This chapter presents developments in agriculture policy based on information and support estimates gathered for 54 countries covered in OECD’s Agricultural Policy Monitoring and Evaluation 2024. It starts with an overview of recent economic and market developments that contextualise the implementation of agricultural policies. It then provides an analysis of developments in the level and structure of support to agriculture. A special section describes sustainable productivity growth and how it can be encouraged, along with examples of activities and policies currently in place that support innovation for sustainable productivity growth.
Agricultural Policy Monitoring and Evaluation 2024
Innovation for Sustainable Productivity Growth
Agricultural Policy Monitoring and Evaluation
Abstract
Agricultural support policies generated on test average USD 842 billion per year in transfers towards agriculture in 2021‑23 across the 54 countries covered in this report. Transfers in 2023 declined slightly relative to the two preceding years but remain significantly above those in the pre-pandemic era. The global landscape of support has shifted towards some large emerging economies, led by the People’s Republic of China (hereafter “China”) and India.
Market price support (MPS) is still the dominant form of support to producers. MPS generated USD 334 billion per year or more than half of the positive support to producers in 2021-23. At the same time, several countries use policies which caused negative market price support (lowering domestic prices) which cost producers USD 191 billion per year during the same period.
Despite international commitments to reform, the share of MPS and other most distorting forms of support in overall positive producer support has been relatively stable, declining only 5 percentage points over the last 20 years to 65% in 2021-23. Reforming or reorienting support towards general services, including innovation, can support sustainable productivity growth.
However, net producer support overall across all 54 countries has declined as a share of gross farm receipts (%PSE) over the past 20 years, from 18% in 2000-02 to 9% in 2021-23. MPS has fallen from 11.6% of gross farm receipts at the start of the century to 6.9% today. Producer support in OECD countries fell from 29% of gross farm receipts in the early 2000s to 14% in 2021-23. Similar trends can be seen for most of the 11 emerging economies in the report, where producer support has declined or become more negative. China is the only country that increased its producer support relative to gross farm receipts since the early 2000s.
Policy continues to be responsive to shocks including Russia’s1 war of aggression against Ukraine, evolving conflicts in the Middle East affecting trade on the Suez Canal, drought affecting the Panama Canal, and extreme weather events. The resulting trade disruptions have sharpened focus on food security as a stated policy objective.
Sustainable productivity growth will need to increase if global food security objectives are to be met whilst reducing the environmental footprint of the agricultural sector.
In OECD countries, agricultural TFP grew by 1.4% annually between 1991-2000, but only by 0.85% in 2011-21. Yet, spending on innovation, a key element of TFP, is only a small share of total support and is not growing substantially. General support to the sector, public investments that underpin its health and performance, amounted to USD 106 billion in 2021-23 making up only 12.6% of total support towards the sector (positive TSE) down from 16% two decades earlier.
Investment in innovation by itself is not enough to find solutions that reconcile both productivity and environmental sustainability outcomes, and the right policy settings are needed to ensure that environmental objectives are achieved. The share of payments subject to specific requirements for sustainable farming practices or for environmental public goods is increasing, but remains relatively low, at about 5% of producer support. Increasing the share of producer support that promotes innovation and environmental sustainability will make it more effective at delivering public goods and sustainable productivity growth.
1. This report does not contain a country chapter on the Russian Federation. However, aggregate data for the 11 emerging economies and for all 54 countries covered in this report continue to include those for Russia.
Agriculture policy in 2023 and 2024 was conducted in the context of a global economy characterised by value chain disruptions and high energy prices. The global economy has narrowly avoided recession, but the recovery in GDP growth both globally and in the OECD area remains fragile. Food price inflation, an especially volatile component of the economy, has fallen substantially from 2022 highs, but food prices remain elevated and this has put continued pressure on consumers’ food budgets.
This chapter begins with an overview of some of the important drivers of agricultural policies and a description of developments of support to agriculture based on the latest data available. This is followed by a special section that looks at the evidence on sustainable productivity growth (SPG) and how governments may take action to promote it. This includes examples of some actions currently being undertaken by governments to support innovation for SPG.
Inflation and slow growth remained features of the global economy in 2023 and 2024
Conditions in agricultural markets are strongly influenced by macro-economic factors such as economic growth (measured by gross domestic product, GDP), which drives demand for agricultural and food products, as well as by prices for crude oil, natural gas, and other energy sources that underpin many production inputs in agriculture, notably fuel, chemicals and fertiliser. Energy prices also affect the demand for cereals, sugar crops, and oilseeds through the market for biofuels produced from these feedstocks.
Headline inflation fell rapidly in 2023 in most economies, helped by restrictive monetary policies, lower energy prices, and the continued easing of supply chain pressures. Food price inflation also decreased sharply in most countries, as good harvests for key crops such as wheat and corn resulted in prices falling rapidly from the highs reached after the start of Russia’s war of aggression against Ukraine. Average inflation in the median advanced economy fell from 9.9% in the last quarter of 2022 to 3% in the first quarter of 2024 (OECD, 2024[1]).
GDP growth remained moderate due to tighter financial conditions, weak trade growth, and lower business and consumer confidence. This is expected to continue. Across countries, there are clear signs that strong near-term momentum will continue in India, of relative weakness in Europe, and of mild near-term growth in most other major economies. Global growth, which rose by 3.1% in 2023, is projected to remain at 3.1% in 2024. Business surveys, however, point to improving activity in both manufacturing and services, helped by strong momentum in India and signs of stronger than anticipated outcomes in China and most major advanced economies (OECD, 2024[1]).
