1 HLEF 13 October Panel 5 The Policy challenge: support, trade, aid and investment policies Introduction by Gérard Viatte

2 Foreword… Before drawing attention to the five key discussion points at the end of the Issues Paper (IP), I will try to put them in a slightly wider context. I will highlight briefly five “challenges” which seem essential for the long-term orientation of policies, and which are particularly relevant in the fields of support, markets and trade. This approach will cover the issues mentioned in the IP (explicitly quoted), but sometimes in a different order.

3 1. Policies and markets Government interventions will remain necessary to support agricultural development and adjustment even in the context of increasing market orientation. Markets often need to be “created” and “regulated”. Need to promote “non-distorting policies” and “decoupling”. Progress has been made but is still insufficient. Decoupling is uneven. Barriers to market access, tariff escalation and export subsidies remain major sources of distorsions, with a negative impact on developing countries. Innovative proposals on decoupling in the IP.

4 2. Towards “new policy mixes” A wider range of policies will impact on agriculture in addition to traditional agricultural policies. Policies for agricultural markets and trade cannot be isolated from other policies. Two examples from the IP: land set aside and production reserve – environmental policy; safety nets for smallholders - social policy. Search for possible synergies. Hence need for new “policy mixes”, adapted to the specific level of development (beyond the simple distinction between “developed” and “developing” countries).

5 3. Targeted support Support should be not only “decoupled” but also targeted towards well defined objectives. They should reflect the key role of food and agriculture and of the elimination of hunger for development and for the society at large. Two specific examples of targeting from the IP: - the emphasis on pro-poor policies (smallholders) - the payments for public goods. Targeting helps to give a higher priority to food and agriculture at the domestic level, and in international assistance including through new financing mechanisms as proposed in the IP.

6 4. An agro-food perspective Higher priority should be given to financial and technical support (“non-distorting”) for creating efficient upstream and downstream markets, including for strengthening the position of farmers. Examples from the IP: Improving delivery system and accessibility of inputs (more useful than input subsidies). Improving processing and marketing systems as a contribution to increase farmers’ incomes and to reduce malnutrition. Improving market information for all actors.

7 5. Institutions and participation The process of elaboration and implementation of policies deserves more attention. There is often a need for adjustment of institutions at all levels, for stable legal framework (IP) and for efficient governance. This is particularly true in the sensitive field of allocation of support, and of markets and trade. The private sector has a major role to play (example from IP: insurance), including through public/private partnership. Capacity building of all actors on the markets is a good example of “non-distorting support”…

8 The five discussion points The remarks above lead to the five specific discussion points of the IP: 1.What forms of non-distorting support ? 2.Extension of decoupling and possible agricultural production “reserve” ? 3.Increased assistance to developing countries agriculture, including through compensatory financing by OECD countries ? 4.Respective roles of public/private insurance in OECD countries ? 5.Safety mechanism against food crisis emanating from economic shocks (“early reaction fund”) ?