdom.................................................................................................................................... 93
Hungary......................................................................................................................................................... 94
Iceland........................................................................................................................................................... 98
Japan.............................................................................................................................................................. 99
Korea.............................................................................................................................................................. 103
Mexico............................................................................................................................................................ 107
New Zealand................................................................................................................................................. 112
Norway........................................................................................................................................................... 114
Poland............................................................................................................................................................ 118
Slovak Republic ......................................................................................................................................... 122
Switzerland.................................................................................................................................................... 123
Turkey............................................................................................................................................................ 128
United States................................................................................................................................................ 132
2. DEVELOPMENTS IN WTO AND NAFTA TRADE DISPUTE SETTLEMENT PROCEDURES
INVOLVING AGRICULTURAL PRODUCTS................................................................................................. 137
Recent developments in the WTO............................................................................................................. 137
WTO trade dispute developments............................................................................................................ 138
Requests for consultations.................................................................................................................. 138
Panel reports, appeals, and requests for the establishment of a panel....................................... 138
NAFTA dispute settlement procedures.................................................................................................... 142
3. OECD MINISTERIAL COMMUNIQUÉS RELATED TO AGRICULTURAL POLICIES................................ 143
OECD Council at Ministerial Level, June2000.......................................................................................... 143
OECD Committee for Agriculture at Ministerial Level, March1998....................................................... 144
Progress has been made in agricultural policy reform…................................................................ 144
... but more needs to be done…........................................................................................................ 145
... and new challenges are emerging.................................................................................................. 145
Ministers outlined their Shared Goals.….......................................................................................... 146 7
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Agricultural Policies in OECD Countries
... adopted a set of policy principles…............................................................................................. 146
... and outlined a role for theOECD................................................................................................... 148
OECD Council at Ministerial Level, May1987.......................................................................................... 148
The1987 OECD Ministerial Principles for agricultural policy reform............................................. 149
4. MEASUREMENT OF SUPPORT AND METHOD OF POLICY EVALUATION........................................... 151
Introduction.................................................................................................................................................. 151
Classification and definitions..................................................................................................................... 151
Criteria for classification.............................................................................................................................. 154
Defining measures to be included in the PSE, CSE or GSSE......................................................... 154
Classifying transfers to producers in the PSE................................................................................... 154
Rules for classification................................................................................................................................. 157
Classifying transfers associated with market price support............................................................ 157
On-farm services in PSE or services to agriculture in the GSSE?................................................... 157
Input subsidies in the PSE or transfers for infrastructure in the GSSE?........................................ 157
Treatment of taxes and levies............................................................................................................. 160
Main indicators: meaning, calculation and interpretation...................................................................... 161
What does the PSE/TSE cover?........................................................................................................... 161
Calculating the MPS.............................................................................................................................. 161
Comparing prices for the price gap.................................................................................................... 162
Main indicators: methods of calculation................................................................................................... 163
PSE and TSE by country...................................................................................................................... 163
PSE and CSE by commodity................................................................................................................ 164
Percentage PSE/CSE and Producer/Consumer NAC......................................................................... 165
Producer/Consumer Nominal Protection Coefficient (NPC)............................................................ 166
Percentage GSSE and TSE................................................................................................................... 167
Main indicators: general interpretation.................................................................................................... 167
Do these indicators help to assess the need for, and progress in, policy reform?..................... 167
Method of policy evaluation....................................................................................................................... 168
“Market protection” and “market orientation”.................................................................................. 169
How are support indicators used to evaluate policy changes?...................................................... 170
Decomposition of PSE and CSE annual variations.................................................................................. 171
Definition of full-time farmer equivalent and agricultural land............................................................. 173
Notes...................................................................................................................................................................... 174
LIST OF TABLES
II.1. Australia: Expenditure on Agriculture – Advancing Australia programmes....................................................... 69
II.2. Czech Republic: Government procurement prices and quantities for bread-wheat....................................... 74
II.3. Czech Republic: Minimum prices and export subsidies for milk....................................................................... 75
II.4. Czech Republic: Area and headage payments...................................................................................................... 75
II.5. European Union: National expenditures............................................................................................................... 78
