Directorate for Food, Agriculture and Fisheries ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES OECDOCDE OECD Work on Agriculture Stefan Tangermann Director for Food, Agriculture and Fisheries Pretoria, 19 April 2006

Directorate for Food, Agriculture and Fisheries 2 Born after World War II as the Organisation for European Economic Co-operation to coordinate the Marshall Plan … transformed in 1961 into the Organisation for Economic Co-operation and Development Today the OECD has 30 member countries Working relationships with more than 70 developing and transition economies What is the OECD?

OECD's global outreach OECD Member Countries Countries/Economies Engaged in Working Relationships with the OECD

Directorate for Food, Agriculture and Fisheries 4 The OECD: A tool for governments A forum where governments work together on challenges of interdependence and globalisation: Economic, social, environmental A provider of –comparative data –analysis –forecasts

Directorate for Food, Agriculture and Fisheries 5 OECD’s Aims in Agriculture Supporting the efforts of governments to improve the performance of their policies, domestically and internationally, through … policy analysis policy dialogue policy design

Directorate for Food, Agriculture and Fisheries 6 Agricultural Policy Reform Monitoring and evaluation of farm policies Analysis of objectives, instruments and impacts Multifunctionality and non-trade concerns The agro-food economy Designing agricultural policies and institutions

Directorate for Food, Agriculture and Fisheries 7 Agriculture and Trade Market outlook and alternative policy scenarios Export competition policies Market access and preferential trade agreements Benefits and costs of liberalisation, between and within countries Designing trade and adjustment policies

Directorate for Food, Agriculture and Fisheries 8 Agriculture (and Fisheries) Sustainability Agri-environmental performance (indicators) Measures addressing environmental issues in agriculture (inventory) Linkages between agriculture, trade, policies and the environment Designing agri-environmental policies

Directorate for Food, Agriculture and Fisheries 9 Communication of Results Reports discussed by Member Country delegates Consensus principle in OECD Publications widely distributed, data products Communication through media important Transparency through website:

Directorate for Food, Agriculture and Fisheries 10 PSE in Percent of Gross Farm Receipts Japan Australia EU USA OECD New Zealand Korea Source: OECD

Directorate for Food, Agriculture and Fisheries 11 Composition of PSE in OECD Area,

Directorate for Food, Agriculture and Fisheries 12 In OECD countries, agricultural policy reform is often believed to … put pressure on farm incomes threaten non-trade concerns involve large political costs serve other countries' interests give away negotiating chips is in the interest of farmers helps non-trade concerns improves sustainability of policies is beneficial domestically reduces trade distortions OECD's "Positive Reform Agenda" argues that reform …

Directorate for Food, Agriculture and Fisheries 13 Main Policy Advice of « Positive Reform Agenda » First priority: reduce tariffs, export subsidies, production subsidies Pursue domestic objectives with effective domestic policies: –decoupled payments –targeted payments –reduced overall support Reform brings benefits, domestically and internationally

Directorate for Food, Agriculture and Fisheries 14 Why reduction of border protection is first priority Tariffs, export subsidies (and deficiency payments) serve to provide price support Price support not necessary for income support, non-trade concerns But: 65% of OECD farm support is price support and deficiency payments

Directorate for Food, Agriculture and Fisheries 15 Why Border Protection Is Inadequate Farm Income Policy Price support is … unneccessary: farm househould incomes not generally low inefficient: $ 1 of extra price support transfers only $0.25 to farm income inequitable: largest farms receive most support

Directorate for Food, Agriculture and Fisheries 16 Non-Trade Concerns: Multifunctionality Governments identify worthy objectives environment, landscape, biodiversity food security, heritage, rural development But price support/border protection do not target these objectives … and can offset desired impacts

Directorate for Food, Agriculture and Fisheries 17 Strong Policy Conclusion: Decoupling and Targeting  Make sure that policy objectives are well defined  Avoid unwanted production of commodities, by decoupling support from production  Make sure measures are directly targeted to policy objectives

Directorate for Food, Agriculture and Fisheries 18 Current Policies Not Yet in Line With These Suggestions Do not meet their objectives Put stress on environment Distort trade Shift adjustment burden onto other countries … in particular on developing countries

Directorate for Food, Agriculture and Fisheries 19 CONCLUSION OECD work on agriculture is strongly reform-oriented Reduced price support is first priority Decoupling and targeting are key to reform Significant gains result, for –farmers –society –international trade