Strong growth in the labour force and higher labour participation rates in 2023 improved supply in labour markets. On the demand side, employment growth slowed, the number of vacancies declined, and the total hours worked eased in several countries. Unemployment rates generally remained close to historical lows. Overall, survey evidence suggests that firms had fewer pressing labour shortages, and that supply and demand of labour was more balanced (OECD, 2024[1]).
Commodity and input prices remain high
The effects of Russia’s war of aggression against Ukraine on food prices and trade have been substantial, but markets are adapting and increases in food prices and input costs have moderated on the global market, especially in more developed economies. Ukraine has increased its exports via the Black Sea corridor and trade volumes have approached prewar levels. However, several regions dependent on agricultural products from Ukraine continue to face both reduced imports to meet their food needs and rising food import bills.1
Shipping has been unusually disrupted in 2023, affecting food and input prices. Traffic through the Panama Canal has been restricted since mid-2023 by low water levels, while ships have avoided the Suez Canal since late 2023 due to evolving conflicts in the Middle East. These restrictions have forced many ships to take alternative routes, adding time and expenses to each trip. Many ships are taking the route around the Cape of Good Hope on the southern tip of Africa, which adds about 30% more time and 30% more fuel. For example, the average cost of transporting a standard container (measured as a 20-foot equivalent unit, TEU) increased from about USD 700 in November 2023 to over USD 1 900 in January 2024. The situation in the Suez Canal is expected to push near-term shipping prices even higher, with projections indicating that shipping rates could surpass USD 3 000 per TEU.2
The 2022 fertiliser price spike exposed the vulnerability of import-dependent countries to trade shocks. In 2024, fertiliser prices have so far been significantly lower than in 2022 and 2023, but a small number of large producing countries continue to dominate global exports. This, and slow progress of green alternatives means importers remain vulnerable to supply shocks. The Russian Federation (hereafter “Russia”) has largely benefited from the market disruptions despite sanctions imposed on it. Russia increased exports of potash, urea, and diammonium phosphate (as well as commodities such as wheat).3
Farmers are concerned about future prospects
Farmer protests are not a new phenomenon, but their discontent reached new heights in 2023 and 2024, with protests spreading in several countries. The reasons behind the protests are complex, and include rising production costs, foreign competition, falling incomes, environmental constraints, and burdensome administrative procedures.
In a number of countries bordering Ukraine, protests followed the fall in cereal prices due to increased imports from Ukraine when the war disrupted alternative trade routes. In other countries, plans to reduce tax rebates on agricultural diesel, growing environmental obligations under the Green Deal of the European Union, and concerns about free trade agreements provoked farmers’ discontent.4 Protests in India in 2024 called for a minimum purchase price for crops, echoing those emitted in 2021 against laws to liberalise the sector.
Progress on agriculture negotiations at the World Trade Organization remains elusive
The thirteenth Ministerial Conference (MC13) of the World Trade Organization (WTO), held in February 2024, ended with no outcomes of agriculture reform under the WTO Agreement on Agriculture. A draft text covering all negotiating issues such as domestic support to agriculture, including public stockholding for food security purposes, market access, and export prohibitions or restrictions was discussed, but wide divergences amongst Members prevented consensus. The disagreements notably centred around developing countries’ public stockholding programmes. In 2013, WTO Members had agreed to an interim “peace clause” under which such support could not be challenged under WTO dispute settlement if certain conditions were met. Agreement on a permanent solution has so far not been possible as no consensus was reached at MC13 on reducing trade-distorting domestic support to agriculture, nor on exempting least-developed countries from export prohibitions or restrictions on foodstuffs.
The harvest in the 2023/24 season was generally good at the global level, though some regions suffered from bad weather
Although El Niño, which began in mid-2023, provoked a series of global temperature records that made 2023 one of the warmest years on record, it did not have much effect on global agricultural output or commodity prices. Its effects at a regional level have been, however, large in some cases. In July 2024, FAO forecasted an increase of 1.2% in world cereal production in 2023/24, led by global rice production which was expected to increase by 2.9 million tonnes. Global wheat production in 2024 was expected to increase by 0.5% from 2023. Agriculture production should be higher in North America and Asia, but lower in Europe based on lower plantings and in North Africa due to low rainfall. Severe drought in southern Africa has sharply reduced grain harvests and has led to water shortages and power cuts. This is one factor for the disappointing growth rate of low-income countries as a group in 2023 (OECD, 2024[1]). Total value of agricultural production for the 54 countries covered in this report was USD 4.7 trillion in 2023, only slightly down from 2022 and a consequence of lower average prices, not lower production quantities.
This section provides an overview on developments in policy support in agriculture, building on the OECD estimates of agricultural policy support that are comparable across countries and time. These show the diversity of support measures implemented across different countries and focus on different dimensions of these policies. Complete definitions are shown in Annex 1.A.
The Total Support Estimate (TSE) is the broadest of the OECD support indicators. It combines three distinct elements: a) transfers to or from agricultural producers individually; b) policy expenditures for the primary agricultural sector collectively; and c) budgetary support to consumers of agricultural commodities (Figure 1.2).
The Producer Support Estimate (PSE) measures all transfers to agricultural producers individually. Two major types of transfers can be distinguished: Market Price Support (MPS) represents transfers from taxpayers and consumers to agricultural producers through domestic prices that are higher than their international reference prices due to domestic and trade policies. MPS can also be negative, representing transfers from producers to consumers through domestic prices that are lower than references prices. Budgetary support is financed by taxpayers. The PSE indicator is expressed as a net transfer, including both positive and negative elements.
The General Services Support Estimate (GSSE) measures policy expenditures that benefit the primary agricultural sector as a whole, rather than going directly to individual producers. Different types of expenditures are represented in specific categories of the GSSE.