II.6. European Union: Selected institutional prices..................................................................................................... 78
II.7. European Union: Area and headage payment rates............................................................................................. 80
II.8. Hungary: Guaranteed prices.................................................................................................................................... 96
II.9. Iceland: Administered prices for milk.................................................................................................................... 98
II.10. Japan: Administered prices for rice......................................................................................................................... 100
II.11. Japan: Administered prices for crops..................................................................................................................... 101
II.12. Japan: Administered prices for livestock products............................................................................................... 101
II.13. Japan: Guaranteed prices for calves per head...................................................................................................... 102
II.14. Korea: Purchase prices and quantities of major cereals...................................................................................... 104
II.15. Korea: Consumption and price of beef and milk.................................................................................................. 105
8 II.16. Mexico: Administered prices................................................................................................................................... 109
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Table of Contents
II.17. Mexico: Retail price for maize products................................................................................................................ 109
II.18. Mexico: PROCAMPO direct payments................................................................................................................... 109
II.19. Mexico: Alliance for Agriculture.............................................................................................................................. 110
II.20. Norway: Administered prices................................................................................................................................. 115
II.21. Poland: Administered prices.................................................................................................................................. 119
II.22. Switzerland: Budgetary payment rates.................................................................................................................. 125
II.23. Switzerland: Outlays for direct payments............................................................................................................. 126
II.24. Turkey: Administered floor prices for cereals, sugar and tobacco..................................................................... 130
II.25. Turkey: Import tariffs................................................................................................................................................ 131
II.26. United States: Loan rates for crop years 1999 and 2000...................................................................................... 133
II.27. Coverage of MPS as a percentage of the total value of production in2000..................................................... 164
II.28. List of “MPS commodities” by country.................................................................................................................. 164
FIGURE
II.1. MPS Calculation: Marketing and geographical levels of commodity prices................................................... 163
LIST OF BOXES
II.1. Deregulation of Australian Dairy Industry........................................................................................................... 66
II.2. First evaluation of the PROCEDE programme defining Ejido’s land property rights.................................... 108
II.3. Slovak Republic...................................................................................................................................................... 122
II.4. The Agricultural Reform Implementation Project (ARIP)................................................................................... 128
II.5. Classification of policy measures included in the OECD indicators of support............................................ 155
II.6. Transfers associated with market price support................................................................................................ 158
II.7. The case of negative support................................................................................................................................ 160
II.8. Relative impacts of policy measures on production and trade....................................................................... 169
Part III. SUMMARY TABLES ON ESTIMATES OF SUPPORT TO AGRICULTURE............................... 177
LIST OF TABLES
III.1. OECD: Estimates of support to agriculture........................................................................................................... 178
III.2. OECD: Estimates of support to agriculture........................................................................................................... 179
III.3. OECD: Producer Support Estimate by country.................................................................................................... 181
III.4. OECD: Producer Support Estimate by commodity.............................................................................................. 183
III.5. OECD: Producer Support Estimate per full-time farmer equivalent................................................................. 185
III.6. OECD: Producer Support Estimate per hectare of agricultural land................................................................. 186
III.7. OECD: Composition of Producer Support Estimate............................................................................................ 187
III.8. OECD: General Services Support Estimate by country....................................................................................... 190
III.9. OECD: Composition of General Services Support Estimate.............................................................................. 191
III.10. OECD: Consumer Support Estimate by country.................................................................................................. 193
III.11. OECD: Consumer Support Estimate by commodity............................................................................................ 195
III.12. OECD: Total Support Estimate by country........................................................................................................... 197
III.13. OECD: Total Support Estimate per capita............................................................................................................ 198
III.14. Australia: Estimates of support to agriculture...................................................................................................... 199
III.15. Australia: Main indicators by commodity.............................................................................................................. 200
III.16. Canada: Estimates of support to agriculture........................................................................................................ 203
III.17. Canada: Main indicators by commodity................................................................................................................ 204
III.18. Czech Republic: Estimates of support to agriculture.......................................................................................... 207
III.19. Czech Republic: Main indicators by commodity.................................................................................................. 208
III.20. European Union: Estimates of support to agriculture......................................................................................... 211
III.21. European Union: Main indicators by commodity................................................................................................ 212
III.22. Hungary: Estimates of support to agriculture....................................................................................................... 215
III.23. Hungary: Main indicators by commodity.............................................................................................................. 216
III.24. Iceland: Estimates of support to agriculture......................................................................................................... 219
III.25. Iceland: Main indicators by commodity................................................................................................................ 220 9
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