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Dimitris Diakosavvas Trade and Agriculture Directorate OECD
Meeting the Policy Challenges for Sustainable Productivity Growth – An OECD Perspective Dimitris Diakosavvas Trade and Agriculture Directorate OECD Pre-congress symposium «The Need for Policy Coherence towards Sustainable Productivity Growth», 2017 EAAE Congress, Parma, 29 August 2017.
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Outline of presentation
Context Key challenges facing agriculture Role of policy in addressing these challenges Level and composition of agricultural support Key lessons – need for further reform
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What is OECD? In 56 years of existence, its member countries totalled 35, plus the European Union: Australia Austria Belgium Canada Chile Czech Rep. Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Korea Latvia Luxembourg Mexico Holland New Zealand Norway Poland Slovenia Portugal Slovakia Spain Sweden Switzerland Turkey UK USA … and formal accession talks are underway with Colombia, Costa Rica, Lithuania, and enhanced co-operation with Brazil, China, India, Indonesia and S. Africa
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Context
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Good prospects for agriculture…
Market conditions are broadly consistent with market fundamentals
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.. but agriculture is facing a multitude of challenges
Old issues that remain relevant Income support Food security Food safety Competitiveness Equity
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Agriculture is facing a multitude of challenges
Old issues that remain relevant Income support Food security Food safety Competitiveness Equity New and emerging challenges Sustainable use of natural resources Climate change Changing citizen demands Innovations – 4th industrial revolution
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Emerging challenges are global
Key question for policy is to enable the sector to respond to global challenges: provide enough food, feed, fibre and fuel for 9 billion people in 2050… …with greater pressure on land, water, energy and biodiversity resources - and the impact of climate change… …and the need to limit the harmful and enhance the beneficial environmental impacts and reduce waste in the food supply chain, while addressing social concerns.
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The policy challenge
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The policy challenge … Policies that mutually reinforce growth and green – Increasing productivity in a sustainable manner Investing in knowledge generation (R&D, innovation) Investing in knowledge creation and adoption – training, advisory and extension services Investment and trade Policies specifically aimed at greening growth Market-based instruments Agri-environmental payments, environmental taxes, etc. Non-market instruments Regulation, voluntary agreements, technical assistance But a lot of green is not priced..
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Progress with decoupling GHG emissions from production growth
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… but confusing evidence on productivity improvements
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Declining trends and wide variations of support to farmers across countries …
OECD = €199 mill (%)
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Important changes in the structure of support to producers
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Total Support Estimate, 2014-16
Beneficiaries Consumers = 1% Producers = 88% General Services = 11% Total Support Estimate (TSE) = €98 bill. Components of Total Support Estimates All transfers from taxpyrs and cons'rs, net receipts This can be done either of 2 ways PSE + Transfers from taxpyrs to cons'rs + GSSE OR, sum of Transfers from cons'rs and from taxpyrs to prod'rs Less any budget revenues (levies, fees) Remember: This is a way to start with the budget Divide it by IMPLEMENTATION mechanism; The CRITERIA to get pymt NOT by purpose or objective Economic content is in implementation -- not purpose What decision is required to get pymt? That decision is distorted by support Consumers = 20% Taxpayers = 80% Sources of financing
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Payments conditional on specific farm practices
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Potentially environmentally harmful support to farmers decreased in OECD area
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Agricultural knowledge generation
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Key lessons – Need for further reforms
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Countries generally agree on what is needed
2016 OECD meeting of Agriculture Ministers Numerous objectives shared across countries Countries also agree that more coherence is needed with other policies Traditional policies reached their limits Shift support from quantity to quality and the environment
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Adopting policies which are :
How could be achieved? Adopting policies which are : Coherent with economy-wide objectives and policies Transparent, with explicit objectives and intended beneficiaries Targeted to specific outcomes Tailored - proportionate to the desired outcome Flexible to reflecting diverse situations and priorities over time and space Consistent with multilateral rules and obligations Equitable within and across countries
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A positive reform agenda for agriculture
Reduce/eliminate wasteful, inefficient or inconsistent agricultural policy measures and move away from “entitlement” based instruments Make innovation priority: R for D rather than R&D Foster sustainable resource use Strengthen resilience through a 3-layer approach to risk management. Policies should not inhibit or “crowd-out” farmer- and market-based risk management; focus on catastrophic risks Define clearly the non-market goods and services sought when designing payments
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What is OECD doing? Monitoring and evaluating agricultural policies
Medium term prospects for agricultural policies and markets Innovation in food and agriculture Country reviews Risk management Improving sustainability in food and agriculture Resource efficiency in the food chain (waste, energy) Climate change and water Biodiversity and ecosystem services Network on agricultural TFP and environment Data, indicators and quantitative tools
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Thank you for listening!
Agriculture policy resources Policy notes Digital tools Evidence base Brochure Concise briefs on trade policy issues available online Data visualisation and other digital tools available stats.oecd.org All OECD trade research is published on the iLibrary Comprehensive overview of OECD work on agriculture policy
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