Similar to the PSE, the Consumer Support Estimate (CSE) reports support to consumers of agricultural commodities, distinguishes between market transfers that mirror the MPS, and budgetary support. To avoid double-counting, only the budgetary part of the CSE is included in the TSE.
Note: *Market Price Support (MPS) is net of producer levies and excess feed cost.
Source: Annex 1.A.
Total support to agriculture remains around record highs, but declined relative to its 2021 peak
The 54 countries covered in this report collectively provided USD 842 billion in support to the sector per year on average over 2021-23 (Figure 1.3). Most frequently this was in the form of market price support (MPS) policies that increase the domestic price of agricultural commodities. In addition, some countries (mainly India) implicitly tax their farmers (negative MPS) by lowering the price of agricultural commodities to benefit consumers. This tax amounted to USD 192 billion per year on average. In net terms, the Total Support Estimate (TSE) amounted to USD 650 billion per year in 2021‑23.5
Of the USD 842 billion in positive support, 75% (USD 629 billion) goes to producers individually, 12.5% goes to consumers of agricultural products (CSE) and 12.5% goes to general services that benefit the sector overall (GSSE). The net producer support (PSE), which includes negative MPS, amounts to USD 437 billion per year.
The PSE is made up of many different categories, some of which are potentially more distorting of production and trade than others (Box 1.1). The potentially most distorting forms of support comprised 65% of the positive producer support (USD 409 billion) on average over 2021-23 while less distorting forms made up 35% (USD 219 billion). These shares have been relatively stable since 2000; most distorting forms of support were 70% of the positive PSE in 2000-02.
Support has been elevated in the post-COVID era and the drivers behind this have only partially abated. But total support in nominal terms has declined in the last two years and support as a share of value of production continues to moderate. Total net support was 0.72% of GDP overall, but higher in emerging economies (about 1%), reflecting the generally larger role of agriculture in those economies.
The OECD has been using quantitative models to estimate the relative effects of different support policies for more than two decades (OECD, 2001[2]; Martini, 2011[3]; Valin, Henderson and Lankoski, 2023[4]). These analyses showed that MPS, support based on output payments and on the unconstrained use of variable inputs potentially have the most distorting effect on production and trade.
OECD work has shown that these measures also have the potential to harm the environment (Henderson and Lankoski, 2019[5]), though the effects of these policies on the environment is not as clear cut as for production and trade. Environmental impacts from agricultural policy depend on several factors. Individual responses to economic incentives created by agricultural policies vary, producing variations in environmental impacts. Variation also occurs due to location-specific physical factors, including landscape characteristics, as well as the cumulative effects of decisions across actors and across time (DeBoe, 2020[6]). Reforming these policies can improve the policy setting for sustainable productivity growth and, in the case of budgetary support, can provide additional resources for investment in targeted and beneficial measures (Valin, Henderson and Lankoski, 2023[4]).
The PSE is composed of MPS and budgetary support. Budgetary support is delivered in many different forms and allocated to different categories according to the PSE classification system. These budgetary categories identify the following distinctions in the way policies are implemented:
Payments based on current output of a specific agricultural commodity.
Payments based on-farm use of inputs. These either reduce the cost of purchased inputs like fertiliser or chemicals, fixed capital like farm buildings and equipment, or on-farm services that reduce the cost of technical, accounting, commercial, sanitary and phytosanitary assistance and training provided to individual farmers.
Payments based on current area, animals, revenue or income (A/An/R/I) that require production.
Payments based on non-current (i.e. historical or fixed) A/An/R/I, with current production of any commodity required.
Payments based on non-current A/An/R/I, with current production of any commodity not required but optional.
Payments based either on the long-term retirement of factors of production from commodity production, for the use of farm resources to produce specific non-commodity outputs of goods and services, or transfers provided equally to all farmers, such as a flat rate or lump sum payment.
Payments for which there is a lack of information to allocate them among the appropriate categories have their own miscellaneous category.
More information on the PSE classification system and the indicators used in this chapter can be found in Annex 1A.
The global landscape of support has shifted towards large emerging economies
Four economies – China, Japan, the European Union, and the United States – account for roughly 70% of all positive producer support over the past 20 years. However, the relative shares among these economies have changed dramatically over this time (Figure 1.4). In 2000-02, the European Union6 accounted for the largest share with 30% of all positive producer support, followed by Japan (17%), the United States (17%) and China (7%). In 2021-23, China represented about 45% of producer support, while the European Union (15%), the United States (7%) and Japan (4%) collectively provided about 26% of producer support. India’s already large share of implicit taxation among countries has grown from 61% of all negative support in 2000-02 to 75% in 2021-23.
While support in nominal amounts has been increasing over time, this has been outpaced by growth in gross farm receipts (GFR). As a result, the share of support as a proportion of GFR (the percentage PSE, %PSE) among OECD countries has been in long-term decline, although the pace of this decline has slowed since the early 2010s (Figure 1.5). In the emerging economies in this report, growth in GFR has been even stronger, but so has growth in nominal support such that the change in %PSE on average in these countries has been flat to slightly rising.
The %PSE in the OECD averaged 14% over 2021-23, compared to 18% in 2010-12 and 28% in 2000-02. The average %PSE in emerging economies averaged 6.5% in 2021-23, compared to 3.8% in 2000-02. However, these figures for average support to producers include the effects of negative MPS. Excluding this, the %PSE among emerging economies was 12.5% in 2021-23, close to but still below the OECD average.
MPS is the largest category of support in both OECD and emerging economies. However, OECD countries tend to make more use of budgetary support based on land while emerging economies make more use of input support as well as negative MPS. In OECD countries, MPS has declined as a share of total support since 2000. Positive MPS has been increasing in emerging economies, mostly in China, though their use of budgetary support has become less dominated by input support (considered one of the most distorting forms of support) over time.
