Half of global financial support to agriculture distorts the market, creates inequity, harms the environment and obstructs food security, according to this year’s report on agricultural policy from the Organisation for Economic Co-operation and Development (OECD).
It recommends income support to struggling farmer households, as well as to families in wider society, while phasing out harmful subsidies.
US$720 billion a year was provided in agriculture support between 2018 and 2020, according to Agricultural Policy Monitoring and Evaluation.
“Only one in six dollars of support to agriculture is spent in ways that promote sustainable productivity growth and agricultural resilience,” said OECD Director for Trade and Agriculture Marion Jansen.
“Most support is either ineffective in improving the performance of food systems, or even harmful. As we emerge from the Covid-19 pandemic, governments should make agricultural innovation central to their support for the sector.”
Subsidies currently include $66 billion for potentially harmful inputs like fossil fuels and fertiliser.
The report confirms that the world is not on target to achieve the United Nations Sustainable Development Goals of ensuring access to safe, nutritious and sufficient food for all people all year round, nor of eradicating all forms of malnutrition.
The findings coincide with a special report from the European Court of Auditors saying more than €100 billion earmarked to address greenhouse gas emissions from agriculture, has had no impact.
“New Common Agricultural Policy should be more accountable and transparent about climate mitigation”
The funds were made available for mitigating and adapting to climate change between 2014 and 2020, but agricultural emissions remain the same as in 2010.
It says that although the European Commission reported 26 per cent of Common Agricultural Policy (CAP) funds benefit climate action, it did not a set specific mitigation target for the funds.
The impact of CAP climate funding on greenhouse gas emissions can’t be properly monitored under the current system.
“The EU’s role in mitigating climate change in the agricultural sector is crucial, because the EU sets environmental standards and co-finances most of Member States’ agricultural spending,” said Viorel Ștefan, the member of the European Court of Auditors responsible for the report.
“We expect our findings to support the EU’s objective of becoming climate-neutral by 2050.
“The new Common Agricultural Policy should have a greater focus on reducing agricultural emissions, and be more accountable and transparent about its contribution to climate mitigation.”
The report recommends annual monitoring. It also says the Commission should consider a polluter-pays system for agriculture emissions, and should reward farmers for long-term carbon removals.
Meanwhile, the OECD report says agricultural support has continued to grow but is often failing to meet its stated aims of improving food security, livelihoods and environmental sustainability.
It said consumers pay for more than one-third of the annual support, or $272 billion, through higher prices, while taxpayers fund the remaining $447 billion.
Investments in agricultural innovation, biosecurity and infrastructure accounted for only $76 billion, or 17 per cent of support to agriculture, despite their strong potential to boost sustainable productivity growth and improve resilience.
The OECD report proposes three reforms:
- Phase out price interventions and market distorting producer support
- Target income support to farm households most in need, and where possible incorporate such support into economy-wide social policies and safety-nets
- Re-orient public expenditures towards investments in public goods – in particular innovation systems
