Tag: PSE

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OECD reports EU farm transfers at lowest level ever

The OECD produced the 2012 edition of its Agricultural Policy Monitoring and Evaluation report during the week. This is the publication that keeps tabs on the transfers to and from farmers and consumers as a result of government policy interventions. It also usually contains a chapter on a special theme, which this year is devoted to fostering innovation and productivity growth in agriculture.

General findings

The results are summarised in a series of indicators, of which the most well-known is the Producer Support Estimate (PSE) usually expressed in percentage terms. It measures the percentage of farm receipts in a country that is due to public policies.

Another useful indicator is the Nominal Protection Coefficient (NPC) which measures the ratio between the average price received by producers (at farm gate), including payments per tonne of current output, and the border price (measured at farm gate).

The report finds that in 2011 support to producers across the OECD area amounted to €182 billion as measured by the Producer Support Estimate (PSE).… Read the rest

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The European Parliament report on the measurement of farm support

A variety of estimates of the level of farm support circulate. Many of them rely on creative accounting. For example, during the recent farm bill debate in the US Senate on C-Span television, a Senator claimed that the EU subsidized its farmers seventeen times more than the US, quoting as “evidence” that farm subsidies accounted for 45% of the EU budget, while by contrast the US farm spending was less than 1% of the US federal budget. On the opposite, the Momagri (a French arable crops producers sponsored think tank) published estimates that US farm support was three times higher than the EU one. Defining meaningful indicators is important since, on both sides of the Atlantic, the fact that the other party supports its farmers is used as an excuse to maintain, increase or “re-couple” support. In the EU Parliament, for example, more and more MEPs seem to be arguing for maintaining support and even make it more countercyclical payments mostly because “the US does it”.… Read the rest

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The changing landscape of agricultural support

Discussions on reducing agricultural support in the Uruguay Round and, especially, the WTO Doha Round have been framed increasingly in North-South terms. Developing countries have sought reductions in OECD country agricultural support while developed countries have sought increased access to their manufacturing and services markets in exchange.

However, the landscape of agricultural support is changing. While levels of agricultural support and protection have been falling in OECD countries (helped by high world market prices), agricultural support in a number of (but not all) emerging economies has been increasing (despite the increase in world market prices).

These changes in the global distribution of agricultural support have two main consequences. First, the pattern of global agricultural trade is increasingly influenced by agricultural policy interventions in non-OECD countries, even if OECD countries still have a predominant weight in global agricultural production and trade.

For example, world cotton prices which are a concern for the West African C-4 countries in the WTO are now more distorted by subsidies in China and Turkey than by subsidies in the US and the EU.… Read the rest