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Subsidy support for Australian farmers among lowest in world

Beef Central, 28/09/2011

Farmers in Australia and New Zealand still receive the lowest level of subsidies of any country within the 34 members of the Organisation for Economic Co-operation and Development (OECD).

The OECD’s “Agricultural Policy Monitoring and Evaluation 2011” report shows that average Government support for agriculture across the OECD member countries fell to a record low of 18pc of total farm receipts in 2010.

The fall in support as a percentage of overal farm revenue was attributed to high global commodity prices, however, the reduction confirms a long standing trend toward falling farm support, according to the OECD.

The report points out that most government support is still given in ways that distort production and trade, while doing relatively little to improve productivity and competitiveness, ensure sustainable resource use or help farmers cope with risk.

“With tighter government budgets and farmers getting top prices for their crops, governments should begin to shift from payments that further support farm incomes and move to policies that have long-term benefits for the global food economy,” said OECD Director for Trade and Agriculture Ken Ash. “The time is ripe for reforming farm support.”

OECD government support to farmers was valued at $227 billion in 2010.

Levels of  support varied enormously between OECD member countries.

New Zealand had the lowest level of support to farm receipts at just 1pc of farm income, followed by Australia (3pc), and Chile (4pc).

The United States (9pc), Israel and Mexico (12pc), and Canada (16pc) were also below the OECD average.

The European Union has reduced its level of support to 22pc of farm income, but remains above the OECD average.

At the other end of the scale, support to farmers remains relatively high in Korea (47pc), Iceland (48pc), Japan (49pc), Switzerland (56pc) and Norway (60pc).

For the first time this year’s report also includes emerging economies that are key players in world agricultural markets.

The OECD report said Brazil, South Africa and Ukraine generally supported agriculture at levels well below the OECD average, while support in China was approaching the OECD average. In Russia, farm support now exceeds the OECD average.

The OECD continues to urge international Governments to focus support policies that improve farm productivity, sustainability and long-term competitiveness, rather than policies that distort markets. Farm policy should also offer greater support to research, innovation and education, it says.

“With volatility expected to remain high and growing concerns about climate change, farmers will need comprehensive risk management systems that best address their specific needs.

“Governments should support the development of market-based tools while steering clear of actions that interfere with farmers’ management of normal business risk.

“While high farm prices create opportunities for farmers, the OECD recognises that high and volatile food prices have particularly severe impacts on the poorest people on the planet, who spend a large proportion of their available income on food.”

Australian Farm Institute chief executive officer Mick Keogh said that when agriculture sector support including subsidies to farmers, subsidies to consumers and government R&D contributions was measured in terms of government outlays to the sector as a proportion of national GDP, Australia had the lowest level. On that measure its outlays to agriculture equated to just 0.12pc of GDP. This compares with an OECD average of 0.85pc.

“The data actually overstates current support levels in Australia, because it is reported as an average of the 2008 – 2010 years – during the earlier years of this period the drought subsidies being paid to farmers were higher than in the current year,” Mr Keogh writes on the AFI website.

“For the 2010 year, subsidies and support for Australian farmers were equivalent to just 2.23% of farmers income.

“Next time someone telly you Australian farmers are just whingers who are always on the Government teat, tell them they're dreaming!”

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