Wilfrid Legg OECD Trade and Agriculture Belgian Association of Agricultural Economics 30 th...

Wilfrid LeggOECD Trade and Agriculture

Belgian Association of Agricultural Economics 30th Anniversary, Brussels, 1 April2010

Future Challenges for Future Challenges for Agricultural EconomicsAgricultural Economics

OECD Trade & Agriculture 2

OECD and agricultural policy issues

Agriculture Ministerial meeting 2010

Policy priorities

Implications for agricultural economics

Some conclusions

PresentationPresentation

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OECD and agricultural policy issues

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The Organisation for Economic Cooperation and Development is an inter-governmental organisation financed by its 31 member countries with increasing outreach to other countries

Aim is to foster sustainable green growth and prosperity and act as a hub for globalisation

Addresses common policy issues through dialogue among countries, based on analysis and comparative statistics

The OECDThe OECD


Work on agriculture in the OECDWork on agriculture in the OECD

Economic analysis of agricultural policy issues

and advice to help governments design and

implement effective and efficient policies


Bridge between research and government Bridge between research and government

• OECD has increasingly forged links with academics and the research community to support policy analysis

• Researchers have been particularly helpful in developing or outlining relevant theories, concepts, methods and analytical frameworks, conducting literature reviews, and in preparing case studies

• They have also acted as reviewers of OECD studies

• A notable example of the contribution has been in the development of the Producer Support Estimate


OECD methodsOECD methods

• OECD Committee for Agriculture mandates work, details are scoped out by the Secretariat in conjunction with working parties, studies are prepared by the Secretariat – with input from ministries in OECD (and non-OECD countries) and academics – and are ultimately approved by the Committee

• The Secretariat participates in conferences and seminars with researchers, commissions consultancies and offers possibilities for experts to work with the Secretariat in Paris on short-term contracts


Agriculture Ministerial meeting 2010

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Ministerial meetings in Ministerial meetings in OECDOECD

• Meetings of OECD Agriculture Ministers have been rare in the OECD

• Origins of the agricultural policy reform and agricultural trade agendas in the OECD were mandated by the annual meeting of OECD Finance and Trade Ministers in 1982 and 1987

• Agriculture Ministerial meetings were held in 1992 and 1998 – the latter being a milestone event – and then in February 2010, in which key non-OECD countries also participated


Agriculture Ministerial February 2010Agriculture Ministerial February 2010

• Theme:

Food and Agricultural Policies for a Sustainable Future – responding to global challenges and opportunities

• Focus:

Food security

Green growth

Climate change


Policy priorities

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Agriculture Ministerial: policy goalsAgriculture Ministerial: policy goals

• Governments should ensure that:

Farmers can respond to demand

Markets can function

Agri-food sector can manage risk

Policies are coherent

Trade plays a market clearing role

Natural resources are well managed

Right signals can improve environmental performance

Supportive investment climate is in place

Innovation is fostered

Science-based food safety standards are implemented

Policies are targeted, monitored and evaluated


Agriculture Ministerial: guidance for OECDAgriculture Ministerial: guidance for OECD

• Ministers requested OECD work to:

Distinguish between farmer actions and government responses

Harness OECD expertise to explore food security policy options

Identify policy and market options for green growth

Analyse agriculture’s role in addressing climate change

Identify options to reflect social/environmental costs/benefits

Analyse market functioning, define risk management responses

Explore actions to improve productivity and reduce waste

Explore role of trade policy to contribute to food security

Address institutional and governance aspects of policy reform

Provide a platform for policy dialogue

Ensure Codes and Schemes and CRP ontribute to policy work

Ensure effective communication


Implications for agricultural economics

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Where can agricultural economics help (1)?Where can agricultural economics help (1)?

Focus in the following slides is on areas where agricultural economics can contribute to designing and implementing agricultural policies that can best meet objectives in cost-effective ways

Suggestions below are not comprehensive and do not necessarily reflect those of the OECD or its member countries

It would also be helpful to hear from Belgian agricultural economists as to where they think they can contribute to helping the development of policy



Agricultural policy: OECD has a long history in monitoring and evaluating agricultural policy reform, but gaps remain

Distributional and transaction cost implications of targeting policies to specific outcomes (policy targeting)

Costs and benefits of alternative policy delivery mechanisms (policy evaluation)

Institutional arrangements that can help or hinder agricultural policy reform (political economy)

Impacts of agricultural policy reform (decoupling, SFP etc) on land values, farm household welfare, risk management, and structural adjustment in farming



Agricultural trade: The core work in OECD has been to analyse the impacts of “traditional” domestic and trade policies on trade and welfare, but new policies and issues have arisen

Measuring the transfers associated with agriculture non-tariff barriers and constructing trade distortion indices

Trade, production and farm income impacts of alternative trade liberalisation scenarios – including bilateral agreements

Incorporating market failure into agriculture supply response models, especially in developing countries

Drivers and impediments to reaping comparative advantage

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Agri-food supply chain: There is increasing interest in the linkages between agriculture and the other actors in the agri-food chain and the role of policies

Farm-household data and models, in light of policies moving away from market support and towards farm households

Risk management strategies by farmers (to reduce, transfer, and cope with risk) and actors in the agri-food chain

Share of consumer food expenditure that is retained by farmers and why this varies across countries and commodities

Role of speculation in commodity and food price variability



•Agricultural sustainability: agriculture has an important role in contributing to sustainability and green growth but there are methodological and data challenges

Defining “low carbon” agriculture, measuring natural resource productivity, and constructing scenarios of alternative environmental and food production futures

Multi-disciplinary work integrating economic and biophysical models in view of natural resource (land, water) pressures

Design of information-revealing mechanisms (to determine the full cost of compliance with environmental etc regulations)

Measuring the demand for, cost of and alternative mechanisms to deliver public goods from agriculture


Environmental targets and reference levels

How are environmental reference levels and targets determined so as to distinguish between who should pay for environmental harm and

be paid for the provision of environmental public goods?



•Agriculture and rural development: agriculture is a small part of the rural economy but a large user of rural natural resources; however, there could be a bigger role for farming in rural areas to provide food, feed, fibre, fuel and leisure space in the future

• Developing methodologies and indicators to evaluate the cost-effectiveness of achieving rural development programme goals

• Scenarios for agriculture in rural areas to meet future demands from the agri-food sector, given demographic and technological changes and societal concerns

• Do rural areas need specific policies – or space-targeted economy-wide policies and market approaches to enhance their economic and social viability?


Some conclusions

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ConclusionsConclusions

• Agricultural economics – among the oldest and most robust areas of applied economics – will have a continuing role in contributing to the understanding of policy problems and solutions

• Increasingly the policy issues and solutions lie outside of agricultural policy as such and agricultural economists need to engage with other disciplines and understand linkages with for example energy and financial markets, and other policies

• A mixture of tools – not only modelling – are needed


Thank You!

www.oecd.org/agriculture Contact

[email protected]

OECD Trade and AgricultureOECD Trade and Agriculture

Wilfrid Legg OECD Trade and Agriculture Belgian Association of Agricultural Economics 30 th...

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