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on January 1, 2014

OECD: Europe has unique opportunity to reform farm support

According to a new Organization for Economic Cooperation and Development report, Evaluation of Agricultural Policy Reforms in the European Union, high commodity prices have made European farmers much less dependent on income support, offering cash-strapped governments a unique opportunity to reform the European Union’s Common Agricultural Policy.

The report shows that European support to farm incomes has decreased substantially over the past 20 years. Farmers earned 22% of total annual receipts from government support over the 2008-10 period, down from 39% annually over the 1986-88 period. The decline is due to many factors, including high commodity prices, which automatically push down income support, as well as 25 years of CAP reform outlined in the report.

Despite the decline, CAP expenditures nonetheless comprised close to 45% of the total EU budget in 2010, or about EUR 53 billion. Overall farm support reached EUR 77 billion in 2010, as measured by the OECD’s Producer Support Estimate, which includes direct payments to farmers as well as the impacts of government policies on prices.

The OECD report details the major CAP reforms over the past 25 years, describes the main characteristics and structure of the current CAP and recommends paths for future reform.
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