Farm policy example in developing nations
Farm policy example in developing nations
BakingBusiness.com, December 01, 2009
by Morton Sosland

It isn’t often that advice meant to guide food and agricultural policy-making in developing countries is deemed applicable to the United States. Yet, a report issued recently by the Organization for Economic Cooperation and Development (O.E.C.D.) meant to provide advice to emerging countries about their domestic agricultural support programs reflects just the sort of good sense that is all too frequently missing from farm legislation in America.

The central point made by the O.E.C.D., in a study prompted by concerns over the way some countries reacted to the global food crisis in the first half of 2008 and more recently to the global economic travail, is that agricultural policies should be focused on long-term sustainability rather than short-term fixes. Considering the obstacles that the Obama administration is facing in securing congressional acceptance of relatively modest changes in direct program payments, including tighter maximums, suggestions meant for countries like Brazil, China, India, Russia, South Africa and the Ukraine ought to be heeded by the congressional leadership that has called the new president’s ideas for farm program changes "more than dead on arrival."

The O.E.C.D. argues that the most common actions taken by emerging countries in response to the earlier food crisis, such as imposing export barriers and taxes "do not help those most in need of food security." It adds,

"They harm domestic farmers and limit incentives to produce." In addition, limits on exports do damage to relationships with import-dependent trading partners. The O.E.C.D. then makes a point about maintaining liberalized trade, a view that is as applicable to the United States as to any of the emerging nations, by warning that "increasing protectionism and reinforcing moves toward self-sufficiency increase the volatility of agricultural commodity prices on world markets and reduce trade."

Another focus of the O.E.C.D. study is something that Secretary of Agriculture Tom Vilsack has been saying to Congress with little effect so far. He has pointed out how cutting back on direct payments to the largest farmers would save money that could be better used to operate urgently needed programs like expanded food safety and increased research.

In listing program needs of emerging nations, the O.E.C.D. makes the case for diverting government supports away from commodity-specific and market-disturbing measures to what it calls "public goods" like education, research, infrastructure improvements and marketing. If these actions are undertaken, the organization comments, additional funds become available for investing in programs aimed at developing higher-yielding crop, improving the long-term competitiveness of agriculture and helping assure higher and more sustainable incomes. Diversion is strongly recommended even though undesirable subsidies in emerging nations account for less than half the 26 per cent of farm receipts from government payments in the 30 advanced countries that make up the O.E.C.D.

The goals of what the organization’s report recommends will resonate positively among industries like grain-based foods. Watching vast sums of money going to supports that have minimal long-term benefits prompts questions about balancing income supports against the "public goods" the O.E.C.D. wants. This is particularly important in acknowledging the organization’s warning that the global recession threatens to increase food insecurity among poor nations. Other consequences from the recession include reduced credit availability for farmers as well as reduced foreign direct investment, which is crucial to rural development. It is in response to these possibilities that the report warns of initiatives that would be counter-productive to the goal of attaining a global food system efficiently matching supply and demand.

Even while warning about allowing agricultural programs to attract a disproportionate amount of subsidy, the O.E.C.D. praises what it perceives as increasing levels of government support in emerging nations for investing in "public goods." Considering the hesitancy in the U.S. Congress toward pursuing the same path, it would be extremely ironic if these developing countries would show America the way to have agricultural programs that at last truly enhance the farm and food economy.