1. Domestic support and international agricultural markets
Jared Greenville
Trade and Agriculture Directorate
Today’s talk:
What is trade distorting support?
And how has its use changed over time
What impacts does it have on markets
Domestic and international
Policies to encourage growth, trade and development
Modern Approaches to Agricultural Trade Policy Reform and Domestic Support
29 June 2017, Geneva

2. Trade distorting domestic support: What is it?
Governments provide various types of support to farmers and the agricultural sector
Non-distorting support is that targeted at ‘market failures’
Public good provision
Overcoming missing or incomplete markets
Environmental goods/externalities
Distorting support changes producer actions via interventions unrelated to market failures or poorly targeted at them
Market price support
Output subsidies
Input subsidies (particularly without limits)

3. Structure of support across countries
Not including non-OECD EU Member States
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),

4. Support to farms as percentage of gross farm receipts
Trends in overall support: broad groupings
Support to farms as percentage of gross farm receipts
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),

5. Trends in overall support: country differences
To demonstrate, we can see that for both agriculture and food there has been strong growth in intermediates trade over time – stronger than that of final goods
This can be thought of exports going into ongoing GVCs. But final goods trade is often the result of GVCs also…
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),
1. For Viet Nam and the Philippines, is replaced by
2. EU15 for and EU28 from 2014.
For Indonesia, is replaced by
The OECD total does not include the non-OECD EU Member States. The Czech Republic, Estonia, Hungary, Poland, the Slovak Republic and Slovenia are included in the OECD total for both periods and in the EU for Latvia is included in the OECD and in the EU only for

6. Which commodities are most supported?
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),

7. Market impacts of trade distorting support

8. Some domestic impacts of trade distorting support
Aside from international markets, domestic impacts are created
For the agriculture sector
Costs to non-supported sectors
Environmental and sustainability pressures
Food prices & food security
Increases domestic production risk
Also for other sectors & taxpayers
Support has to be funded either directly of indirectly
The ‘tax’ exists even if not on-budget

9. Impacts on global trade
Important because we see where the gains from trade are likely to go – we have seen a shift to supplies to developing countries with trade liberalisation (spoken about this before here), and this is job creating in agriculture itself
Source: Greenville (2017) Domestic support to agriculture and trade: implications for multilateral reform. (

10. … and welfare globally
Important because we see where the gains from trade are likely to go – we have seen a shift to supplies to developing countries with trade liberalisation (spoken about this before here), and this is job creating in agriculture itself
Source: Greenville (2017) Domestic support to agriculture and trade: implications for multilateral reform. (

11. Impacts on value creation in agro-food exports
Proportion of total country-sectors
Shows the distribution of shares in agro-food export value of domestic value added created by specific sectors
Negative value added in ag and food = policy risk
Contribution to value added in exports
OECD Trade and Agriculture Directorate
Share of export DVA
Greenville, Kawasaki and Beaujeu (2017), How policies shape global food and agriculture value chains, (

12. How can non-trade distorting policies help?

13. Policies to promote productivity growth: general services to the sector
Innovation systems along with the provision of public good and infrastructure have strong links to agricultural productivity growth
Market conditions/regulations also very important
Across OECD, only 13% of total support is directed towards these measures ->
Despite the primacy in stated policy objectives
Scope to realign support towards policy objectives
Benefits then to trade, food security and development

14. Composition of support across countries
Just to show you want this looks like
EU (28)
GDP for
Not including non-OECD EU Member States
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),

15. Policies to promote domestic value added creation from agro-food exports to GVCs
Robust enabling environment also important
Complex effects of NTMs
Competitively priced imports important for export value creation
Domestic value added represents the returns from participation….
The benefits to an economy from being involved in trade
It represents the returns to labour and capital, along with taxes paid to governments (but less subsidies)
It picks up the benefits to the entire economy from the activity
Both within the sector and to all who contribute
Directly links to jobs and growth
Greenville, Kawasaki and Beaujeu (2017), How policies shape global food and agriculture value chains, (

16. Policies to promote GVC participation
Trade facilitation important
Policies to promote GVC participation
Market size increases domestic sourcing and shift to final products
So too are aspects of the enabling environment
Trade policies important
Pointing to options to enhance GVC jobs and growth effects
Greenville, Kawasaki and Beaujeu (2017), How policies shape global food and agriculture value chains, (

17. Open markets can help promote food security: case study ASEAN & changes in food insecurity
Source: OECD(2017), Building Food Security and Managing Risk in Southeast Asia,

18. Reform pathways taken
Shift from producer support to general sector support
Australia, Chile, New Zealand, South Africa and Viet Nam
Decoupling of support from production
Movement from payments based on outputs and inputs to direct transfers
Most notable in the EU, but China taking this path also
Commodities with changes on a global scale
Decoupled and falling: Cotton, dairy, sugar (for some)
Remaining high and distorted: rice, maize, animal products
But within some movement -> China and EU

19. Pathways seen in the trade impact of various policy packages
% point change in the trade impact of countries policy packages and in the Producer Support Estimate, to (as measured in percent of gross farm receipts)
Many reforms have targeted trade distorting support over time
Source: OECD (2017), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database),

20. Key messages Trade distorting support remains prevalent
And concentrated to a narrow set of commodities
This support is adversely impacting world markets and welfare
Removing and reforming trade distorting support has benefits
Domestic -> jobs, productivity, food security
International -> better functioning world markets
Pathways taken have varied
Directly to general support, or through a decoupling path

21. Contact us We look forward to hearing from you! Contact us template 2
Access all of the information from the Trade & Agriculture Directorate at:
You can reach us via
by sending your message to the following address:
We invite you to connect with us on Twitter by following:
@OECDagriculture