Long Term Trends in Agricultural Policy Impacts

Abstract

The working paper series is designed to make available to a wide readership selected studies by OECD staff or by outside consultants and are generally available only in their original language, English or French.The present document has been declassified by the Working Party on Agricultural Policies and Markets of the OECD Committee for Agriculture.Comments on this series are welcome and should be sent to tad.contact@oecd.org. OECD FOOD, AGRICULTURE AND FISHERIES WORKING PAPERSare published on www.oecd.org/agricultureApplications for permission to reproduce or translate all or part of this material should be made to: OECD Publishing, rights@oecd.org or by fax 33 1 45 24 99 30. Abstract LONG TERM TRENDS IN AGRICULTURAL POLICY IMPACTSby Roger Martini Economist, OECD Agricultural policies have undergone reforms in most OECD countries, each choosing a different path to replace policies historically based on market price support with other forms of support deemed superior in achieving differing policy objectives. This report looks at the results of this reform in six OECD regions and concludes that while every region has seen progress, results have been uneven. The key to reform that delivers effective results is keeping the focus on reducing market price support. Reforms moving from one form of land-based payment to another offer relatively little scope for improving the impact of the overall policy set. Recent reductions in market price support are at risk of reversal if the current trend towards higher commodity prices does not continue, as much of recent progress reflects market developments and not underlying policy change.

Support to fisheries

“… Payments based on variable inputs  Payments based on output  Payments based on fixed input use  Payments based on fishers' income  Payments based on general services This rank ordering is derived from the work of , and has been confirmed in OECD (2001) and Martini (2011). The logic behind this ordering is based on the observation that the supply elasticity for the fishing firm can be thought of as a weighted average of the supply elasticities of the factors of production, with the weights being a function of the factor shares and the elasticity of substitution between factors.…”

“…In this section the consequences of the initial incidence of support are considered. This analysis is an adaptation of work by Floyd (1965) as further elaborated by Gardner (1979) and used in OECD (2001) and Martini (2011). The initial incidence refers to which market activity is directly affected by the support.…”

“…Even support that has no effect on marginal cost but that amounts to a large percentage of the value of landings will influence the long-term entry-exit choices of fishers, and thereby tend to promote overcapacity. OECD, 2001 andMartini (2011).…”

“…FTC transfer value as % of reported FSE, 2008 Note: Data for 2008 except as noted: 2007 for Australia and Japan; New Zealand fuel consumption estimate 2005; GFT estimate for Mexico and Poland from 2007.Source:Martini, R. (2011).…”

Evaluating the environmental impact of agricultural policies

“…PEM is a global comparative-static, partial equilibrium, net-trade model for key agricultural sectors. Its behavioural functions derive from cost minimisation under an explicit constant elasticity of substitution (CES) production function and regional input markets for intermediate and primary factors used in the production of these commodities (Martini, 2011;Britz, 2015). The market elasticity parameters in the model are intended to represent medium-term adjustments of approximately five years.…”