In 2021-23, USD 411 billion per year, or two-thirds of the USD 630 billion in positive support to producers across the 54 countries covered in this report, was in forms considered to be the potentially most distorting to production and trade (9% of gross farm receipts). Across the OECD, such support amounted to USD 103 billion, while for the 11 emerging economies such transfers to producers totalled to USD 308 billion per year. Policies reducing domestic prices (benefitting consumers) additionally gave rise to USD 179 billion in implicit taxation in 2021-23 and these also have a distorting effect.
Consumers face higher food prices on average in part due to government policies
Consumer support includes support to both final consumers of agricultural products as well as industry consumers who transform agricultural commodities into processed products (first-stage buyers). Between 2021 and 2023 policy support increased the cost of agricultural commodities to consumers by 3.2% of gross consumer expenditures measured at farm gate prices (%CSE) (Figure 1.6). This net transfer from consumers to producers comes mainly from MPS policies that raise domestic prices, such as when governments set minimum prices or use tariffs. Still, budgetary consumer support rose dramatically following the outbreak of the COVID-19 pandemic. Before the pandemic, governments provided USD 65 billion in budgetary support to consumers, but this support averaged USD 107 billion between 2021 and 2023, due to increases in both OECD and emerging economies. In the OECD, the United States is the largest provider of food assistance to low-income consumers (accounting for 98.6% of OECD budgetary transfers to consumers).
Many emerging economies seek to find a balance between producers or consumers. Several of them use price policies that benefit consumers (negative MPS). The emerging economies are a diverse grouping, some of whom offer mainly positive MPS (China) and others mainly negative MPS (India and Argentina) and others make almost no use of MPS at all (Brazil). Positive MPS in the covered emerging economies countries (transfers from consumers) was USD 254 billion and negative MPS (transfers to consumers) was USD 191 billion on average over 2021-23. Some countries aim to keep consumer prices within a certain range, using budgetary transfers, preferential distribution of food or other interventions. For example, India has an important programme for public distribution of food grains.
In OECD countries, the %CSE was ‑18.3% in the early 2000s but only ‑1.9% in 2021-23, a substantial reduction in the effect of policy on consumer prices. Conversely, consumers in emerging economies have seen the %CSE move from near zero 20 years ago to average ‑3.7% in 2021-23. This largely reflects increasing market price support starting around 2012 (when MPS in China approximately doubled).
Support to general services is focused on improving infrastructure
Countries provided USD 106 billion in support for general services to the agricultural sector (GSSE) on average over 2021-23. This is about 2.2% of the value of production of the sector, a decline from 4.7% in 2000-02. In OECD countries, GSSE equalled 3.3% of the value of production, down one percentage point from 2000-02 and in emerging economies it was 1.9%, down by 1.8 percentage points (Figure 1.7).
General services support arises from policies that are aimed to benefit the broader agricultural sector and are not directed at producers or consumers individually. Investments in general services can help the agricultural sector to become more productive, sustainable and resilient. For example, infrastructure development can make irrigation more accessible, or rail or port storage which makes transport and marketing of products easier and reduces wastage. It includes inspection services to ensure food quality and safety or the efficient control and handling of pests and diseases, investments in knowledge and innovation and institutional investments that support farm organisations or help farmers sell their products at home and abroad.
Infrastructure is the largest component of the GSSE, though this share is decreasing in the OECD (was 38% in 2021-23) and increasing in EEs (55% in 2021-23). Public stockholding is important in EE countries (21%), but little used in the OECD area since the mid-2000s (1.1%).7 OECD countries dedicate a larger share of GSSE spending to marketing and promotion (about 13%) while emerging economies spend only about 1.4% of their general support in this area. Spending on agricultural knowledge and innovation systems (AKIS) was USD 25 billion, 32% of the OECD GSSE and increasing but only 15% in the emerging economies, where this spending peaked at 26% of the GSSE in 2013 and has been declining as a share of the GSSE since then.
Negative MPS moderated in 2023 while positive MPS remained nearly unchanged
Preliminary estimates indicate that net market price support increased in 2023. Positive MPS increased by an estimated USD 2 billion (that is, nearly unchanged) and negative MPS became USD 72 billion less negative (Figure 1.8). Market price support moves in response to changes world prices if supported domestic prices do not change to match (Box 1.2). In 2023, the change in negative MPS comes mainly from India, whose policies are in part designed to insulate domestic prices from fluctuations in world prices, and so its MPS varies with world prices. Overall, the gap between domestic prices and world prices has narrowed over the past 20 years. On average over all countries effective prices received by farmers were 4% higher than world prices in 2021-23, down 10 percentage points from the 14% higher prices in 2000‑02.
Market price support (MPS) estimates the benefit or loss farmers receive when there is a difference between domestic prices and world prices. This price gap is calculated by measuring the difference between the actual domestic market price and price farmers would have received were there no price-distorting policies in place (OECD, 2016[7]).
The price gap for a specific commodity measures the difference between two prices: the average domestic price and a reference price calculated at the same level in the value chain (generally at the farm gate). This reference price corresponds to the country’s border price, i.e. the import price (for net-imported commodities) or the export price (for net-exported commodities). The reference price can be observed directly, estimated based on prices in similar or neighbouring countries or in rare cases using tariff data.
If the price gap is such that the domestic price is twice the reference price, the MPS as a share of commodity gross receipts should be 50% and producers receive double the revenue they would have otherwise (assuming there were no other forms of support offered). If domestic prices are five times border prices, the MPS as a share of commodity gross receipts would be 80%. For negative MPS, if the domestic price is half the world price (such as would result from a 50% tax), MPS as a share of commodity gross receipts would be -100%. Market developments (such as exchange rate movements affecting world prices expressed in local currencies) may influence the price gap, so changes in MPS do not always mean that a policy has changed.
