Agricultural Policies in Canada OECD s Perspective
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1 Agricultural Policies in Canada OECD s Perspective Shingo Kimura OECD Trade and Agriculture Directorate IICA Agricultural Policy Seminar 7 November 2014
2 Annual OECD Monitoring and Evaluation Measurement of support to agriculture Consistent over time and across countries 47 countries; 80% of global agricultural value added, including Canada, USA, Mexico, Chile and Brazil. Colombia (underway) and Costa Rica (expected) 2
3 Key concepts in Monitoring and Evaluation : Policy transfers by economic actors Agricultural Support = Producer Support Estimate (PSE)+General Service Support Estimate (GSSE) PSE adds two types of transfers to producers: Budgetary transfers to producers Transfers from consumers to producers through boarder measure and domestic price support Total Support Estimate (TSE)=PSE + GSSE + Consumer subsidies 3
4 % of PSE in gross farm revenue % of TSE in GDP Producer Support Estimate (PSE) and Total Support Estimate (TSE) in Potentially most distorting support:: Other payments: Support based on commodity output Payments based on variable input use without input constraints Other payments based on input use Payments based on current A/An/R/I, production required Payments based on non-current A/An/R/I, production required Payments based on non-current A/An/R/I, production not required Payments based on non-commodity criteria Miscellaneous payments
5 % of PSE in gross farm receipt Producer Support Estimate (PSE) in Canada Mexico United States Brazil Chile
6 Income level and agricultural support in America Source: Anderson and Nelgen (2012) 6
7 Progress in OECD policy reform Support gradually decoupled from production, Narrowing gap between domestic and world commodity prices Reforms increase farmers production flexibility Overall - more market orientation Shift of policy focus from income support to productivity, innovation, sustainability and risk management 7
8 Trends in policy reform in Canada Canada followed the trends in OECD policy reform Abolishment of commodity-based policies (with the exception of supply managed commodities) and shift to a whole-farm approach Deregulation in commodity markets Policy focus on business risk management: crop insurance, income stabilization payment and disaster assistance Uniqueness of individual margin based programme 8
9 OECD recommendations to Canada Simply the Business Risk Management Programmes - Enhance more proactive role of farmers in risk management and focus government support more to catastrophic risks - Avoid overlapping of the programmes covering the same risks - Introduce more competition in commodity insurance markets Address long-term challenges in enhancing innovation and productivity - Further improve incentives for private investment - Improve capacities and services for innovation - Strengthen direct incentive to innovation Reform in supply management sectors by phasing out quota 9
10 Recent policy reform direction in Canada Growing Forwards 2 programme ( ) More proactive role of farmers in risk management - limiting the role of government in managing normal business risk (e.g., reduction of margin coverage from 85% to 70%) - Removal of monopoly of Canadian Wheat Board More policy emphasis on innovation, competitiveness and sustainability - Support to industry-government collaboration in R&D, commercialization, and the national assurance system on standard - OECD innovation policy review is underway to assess the enabling environment for innovation and private investment 10
11 For more information Visit our website: Contact: Follow us on Trade and Agriculture Directorate 11
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