OECD
World
Forum
onon
Key
Indicators
OECD
World
Forum
Key
Indicators
Statistics,
Statistics,Knowledge
Knowledgeand
andPolicy
Policy
Palermo,
10-13
November
2004
Palermo,
10-13
November
2004
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
1
Indicators to Evaluate Agricultural
Policies in OECD Countries
Wilfrid Legg
Head of Policies and Environment Division,
OECD Agriculture Directorate
wilfrid.legg@oecd.org
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
2
Main Messages
OECD indicators of agricultural support are:
- internationally recognized as the best measure of
transfers associated with agricultural policies
- key inputs in monitoring and evaluating policies
- regularly refined to reflect changes in agricultural policies
- easy to understand and produced at relatively low cost
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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What is a good policy indicator?
- Analytically sound and able to reflect policy change
- Able to aid policy evaluation
- Able to compare change over time and countries
- Transparent, easy to understand and communicate
- Able to up-date regularly at low cost
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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Why monitor and evaluate agricultural
policies in OECD countries?
- Severe trade problems in world agricultural markets in the early
1980s were due to trade and domestic policies – but no way then
to compare policies across countries and time
- Main aim of work in the OECD has been to facilitate and underpin
multilateral trade negotiations in the GATT (now WTO)
- Governments and civil society also want to know the cost of
agricultural policies, who receives support, and the impact on
production, farm incomes, trade and the environment
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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What is the OECD contribution?
- Developing a consistent and economically sound methodology to
measure agricultural support – and agreed among OECD countries
- Applying that methodology since the early 1980s to produce annual
estimates of farm support to commodities and countries, in monetary terms
and as a share of farm receipts
- Showing changes in support arising from different types of policy
measures and analysing the consequences
- Using the support data with other indicators and models to analyse
impacts of policy changes
- Working closely with countries in collecting data, calculating the
indicators, discussing and communicating results and analysis
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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Which are the key support indicators?
- Producer Support Estimate measures transfers (as % of farm receipts) to
farmers from agricultural policy measures that * maintain domestic prices above world prices
* provide payments to farmers or lower their costs
- Consumer Support Estimate measures transfers (as % of food spent at farm
gate) from consumers from agricultural policy measures
- Total Support Estimate (TSE): measures total transfers (as % of GDP) to the
agricultural sector from agricultural policy measures
AGRICULTURAL SUPPORT IS MUCH MORE THAN ONLY BUDGETARY
PAYMENTS TO FARMERS!
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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How much have policies cost?
- In 1986-88 support to farmers was $ 241 billion (37% of farm receipts)
of which 77% was transferred from consumers and 23% from taxpayers
- In 2001-03 support to farmers was $ 257 billion (32% of farm receipts)
of which 62% was transferred from consumers and 38% from taxpayers
- By commodity, support to rice, sugar and milk is over 50%, while for
poultry, pigs, eggs and wool it is below 20%
- By country, support varies from 2% in New Zealand to 73% in
Switzerland, with the US at 20%, the EU at 35% and Japan at 58%
- In 1986-88 over 90% of support to farmers was very closely linked to
production. In 2001-03 that share had fallen to around 75%
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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Who gets the support?
- Most support does not end up in raising farm incomes
- Large farmers benefit most
- Wide variation depending on commodity produced
- Poorest consumers pay highest share of their incomes
on support
Additional data used: FARM INCOMES + POLICY
EVALUATION MODEL + STRUCTURES
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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Does support slow down farm
adjustment?
- Long term decline in world commodity prices, technological change and
smaller share of consumer incomes spent on food
- But many farm sectors insulated from world market signals, although rate
of agricultural protection has halved in last 15 years
- Support keeps more resources in agriculture than would otherwise be the
case and locks in technology and structures
Additional data used: COMMODITY PRICES + TRADE BARRIERS + FARM
STRUCTURES
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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How does support affect the
environment?
- Agriculture uses over 40% of land and water in OECD countries so
potentially has big impacts on ecosystems and natural resources
- Production-linked support encourages more use of chemicals, intensive
farm practices, and farming on eco-sensitive land
- Agriculture also preserves some landscapes, helps flood control and
absorbs carbon, but is not the only activity doing these things
- Increasingly, farm support payments are eco-conditional, but can conflict
with production-linked support
Additional data used: AGRI-ENVIRONMENTAL INDICATORS + POLICIES
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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What does support do to trade?
- Trade policies such as import restrictions and export subsidies
insulate domestic markets from world price signals
- World prices of farm commodities are lower than would otherwise
be the case
- Difficult for low cost competitors to enter protected markets, but
when protection is lower, non-tariff barriers and agri-food industry
restrictions become more significant
Additional data used: TRADE POLICIES + MODELS
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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How are indicators being refined?
- Increasing
country and commodity coverage over time
- Better breakdown of more complex forms of support
- Greater integration of support into impact modelling work
- Developing indicators to show spread of support
- Explaining changes in the level of support
- More attention to communicating results
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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An example to show progress in policy reform
- The % PSE shows support as a share of farm receipts
- Changes in the % PSE over time is one indicator of showing progress in
policy reform
- But we can also show changes in farm receipts that result from changes
in support
- There are sometimes big differences between changes in the % PSE and
in resulting changes in farm receipts, as the graph shows…….
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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Progress in reducing support 1986-88 to 2001-03
Percentage change
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
Switzerland
Japan
%PSE
European Union
Transfers from
policies (USD)
Korea
Iceland
OECD
United States
Canada
Australia
New Zealand
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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And finally, are the indicators of
support cost-effective?
- relatively high start-up costs but low maintenance costs
- raw data mainly from government sources and no modelling
involved in calculating indicators
- benefits of sharing information across countries and can
enter high up on the learning curve when measuring support
for non-OECD countries
- very timely: indicators produced a few months from the end
of the year in question and valued by governments and CSOs
OECD World Forum “Statistics, Knowledge and Policy”, Palermo, 10-13 November 2004
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