The price gap is calculated only if policies exist that could cause such a gap, such as border measures that restrict or promote imports or exports, and government purchases, sales and intervention prices in the domestic market. If countries do not implement such policies, the price gap is assumed to be zero. The price gap for individual commodities is adjusted for differences in product qualities, processing and transportation margins, to compare like with like.
MPS is not a measure of public expenditures but an estimation of implicit or explicit transfers. MPS estimates published by the OECD therefore often differ from, and should not be confused with, those published by other organisations, including by the World Trade Organization, which may use very different concepts to calculate their indicators, despite similar names.
Source: OECD (2020[8]).
Measures providing positive MPS to producers provided USD 334 billion per year on average between 2021-23 across all covered economies (6.9% of annual gross farm receipts). Negative MPS caused by policies which reduce domestic prices was worth USD 191 billion or 3.9% of gross farm receipts over that time. Import tariffs, tariff rate quotas and minimum support prices are the most frequently applied policies which give rise to positive MPS, whereas export restrictions, quotas, bans or export taxes are most frequent for negative MPS.
Only a quarter of support is provided subject to specific requirements
Payments made to producers are often subject to conditionality that sets out obligations that farmers must meet to be eligible. These conditions involve actions that may be “mandatory” or “voluntary”. The former include requirements that relate to a generally applicable regulation, while the latter go beyond general regulations and are adopted by farmers in exchange for receiving the payment. Within the “voluntary” input constraint label, a further distinction is introduced to identify the character of constraint, i.e. whether it concerns (i) environmental practices, (ii) animal welfare, or (iii) other practices (Box 1.3). Benefiting from market price support cannot be made conditional on such constraints as beneficiaries cannot be excluded from higher prices. Budgetary payments however can be, and often are, subject to additional requirements.
In 2021-23, 25% of support to all countries covered in this report was delivered subject to constraints, with the majority of these being mandatory input constraints (20.1% of support). Voluntary environmental constraints apply to 4.7% of all transfers to producers, and other constraints accounting for less than 1% (Figure 1.9). Constraints are almost always applied to support that is based on non-commodity criteria, which is to be expected given the nature of this form of support. Nearly half of support based on A/An/R/I have some conditions attached. Payments based on input use are less often subject to input constraints (about 12%).
Mandatory constraints give farmers extra incentives to be in compliance with applicable laws
In the United States, the Livestock Forage Disaster Program (LFP) provides compensation to eligible livestock producers who have suffered grazing losses on native or improved pastureland due to a qualifying drought. As part of the requirements for eligibility, participants must have been in compliance with the applicable provisions of federal regulations pertaining to highly erodible land conservation and wetland conservation. As these regulations are generally applicable to relevant producers, this programme is classified as having mandatory input constraints.
Voluntary environmental constraints encourage additional actions to benefit the environment
Eco-schemes are the big new building block of the European Union Common Agricultural Policy 2023‑27 to encourage the adoption of specific farming practices with additional environmental benefits. Eco-schemes, as part of Pillar 1, are fully financed by the EU budget and the related payments are granted per hectare or per livestock unit in two forms: either as compensation for additional costs incurred or income foregone, similar to the agri-environmental support schemes of Pillar 2, or as fixed top-up payments in addition to decoupled direct payments. Each Member State sets up individual eco-schemes for their farmers based on the framework given in the EU Regulation 2021/2115. Farmers who opt-in to these schemes must follow the specified requirements, so these programmes are classified as having voluntary environmental constraints.
Certain commodities are singled out for support
Policies are often designed to affect specific commodities. For example, a tariff put on imports of wheat results in market price support which advantages domestic producers of wheat to the exclusion of producers of other commodities. By their construction, policies providing MPS and payments for outputs are commodity specific, while other budgetary payments may or may not be targeted to a specific commodity. For example, payments based on inputs or other production factors often stipulate terms that make them commodity specific such as when a fertiliser subsidy is granted only for production of maize, or a payment that is made per head of livestock. The total value of such payments taken together with MPS are reported for each commodity as single-commodity transfers (SCT).
SCTs are highest for sugar, maize and rice where they each represented over 15% of the gross receipts for the respective commodity in 2021-23 (Figure 1.10). However, there is significant variation in the level of commodity support among the covered countries. For sugar and maize, almost all SCT support is positive, indicating that most countries’ objectives for these policies centre on the producers of these commodities. Rice is more mixed. While the preponderance of support benefits producers (positive SCT for rice is 18% of GFR), there is significant support for consumers also observed in the negative MPS, which is equal to about 6% of GFR.
For some commodities, there are clear difference in policy objectives in different countries. Net SCT for wheat, eggs, sunflower and soybeans are all near zero, but with substantial amounts of positive and negative MPS. In 2021-23, positive and negative MPS for wheat combined amounted to 15% of GFR. For sunflower it was 9%, eggs 8%, and soybeans 5%. Looked at in this way, the commodities that receive the most overall policy attention are (in order), rice, milk, sugar, maize, wheat and poultry. Some countries act to raise the prices of these commodities, others lower them.
Commodity-specific support can influence production choices by changing the relative returns of commodities or groups of commodities. For example, a payment per bale of cotton produced can lead to more area being planted to cotton instead of other alternatives. In this way, support that is targeted to a few specific commodities can be more distorting of production than the same level of support that is distributed evenly across commodities or that is not commodity specific. To the extent the commodities targeted by SCTs are more intensive users of natural resources or generate higher pollution than those not benefitting from this support, commodity-specific support can also increase environmental pressures. Vice versa, support to specific products that have a lower impact on the environment may have a positive impact on sustainability. Pearl millet is an example of highly nutritious and climate-resilient crop whose support could help combine enhanced food security and reduced use of natural resources.
