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Supply Chain

Food Supply Success In Pandemic Belies Wasteful Farm Policies, OECD Says

Emergency measures by governments helped keep food supply functioning during the COVID-19 pandemic, but agricultural policies continue to pour out subsidies inefficiently without encouraging sustainable production, the OECD has said.

As coronavirus spread last year, countries took various steps, including the creation of so-called green lanes for cross-border food transport and increased food aid for households, the Organisation for Economic Co-operation and Development said.

"As a result, policies were generally successful in maintaining the overall functioning of food supply chains, albeit within an overall structure of agricultural support programmes that showed little change," the OECD said in an annual survey of farming policy.

Farm Policies

Reviewing 54 advanced and emerging economies, the Paris-based organisation estimated that a total of $720 billion per year was transferred to agriculture over the 2018-2020 period.

Three-quarters of this support was in aid for farmers, most of which was through what the OECD sees as market-distorting instruments like price controls or production subsidies.

Only about 14% of total support for the farm sector went towards structural areas like research and development, the OECD said.

Support rewarding environmental services was relatively marginal, with just $1.5 billion out of $268 billion per year in budgetary payments to producers clearly tied to such services, it estimated.

"Overall, most current support policies are not serving the wider needs of food systems," the OECD said.

Environmental Concerns

The OECD study echoed criticisms by the European Court of Auditors in a report on Monday that the European Union's huge farm subsidy programme is failing to rein in greenhouse gas emissions.

The OECD recognised that crop technology has allowed a reduction in the intensity of resource use, with global food production having grown much faster than consumption of land or inputs like fertiliser.

But many subsidies could be redirected towards innovation or environmental services to curb emissions and other negative environmental effects of agriculture, it added.

News by Reuters, edited by ESM. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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