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The 31st OECD report on agricultural policies covers 51 countries, among them also a set of emerging economies. Recommendations regarding agricultural subsidies address only some of the aspects that have come under criticism.

Agriculture world-wide is facing major challenges. Productivity usually falls short of possible potentials, and many farms are in a fragile state owing to climate change. In a number of countries, however, agricultural policies are not sufficiently addressing these issues. Two thirds of the agricultural subsidies continue to distort the market, as the Organisation for Economic Co-operation and Development (OECD) states in its latest Agricultural Policy Monitoring and Evaluation report.

What is market-distorting?

According to OECD criteria, price supports and output-oriented payments are market-distorting measures. This also includes unlimited financing for inputs, which however has been reduced world-wide over the last 20 years. Payments not tied to certain types of production are significantly less market-distorting. These include money for land set-asides or animal welfare. What all countries find difficult to abandon are historic payment entitlements for certain crop cultures or premiums for livestock. These coupled payments account for four per cent of farmers’ income and constitute a 15 per cent share of direct payments.

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