Productivity growth has been a major driver behind the substantial increase in agricultural production in the past decades, contributing to feed the growing world population and to a reduction of GHG emissions intensity (Mrówczyńska-Kamińska et al., 2021[9]). However, productivity growth has slowed or stalled in many places. For many countries, accelerating the pace of innovation is seen as a potent tool to restart the engine of productivity growth.
However, productivity growth alone does not guarantee improvements in the environmental or social performance of the sector. The concept of “sustainable productivity growth” (SPG), increasingly at the forefront of global policy dialogues, takes this into account and reflects the objective to produce more with less by using innovative technologies and practices that increase productivity while reducing demands on the environment.
Sustainable productivity growth will be key to overcome the triple challenge of providing adequate, affordable, safe and nutritious food for a growing global population; providing opportunities for livelihoods all along the food value chain; and doing so while increasing the environmental sustainability of the sector (OECD, 2022[10]). Governments have made substantial effort to develop supporting frameworks to direct research and development (R&D) towards SPG and deploy its results on farms. This includes using support provided to producers to encourage a more innovative perspective to the production and marketing of agricultural products, while avoiding support that may slow SPG. However, only 3% of support is allocated to innovation, as measured by the GSSE. There is substantial scope for action in this regard.
Investment in innovation alone may not be enough to find solutions that reconcile both productivity and environmental sustainability and other outcomes. Such investments may need to be accompanied by other policies driving farmers to meet environmental objectives. Part of the SPG challenge will be to clearly identify desired outcomes and develop the capacity to measure progress towards improved sustainability.
Defining and measuring sustainable agricultural productivity growth
Measuring productivity growth in agriculture is challenging. Total factor productivity (TFP) is the most comprehensive standard measure of agricultural productivity and aims to include most of the marketed output and inputs of the sector. However, TFP does not directly include relevant environmental and social outcomes. Thus, measuring SPG must go beyond productivity to incorporate important environmental and social impacts of agricultural production.
The OECD Productivity, Sustainability and Resilience Framework (OECD, 2020[11]) starts from the basis that sustainable agricultural productivity growth refers to productivity growth compatible with the preservation of natural capital in the short and long run. The Framework identifies innovation, structural change and natural resource use and climate change as the main drivers of productivity, sustainability and resilience in food and agriculture. Sustainable productivity growth is also understood more broadly as agricultural productivity growth that “advances social, environmental, and economic development objectives to meet the food and nutrition needs of current and future generations”.8 This concept of sustainable agricultural productivity has multiple dimensions with different sensitivities and different approaches to measure in different countries.
Encouraging SPG has been a priority for OECD countries for some time. In 2016, OECD Agricultural Ministers endorsed the Declaration on Better Policies to Achieve a Productive, Sustainable and Resilient Global Food System in which they agreed to “make innovation a priority in order to achieve sustainable productivity growth” (OECD, 2016[12]). In 2022, OECD Agriculture Ministers and high representatives of 42 OECD member countries and emerging economies as well as of the European Union adopted the Declaration on Transformative Solutions for Sustainable Agriculture and Food Systems in which they committed to “take action to achieve sustainable productivity growth consistent with SDG 2.4” (OECD, 2022[10]). With the OECD Network on Agricultural Total Factor Productivity and the Environment, the OECD has been working to compare approaches, methods and datasets to measure TFP over the past years, including ways forward to measure environmentally sustainable agricultural productivity (Box 1.4).
The Network on Agricultural Total Factor Productivity and the Environment (TFPN) is an OECD expert group sharing experiences and best practices for cross-country agricultural total factor productivity comparisons and for the measurement of sustainable productivity growth in agriculture. The ambition of the network is to find ways to jointly measure environmental sustainability and agricultural productivity into developing appropriate and scientifically sound indexes that measure countries’ agricultural sector performance. The TFPN organises annual meetings of experts to share knowledge on the topic since 2015 with participants that include researchers from the academy, and country experts and delegates.
As part of the TFPN activities, a relevant dedicated conference on “Sustainable Agricultural Productivity to Address Food Systems Challenges: Measurement, Data, Drivers and Policies” will take place on 28 October 2024, followed by the OECD Global Forum on Agriculture addressing the theme “Steering Policies towards Sustainable Agricultural Productivity” on 29 October 2024.
Measuring and tracking trends in agricultural productivity is a complex undertaking that covers many inputs and outputs in a production system that varies depending on weather conditions. However, substantial progress has been made and there are now several indicators and measures of agricultural productivity (Bureau and Antón, 2022[13]; OECD, 2022[14]; Fuglie, Morgan and Jelliffe, 2024[15]). Productivity is commonly defined as a ratio of a volume measure of output to a volume measure of input use. The United States Department of Agriculture (USDA) (2023[16]) regularly assembles comparable and consistent estimates of agricultural output and agricultural inputs for many countries and is a world reference on TFP databases. TFP growth measurement assesses improvements in the efficiency of resource use and captures the idea of “producing more with less” (OECD, 2022[14]).
Measuring environmentally sustainable productivity growth adds an additional layer of complexity (Bureau and Antón, 2022[13]; OECD, 2022[14]). A complementary dataset on the environmental performance of agriculture is needed to combine with the TFP database. The OECD’s Agri-Environmental indicators database, being a world reference in this domain, could be used for this purpose (Box 1.5) (OECD, 2024[17]).
Agriculture is intimately connected with its environment. It can harm the environment when it pollutes or degrades soil, water, and air. It can also provide ecosystem services, such as attractive and diverse landscapes or mitigating flood risks through the adoption of certain farming practices.
