OECD: Record levels of agricultural support are distorting prices and the market
Governments to provide an additional US$121 billion over the two-year period 2023–25. Secretary-General Cormann: “More resources do not always mean better results”
Key points
Government support for agriculture rose by $121 billion – almost 15 per cent – between 2023 and 2025, averaging $885 billion a year over the two-year period. This is according to the OECD, which, in a highly detailed report presented to the press, shines a spotlight on the damage caused by a system of blanket subsidies, which has served more to patch up emergencies and provide short-term responses than to create a form of lasting and structural support.
“More resources do not always mean better results,” said the Secretary-General of the OECD, Mathias Cormann, at the start of his presentation. In fact, almost half of the funds made available have been channelled into measures that distort production and trade, thereby distorting market prices.
Welfare-oriented governments in OECD countries
In the 56 countries covered, support for the sector rose from 17.6 per cent to 19.1 per cent of the value of agricultural production between 2023 and 2025. In many emerging economies, support came mainly through policies that kept domestic agricultural prices above world prices – a mechanism that isolates domestic markets to protect them from external shocks – whilst OECD countries have relied more heavily on direct government spending, including emergency aid in the event of disasters.
Costs totalling 204 billion dollars
Consumers are now bearing a significant proportion of the costs through rising food prices in the countries concerned.
‘Policies that have kept domestic food prices above international levels have resulted in an estimated net cost to consumers of $204 billion a year during 2023–25, as the additional costs resulting from rising food prices outweighed budgetary support for consumers’, explains Cormann.
