OECD chief calls for phase out of ‘distortive’ farming subsidies globally

Public spending must move away from distortive and environmentally harmful farming subsidies, according to the secretary general of the Organisation for Economic Co-operation and Development (OECD), Mathias Cormann.

Farming ministers from 48 OECD countries gathered in Paris on Thursday and Friday (3-4 November) to discuss global food security and sustainable food production in the context of spiralling food prices and climate shocks ahead of next week’s COP27, the annual UN climate change conference.

In his opening remarks, OECD secretary-general Cormann said that globally, governments provide more than $800 billion a year in subsidies and other support to the agricultural sector while only 13% of that support goes to investments in innovation.

“Instead, too much of this support is inefficient in transferring income to farmers inequitably by benefitting larger scale farmers more and too often environmentally harmful,” he said.

Cormann urged OECD member countries to “change this trend by phasing out distortive subsidies and redirecting public spending” towards more sustainable and resilient agriculture and food systems.

He also called to “keep the markets open and transparent,” which involves eliminating export restrictions.

Contacted by EURACTIV, Damien O’Connor, New Zealand’s agriculture minister and co-chair of the OECD agriculture ministerial meeting, said that he will “always advocate for reform of agricultural subsidies that contribute to inefficient production, wasteful emissions and distorted market prices.”

Though New Zealand doesn’t have a subsidy programme for farmers, he said “that countries are taking their own approach to this” and “are becoming increasingly aware that harmful agricultural subsidies are detrimental to the global environment.”

The European Union has one of the world’s largest farming subsidy programmes, with its €270 billion Common Agricultural Policy (CAP). The CAP has historically come under criticism during trade talks with third countries for being too protectionist.

In a recently published report, the OECD blasted the CAP for not delivering on green goals, despite the bloc’s agricultural spending for climate action being high.

The report compared agricultural policies of 54 countries, highlighting other states in which financial support is not effectively targeted towards climate action in the agricultural sector.

The CAP’s green architecture was reformed in 2021 in order to favour ‘greener’ farming practices through the so-called eco-schemes. However, according to July’s OECD report, voluntary incentive schemes such as eco-schemes are not enough, and the EU will need to price agricultural emissions.

The final declaration signed by OECD ministers on 4 November also calls on countries to assess “the effectiveness and efficiency of agricultural policies to encourage improved environmental outcomes, including by examining environmentally harmful and beneficial subsidies.”

For the first time, agriculture will feature as a key topic at the 27th session of the United Nations’ COP 27 which will take place from 6 to 18 November 2022 in Sharm El-Sheikh, Egypt, with an entire day (12 November) devoted to the subject.

“We need renewed efforts to ensure that agriculture policies fully align with our long-term climate objectives and the outcomes of COP27,” said the OECD secretary-general.

With food systems accounting for about a third of global emissions, he said an “ambitious and effective action on climate change” from the agriculture sector is critical.

[Edited by Gerardo Fortuna/Nathalie Weatherald]