OECD countries use agri-environmental indicators to monitor environmental impacts and provide evidence of the state and trends in the environmental performance of agriculture (OECD, 2024[17]). Agri-environmental indicators support analysis to explain the effects of different policies on the environment and to assess whether budgets for policies are used effectively in terms of environmental outcomes and economic efficiency. The OECD agri-environmental indicators provide a reliable and robust source of data that can be used to benchmark environmental performance and inform policy action.
Covering the OECD as a whole and all individual OECD countries over the period 1990-18, the data show that, while most OECD countries increased their agricultural production in the last decade, the environmental performance of agriculture was mixed (OECD, 2023[18]). Progress was achieved reducing ammonia emissions phosphorus and nitrogen surpluses. Less progress was observed in reducing GHG emissions and in improving biodiversity as measured by the presence of farmland birds. While there is compelling evidence that TFP growth has helped countries to expand agricultural output and reduce GHG emissions per unit of output, there is room to steer innovation in the sector in a more environmentally sustainable direction in many OECD countries (Lankoski and Thiem, 2020[19]; Henderson and Lankoski, 2023[20]).
The productivity and environmental sustainability performance of agriculture
Between 1961 and 2021, agricultural output increased nearly fourfold, while the global population grew by 2.6 times, a 53% increase in agricultural output per capita. Most of the growth in agricultural production was achieved by raising productivity rather than expanding resource use. Capital and intermediate inputs (such as feed and fertilisers) increased more slowly than output, while labour and land significantly decreased. The main driver of productivity growth was efficiency gains and technological change, linked to progress in improved management practices, crop genetic improvements, including the development of genetically modified crops with pest and disease resistance, and digital technologies (Fuglie, Morgan and Jelliffe, 2024[15]). Since the 1990s, the pace of output and productivity growth in world agriculture has slowed and some places have relied on a more intensive use of inputs to maintain growth in agriculture production (Fuglie, Jelliffe and Morgan, 2021[21]).
Agricultural output has increased by more than 37% in OECD countries since 1990, but agricultural land area and labour have declined by about 7% and 34%, respectively. The use of other inputs has increased by 23% in the case of capital and 11% in the case of intermediate inputs over that same period (Figure 1.11, panel A). This translates to TFP growth that averaged 1.4% per year between 1991 and 2000, 1.6% in 2001‑10, but only 0.8% per year between 2011 and 2021.
In emerging economies agricultural TFP and output has grown more rapidly, increasing by 2.4% per year between 1991 and 2000, 2.6% over 2001-10 and 1.6% per year between 2011 and 2021, which implies an increase of 91% in the period 1991-21 The use of capital increased at an annual growth rate of 1% between 2011 and 2021. Intermediate inputs also increased by 0.3% per year, land modestly grew by less than 0.1% per year, while labour decreased by 0.9% per year over the same period (Figure 1.11, panel B).
Agri-environmental indicators in OECD countries show only modest improvements and, in some cases, have gone backwards since 1990. Biodiversity, as measured by the farmland birds index,9 has declined by about 20% and direct farm energy use has increased. GHG emissions are up slightly, but nitrogen and phosphorus balances have improved (although are not at sustainable levels in many places) (Figure 1.12, panel A). Agricultural production in the OECD region shows modest output growth, slowing productivity gains and mixed progress on the environment. Growing output combined with decreased environmental impact is a sign of improved productivity with respect to environmental inputs.
In the emerging economies more agri-environmental indicators show declines over time (Figure 1.12, panel B). Direct farm energy use has increased by 40%, GHG emissions increased by 11% between 1990 and 2020, and nitrogen and phosphorus surpluses increased during most of the period, with a modest decrease in the 2010s until a new upward trend apparently starts in 2018. The general story in the emerging economies is one of relatively rapid growth driven in part by more intensive production and resulting deterioration in environmental performance.
Knowledge and innovation for sustainable productivity growth
Generating, exchanging, and diffusing knowledge is a process involving many interconnected activities and actors, including universities, farmers, research institutions, public sector organisations, and input suppliers. While the public sector historically had a prominent role in agricultural R&D the private sector has gained relevance in more recent decades (Fuglie and Toole, 2014[22]; Pardey et al., 2016[23]; Fuglie and Echeverria, 2024[24]). The rising importance of private R&D does not imply a diminished role of the public sector, as these may complement each other (Pray and Fuglie, 2015[25]). Public funding of agricultural R&D provides stable funds for knowledge institutions, can focus on research in the public interest that might be missed by private entities, and can foster public-private partnerships to increase the impact of research (OECD, 2019[26]).
Farmers have a key role in agricultural innovation (OECD, 2012[27]). Farmers’ learning by doing and learning by using add practical experience that can lead to adaptations, refinements and novel uses for innovations (Stuiver, Leeuwis and Van der Ploeg, 2004[28]). Farmers can help identify subjects for R&D and participate in research projects. Extension services and education and training programmes in turn play a pivotal role in helping farmers adopt sustainable practices and innovations. Integrating local, indigenous and farmers’ knowledge can enhance sustainability and resilience (Šūmane et al., 2018[29]; Mazzocchi, 2020[30]).
Bringing farmers, researchers, policy makers, and private sector actors together in R&D activities can be done through collaborative and participatory programmes to define priorities, or participatory research where farmers or consumers help to identify the relevant research needs. Strong networks and research co‑operation can strengthen linkages within the agricultural innovation system and between it and other sectors (OECD, 2019[26]). To make the most effective use of resources for innovation, an interactive approach may be needed in which feedback from users guides the development of new technologies and serves to align research with emerging needs (OECD/FAO, 2012[31]).
