Consumer Support Estimate Research Articles

Does Agricultural Support Help with Climate Change Mitigation Efforts?

Total support to the agricultural sector arising from public policies reached a record USD 817 billion per year in 2019–2021 for the 54 countries1 covered in the OECD Agricultural Policy Monitoring and Evaluation 2022 report (Figure 1). However, only a small share of this support was directed at longer-term efforts to combat climate change and other food system challenges. Breakdown of agricultural support, total of 54 countries, 2019–2021 Note: The potentially most distorting forms of support exclude those payments for variable inputs (such as fertiliser) that require constraints to their use (USD 1.7 billion per year). Source: OECD (2022), Producer and Consumer Support Estimates, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en. Of the total support, USD 500 billion per year was paid by taxpayers from public budgets, with the remaining USD 317 billion per year being transferred by consumers through higher prices (market price support). In a small number of countries, policies also suppress prices for some or all commodities, generating a transfer (an implicit tax) of USD 117 billion away from agricultural producers. In total, USD 391 billion per year was transferred to producers in the potentially most distorting forms of support (market price support and payments based on output or the unconstrained use of variable inputs). Along with forestry and other land use, agricultre represents around 22 per cent of anthropogenic GHG emissions; mainly methane and nitrous oxide from livestock, rice cultivation and fertiliser use, and carbon dioxide emissions through land use change, such as deforestation and carbon losses in agricultural soils. Lower GHG emissions can result from increasing productivity and efficiency in input use, adopting production techniques that reduce emissions, increasing soil carbon sequestration, afforestation and restoration of degraded lands, reducing food losses in the field and on the farm, and providing information and incentives to consumers to choose food with lower emissions intensities and reduce food waste. Current policies include subsidies for the use of variable inputs such as fertilisers, feed and fuel, amounting to USD 60 billion per year in 2019–2021 and directly contributing to GHG emissions. Moreover, support tied to specific commodities still accounts for a large share of gross farm receipts in some countries (Figure 2). Support for livestock products, which tend to have high GHG emissions intensities, amounted to USD 111 billion per year across the 54 countries, and exceeded 10 per cent of gross farm receipts in 5 countries. Breakdown of transfers to specific commodities, 2019–2021 Source: OECD (2022), Producer and Consumer Support Estimates, OECD Agriculture statistics (database), https://doi.org/10.1787/agrpcse-data-en. Despite their importance for achieving food security, climate and other food systems goals, investments in these areas have been falling relative to the size of the sector for most of the past two decades. Overall, support to general services accounted for 13 per cent of total support for the sector in 2019–2021, down from 16 per cent in 2000–2002 (Figure 3). There is therefore considerable scope for reforms that support both food systems objectives and ensure that agriculture contributes to ambitious emissions reduction targets. Public investments in general services, 2019–2021 (percentage of total support to agriculture) Note: ‘Other’ includes the marketing and promotion, cost of public stockholding, and miscellaneous categories of the General Services Support Estimate (GSSE). Source: OECD (2022), “Producer and Consumer Support Estimates”, OECD Agriculture statistics (database), https://doi.org/10.1787/agr-pcse-data-en. The opinions expressed and arguments employed herein are those of the authors and do not necessarily reflect the official views of the OECD or of its Member countries.

DESIGNING THE STRUCTURAL CONCEPT OF ESTIMATING THE INTERNATIONAL POSITION OF UKRAINE IN THE WORLD CONTEXT OF STATE FINANCIAL AND ECONOMIC SUPPORT TO THE AGRICULTURAL SECTOR

The article studies the problems of state financial and economic support to the agricultural sector in the world context and substantiates the structural concept of assessing the international position of Ukraine. It is confirmed that there is a connection between the annual values of indicators of total state support for the agricultural sector, support for producers and support for consumers and the international rating position of Ukraine. In the world context the ratings of countries are calculated on indicators of state financial and economic support to the agricultural sector: total estimate of support for the agricultural sector (TSE); producer support estimate (PSE) consumer support estimate (CSE); general service support estimate (GSSE). The international position of Ukraine in terms of ratings is determined, which is radically lower compared to the overall indicator of OECD member states and EU member states. It was confirmed that the dynamics of the ratings of Ukraine in the world context is insignificant, the variability is determined at the level of the 22nd – 24th place in terms of indicators of total estimate of support for the agricultural sector, estimate of support for producers and estimate of consumer support. The dynamics of the decrease in the gap of annual indicators of support for producers and consumers of the agricultural sector in Ukraine since 2018 has been determined. The best position of Ukraine in the international rating is confirmed by the indicator of estimate of general support for services. The analysis was the basis for designing the structural concept of estimating the international position of Ukraine in terms of state support trends for the financial and economic mechanism of state regulation of the development of the agricultural sector, the advantages of which are: determining the position of Ukraine in the world context in terms of state support trends for the agricultural sector; establishment of the level of connection of annual values of indicators of state financial and economic support to the agricultural sector; forming a comparative characteristic of the position of Ukraine to the overall indicator of the EU member states. The calculations confirmed the need to review the directions of state support for the mechanisms of state regulation of sustainable development of the agricultural sector for adaptation to European practices. It was established that within the framework of the implementation of state policy in terms of the development of support measures in the EU countries, seven categories of measures were introduced, among them: sector-wide and institutional measures; information and coordination measures; trade and commodity flow measures; labor measures; support for agriculture and food; general support; food aid and consumer support. It is determined that in the EU countries, the impact of economic cuts on food spending was mitigated thanks to government support, which partially compensated the loss of income, and the reduction in total income led to the maximum direction of food spending. The implementation of this approach confirmed the hypothesis that government support ensured the sustainability of food systems.

Review and analysis of agricultural support policies in OECD countries (1995-2015)

Supporting the agricultural sector is a topic that has been discussed for many years in the world and has been the governments’ focus more than other economic sectors for many reasons, such as the nature of the agricultural sector, higher risk than other sectors, food security and nutrition and so on. Accordingly, the support of agricultural sector by different countries has varied depending on its importance in different countries of the world. The present study reviews and analyzes important policy changes, assessments, and recommendations in the context of the research in order to evaluate agricultural support policies in the member countries of the Organization for Economic Co-operation and Development (OECD), including Turkey, Korea and Japan. In this study, the latest agricultural policies in OECD countries are examined through measuring the parameters of agricultural support policies and using library studies. According to the studies, the OECD uses indicators such as Producer Support Estimate (PSE), Market Price Support (MPS), Producer Nominal Protection Coefficient (Producer NPC), Producer Nominal Assistance Coefficient (NACP), Consumer Support Estimate (CSE), General Services Support Estimate (GSSE), Total Support Estimate (TSE), and other related indicators to measure and classify the agricultural support based on a comprehensive system.

Agricultural Support in OECD-Reported Countries from 2000 to 2019

Agricultural support is one of the main tools used by governments to achieve their domestic goals, especially since the food shortages during and immediately after World War II. However, specific agricultural support programs can affect agricultural production in various ways, and support programs can alter the allocation of natural resources domestically and abroad. In this study, we measured agricultural support in OECD-reported countries during the period 2000-2019 using Spearman´s correlation coefficient, time trend analysis and clustering procedures. Data from Organization for Economic Co-operation and Development (OECD) from 2000 to 2019 were employed, specifically the Producer Support Estimate (PSE) and Consumer Support Estimate (CSE). We compared the results of two agglomerative clustering methods and identified groups of similar countries on the basis of their consumer support and producer support estimates behavior during the period studied. Some countries, such as Switzerland, South Korea, Turkey and Canada, displayed specific support behavior, while other groups of countries shared similarities such as China, Indonesia and the Philippines; the European Union, Japan and Norway; and Brazil, South Africa and Chile. Policies implications are discussed and further research is recommended, including analyses of top-down geographical unities, crop-specific programs, and the effects of the COVID-19 pandemic on agricultural support worldwide, as more data becomes available.

Оценка эффективности государственной поддержки сельского хозяйства: методика ОЭСР и предложения по ее совершенствованию

Существенный вклад в развитие аграрного сектора России может внести государственная поддержка сельскохозяйственных предприятий. На развитие данного сектора экономики государством были направлены субсидии в размере 164 млрд руб. Представлен сравнительный анализ государственной поддержки сельскохозяйственного сектора различных стран мира. В качестве метода исследования использована методика, предложенная Организацией экономического сотрудничества и развития (ОЭСР). При анализе предлагаемых показателей по России выявлено, что значительная доля расходов на поддержку аграрного сектора приходится на потребителей за счет высокого уровня цен на сельскохозяйственные продукты. При этом качественные сельскохозяйственные товары становятся недоступными для слоев населения, имеющих доходы ниже среднего уровня. Для решения этой проблемы со стороны государства необходимы новые меры, например, разработка и внедрение программы продовольственных талонов для населения с доходами ниже прожиточного минимума, субсидирование детского питания в образовательных учреждениях и т.д. На основе выводов по результатам анализа разработаны рекомендации по совершенствованию данной методики. Для более объективного анализа целесообразно дополнить ее новыми показателями, такими как совокупная оценка поддержки сельского хозяйства страны (TSE), оценки поддержки производителей (PSE), потребителей сельскохозяйственного сырья и продовольствия (CSE) и общих услуг (GSSE) на душу населения. Значения и динамика показателей, предложенных автором, способствуют более точной оценке состояния аграрного сектора и позволяют более детально провести сравнительный анализ с другими странами, дополняя показатели TSE, PSE, CSE, GSSE, предложенные ОЭСР.

Comparative Analysis of Support to Agriculture in the QUAD Countries in 1986-2014

The purpose of this paper is a comparative analysis of support provided to agriculture sector by the QUAD countries in 1986-2014. The authors examined the changes in levels and structures of this support and tried to assess it from the point of view of its impact on the QUAD economies and markets. In the analysis conducted there were used especially the OECD data and indexes measuring state support to agriculture including: Total Support Estimate, Producer Support Estimate, General Services Support Estimate and Consumer Support Estimate. In the last three decades in all the examined economies, there has been a reduction in agricultural support in relation to GDP, although no distinct change has occurred in terms of the amount of aid in absolute terms (in the US its value even increased almost twice). As regards the changes in structure of support, the most favorable tendencies took place in the European Union where the market price support (MPS), i.e. the most distorting aid to the functioning of the market mechanism, was significantly reduced. One can also positively assess the support structure in the United States where about half of the agricultural budget is earmarked to consumers. Canada has very good economic outcomes as regard the agriculture sector even though it allocates the least amount of financial resources to support agriculture in relation to GDP among all the QUAD economies. However, despite a large part of this support is in the form of general services (GSSE), the country is characterized by an unfavorable trend of increasing expenditure on price support. Throughout the period considered the most harmful support policy from the point of view of market competition was led by Japan though it has affected to a lesser extent the functioning of international agri-food markets due to the lower importance of Japanese agricultural production and exports in the world economy in comparison to the EU and the US.

How does general economy and agriculture sector performance influence farm producer support in the OECD countries?

This paper assesses the effects of the performance of the OECD national economies and agricultural sectors on the farm producer support for the years 1986 to 2009. The study is complementary to the large amount of microeconomic research that highlights the importance of support to agricultural industry. Data for the analysis are taken from the OECD Producer and Consumer Support Estimates database and the World Bank World Development Indicators 2010 database. The Producer Support Estimate – PSE (expressed in absolute value, in percent of the total farm revenues and per 1 hectare of agricultural land) was taken as the dependent variable, whereas the selected indicators describing the performance of the economies (e.g. GDP per capita, unemployment, fiscal balance, government debt, government expense and tax revenue, exchange rate, agriculture share in GDP and employment, agricultural raw materials exports and imports) were the independent variables. Utilizing these variables, a simple linear regression analysis was conducted and resulted in many significant associations. In the period analyzed, there was a wide gap between the most and least farm supporting countries in terms of the annual average percentage PSE and the PSE per hectare. Substantial differences between the countries in the variability of the PSE over the time occurred. The empirical results obtained from the regression models reveal, among other, that when the countries were becoming richer, the percentage PSE was generally decreasing. Mixed results were obtained for the relationship between the percentage PSE and unemployment, as in some countries it was negative, while in the others positive. Expansionary fiscal policy exerted opposite effects on the PSE in different countries. Labour productivity in agriculture was inversely correlated with the percentage PSE.  

Novel indicators of the trade and welfare effects of agricultural distortions in OECD countries

Agricultural markets in OECD countries have long been highly distorted by government policies. Traditional weighted average aggregates of the price distortions involved, such as producer and consumer support estimates (PSEs and CSEs), can be poor indicators of the trade restrictiveness and economic welfare losses associated with them, especially if a country’s support estimates vary a lot across the product range. Certainly estimates of trade and welfare effects of price supports can be obtained from sectoral or economywide models using price elasticity estimates, but the results can be contentious if there is no consensus on what model specification and elasticity parameters to use. This paper shows that, if there is a willingness to accept simple assumptions about elasticities, it is possible to generate indicators of the welfare and trade restrictiveness of agricultural policies using no more than the price and quantity data needed to generate PSEs and CSEs. These new indexes thus provide an attractive supplement to the current policy monitoring regime developed by the OECD Secretariat.

New Indicators of How Much Agricultural Policies Restrict Global Trade

Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of agricultural and food price distortions such as producer and consumer support estimates (PSEs and CSEs) can be poor guides to the policies’ trade effects. Two recent studies provide much better indicators of trade (and welfare)-reducing effects of farm price and trade policies, but they provide somewhat differing numbers. This article explains why those estimates differ and how they might be improved for use in ongoing annual monitoring of the trade restrictiveness of agricultural policies in both high-income and developing countries.

International Dimensions of Obesity and Overweight Related Problems: An Economics Perspective

Overweight and obesity rates in Organization for Economic Co-operation and Development (OECD) countries are rising significantly. An empirical assessment of the different factors that contribute to the growth of overweight and obese population over the last decade in OECD countries was performed. Using macro-level data from various sources, it was observed that factors such as female labor force anticipation, higher levels of per capita income, and caloric intakes significantly influence overweight problems in OECD countries. Results indicate that urbanization or the transition from rural to urban societies have a positive effect on general overweight rates. Furthermore, results show that the application of agricultural policies contributing to higher consumer support estimate (CSE) levels have negative effects on overweight rates and obesity, while expenditures on education have a negative effect on obesity.