Evaluation of agricultural policy developments

Every year the OECD describes and evaluates agricultural developments in its Member countries and other partner countries.

With this report agricultural policy development in member states get described and evaluated annually. One focus is on a clear and distinct analysis on the level and composition of public support in favor of the agricultural sector using indicators like the Producer Support Estimate (PSE). The annual Report is aimed at governments, but also the media, researchers, non-governmental organisations and other interested parties.

The countries analysed, which now number more than 50, for the most part pursue similar goals in their agricultural policy, e.g.

  • providing reliable access to safe, healthy and nutritious food
  • enabling producers to improve their living standards by their activities in line with market requirements
  • contributing to rural community well-being, in particular by providing a range of ecosystem services
  • increasing the resilience of farm households in the face of risks.
     

However, countries attach different weights to these goals and approach them differently, and this is reflected in differing policy mixes. Moreover, the most recent agreements and negotiations as part of the 2030 Agenda (incl. SDGs), the COP21 and the WTO Ministerial Conference in Nairobi build an important international framework for the various agricultural sectorial policies.

In its annual Agricultural Policy Monitoring and Evaluation Report, the OECD also compares levels of support to agriculture. The report focuses on the clearest possible analysis of support to agriculture in the countries covered using different indicators. For example, the Producer Support Estimate (PSE) is used for uniform and comparable information on the level and structure of support to agriculture.

The annual Report is aimed at governments, but also the media, researchers, non-governmental organisations and other interested parties.

In general the OECD makes the following recommendations:

  • national policies and measures need to be coherent
  • policy measures must be transparent, targeted, tailored, flexible, consistent and equitable against the background of scarce government resources
  • make innovation a priority to achieve sustainable productivity growth
     

According to the OECD Report 2016, Switzerland, along with Iceland, Japan, Korea and Norway, has one of the highest levels of farm support of the compared countries (measured as percentage PSE). Close to 60% of the gross receipts of Swiss farms come from government transfers either from consumers or from tax payers (OECD average 17%). However, there is a clear difference in the structure of farm support between the countries. In Switzerland around 50% of government transfers are considered to be most distorting support.

The agricultural policy reforms, which have been carried out in Switzerland since the 1990s, have considerably reduced market distortions. Price supporting measures have been replaced by direct payments which are independent of production and increasingly more target specific. However, the level of farm support in Switzerland remains high in comparison with other countries.

The OECD’s Producer Support Estimate (PSE) is a widely recognised and frequently used indicator for the international comparison of agricultural policies. There is a lack of alternative indicators and base data. Nevertheless, the following points should be remembered when interpreting this indicator:

  • The PSE is used to assess farm support in total (in CHF) and relative terms (as % of gross farm receipts). However, the PSE tells us nothing about the costs environment or spending power in the different countries.Therefore, nothing can be said about the extent to which agricultural income (revenue-costs) is supported by government intervention and how much remaining francs or dollars are worth for the farmer and his family in the relevant country.

  • The annual increases and decreases in calculated border protection are often not due to changes to the border protection regime (e.g. raising or lowering of customs duty). External factors (such as price development on international agricultural markets and/or price and currency fluctuations) have a much greater effect on the level of border protection in the short and medium term. So the calculated border protection for Switzerland since 2013 has risen substantially due mainly to the strength of the Swiss franc following decisions by the National Bank.

High spending power, willingness of consumers to pay (particularly for Swiss products) and high structural costs (e.g. wages) result in a higher price environment in Switzerland than in other countries and not just in the food sector. These structurally-based price differences are therefore only partly attributable to border protection, but in the PSE they influence the level of calculated border protection.

Further Information

Last modification 20.03.2017

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