R&D and innovation are manifested in the many technologies, processes and practices on farm that lead to increased agricultural productivity (Box 1.6). Some parts of farming today would be familiar to a farmer from 100 years ago, and others would be wholly unrecognisable. Impressive progress has been made in improved genetic varieties that can maintain or improve crop yields under more extreme conditions (such as drought, extreme temperatures, saline soils, and flooding) or that resist specific pests or diseases (Wezel et al., 2013[32]). Precision agriculture is another technology that has come a long way by using data analysis and remote sensing to optimise resource allocation, including water, fertilisers and agrochemicals (Campi et al., 2024[33]).
There are many innovative tools that, used in different circumstances, can potentially contribute to sustainable productivity growth. Some of these are relatively new, like robotics and artificial intelligence, while others like conservation tillage have long been used. All of them have seen continued improvement that expand the bounds of what is possible to achieve on a plot of land.
Conservation practices such as minimal soil disturbance (i.e. zero-till farming), crop rotation, and cover cropping, aim to improve soil health, reduce erosion, and increase water retention.
Precision agriculture refers to the use of digital technologies (i.e. GPS, drones, and sensors) to monitor field conditions and apply inputs (water, fertilisers, pesticides) more precisely to increase efficiency, thus, reducing input waste and environmental impacts.
Organic fertilisation, split fertilisation and bio-fertilisers aim to substitute or reduce inorganic fertiliser use, improve the efficiency of fertilisation and general soil fertility, reducing environmental pollution while improving nutrient availability.
Crop choice, crop spatial distribution and crop temporal succession management is used to optimise positive interactions and synergies between crops.
Crop genetic improvement to develop crop varieties with enhanced resistance to pests and diseases, better adaptability to climate stressors, improved nutritional content, and reduce need for agrochemicals.
Agroforestry integrates trees and shrubs into agricultural landscapes, which can enhance biodiversity, improve soil health, and increase farm resilience to environmental stresses.
Integrated pest management refers to strategies that use a combination of biological, physical, and chemical tools minimising economic, health, and environmental risks of pest management.
Carbon sequestration is the process of capturing and storing atmospheric carbon dioxide (CO₂) in soils, plants, and other organic matter through agricultural practices, which can help mitigate climate change by reducing the amount of CO₂ in the atmosphere.
Biocontrol agents use natural organisms such as insects, mites, or microorganisms to control agricultural pests and diseases, reducing reliance on chemical pesticides.
Water-saving irrigation technologies, including drip irrigation and sprinkler systems, deliver water directly to the plant roots, reducing water loss and increasing water use efficiency.
Robotics and automation can perform tasks like weeding, harvesting, and planting, monitoring crop health, increasing efficiency and reducing labour costs. Artificial intelligence is quickly expanding the capabilities of automated systems.
Farm management software combines data from several sources (crop performance, soil, weather) to help farmers make better decisions about planting, managing and harvesting crops.
Source: Authors’ own elaboration based on Pannell et al. (2006[34]); OECD (2012[31]); Wezel et al. (2013[32]); Steensland and Zeigler (2020[35]); and Campi et al. (2024[33]).
Sustainable agricultural productivity growth is not defined by any particular practice, process or technology. It is the outcome of actions that, when taken together, lead to improved outcomes over time. Finding the best combination of practices or technologies in each farm or location is a learning process that involves all actors in the agricultural knowledge and innovation system.
The role of different actors
Various actors have a role to play in fostering productivity and environmental sustainability (Figure 1.13). Private firms produce improved inputs, farmers adopt practices and invest in the latest technologies, and governments provide resources, institutions and incentives for all stakeholders.
Note: The figure is a simplification and provides a non-exhaustive overview of possible actions for agricultural sustainable productivity growth. AKIS: agricultural knowledge and innovation system; R&D: research and development.
Source: Authors’ own elaboration.
Farmers have an important role in agricultural innovation. SPG is ultimately manifested on the farm and must benefit farmers. Farmers contribute to SPG in many ways. They can:
Participate in training and education to improve their knowledge and awareness about the environmental sustainability of their farms and the latest techniques and technologies for enhancing productivity while preserving natural resources.
Experiment, test and adapt technologies and practices to their operations considering the specificity of their contexts.
Adopt sustainable practices to improve soil health, reduce erosion, improve water retention and optimise the use of chemical inputs. This can enhance soil health and resource efficiency.
Invest in technologies to enhance productivity while minimising negative environmental impacts. On-farm data on environmental performance, digital technologies and precision agriculture tools, such as GPS-guided machinery and drones, are particularly important.
Enhanced SPG also involves private actors higher up in the production chain. Input suppliers and other participants in the agricultural knowledge and innovation system can:
Develop sustainable technologies and inputs, investing in R&D: Input producers can invest in R&D to create innovative products to support sustainable farming practices. For example, improved chemicals, precision farming systems, and new genetic varieties.
Provide education, training and advice: Input providers can offer educational resources and training programmes to farmers on the proper use of their products in a sustainable manner. Private advisors or extension agents can provide knowledge of best practices and new technologies.
Offer products with sustainability certification: Implementing sustainability certification programmes for inputs, companies can demonstrate their commitment and assure farmers and consumers that the inputs they use meet certain environmental and social standards.
Both farmers and input providers should collaborate with other stakeholders, including agricultural organisations, research institutions, and government agencies to develop and promote sustainable agriculture initiatives. By working together, farmers can put forward their experience and needs and input providers can leverage expertise and resources to address common challenges and advance sustainability goals. Governments facilitate and participate in these collaborations and have produced many strategies and approaches to help assess the extent to which they advance SPG and then leverage lessons learned to achieve SPG (Box 1.7). