OECD slams agro subsidies by industrialized nations

OECD slams agro subsidies by industrialized nations
By Kabanda Chulu in Kitwe
Wed 11 Aug. 2010, 14:20 CAT

THE latest report of the Organisation for Economic Cooperation and Development (OECD) has continued to slam rising subsidies for agriculture in industrialised countries thus distorting trade and destroying livelihoods of poor farmers in developing countries.

The continued increase in agriculture subsidies comes at a time when the European Union (EU) is simultaneously forcing developing countries in Africa, the Caribbean and Pacific to further open their markets through the ‘unfair’ trade deals called Economic Partnership Agreements (EPAs).

In a report titled ‘Agricultural Policies in OECD countries at a glance in 2010’ OECD stated that subsidies for agriculture in industrialised countries have increased from 21 per cent in 2008 to 22 percent in 2009 to record US $252.5 billion.

“The subsidies for farmers in OECD countries have been at the centre of a heated dispute for years, both at the level of the European Union and the United States and within the larger framework of the World Trade Organisation and its deadlocked Doha Development Round.

The EU spends about US $75 billion on subsidies for agriculture, even though the sector represents only about two per cent of the total gross domestic product of the union,” it stated.

“Subsidies for agriculture in industrialised countries grew in 2009, benefiting the largest companies and land owners, despite repeated and consistent evidence that such subsidies contribute to the destruction of the livelihoods of poor farmers in developing countries, especially in Africa, and that they distort international trade.”

It stated that the European Union's subsidies for farmer increased to 24 per cent from 22 percent and between 2007 and 2009, EU farmers received an average of 23 per cent of their gross receipts in form of direct financial support from the state.

The OECD represents the 30 most industrialised countries of the world, including the US and most members of the EU.

The report stated that EU subsidies for agriculture were a shame and cited the example of subsidies for milk, which form part of the EU agricultural policy.

“Due mostly to over-production, the European milk prices for farmers were in early 2009 extremely low, at less than 0.20 euro (US $0.26) per litre.

Instead of reducing production to stabilise prices, the EU reintroduced subsidies for milk in 2009 to support producers,” it stated.

“As a consequence, the EU is again exporting milk to the whole developing world, especially towards Africa, at ‘dumping' prices’ and by so doing, the EU is destroying the livelihoods of farmers in the poorest countries of the world while artificially maintaining a too high level of production.”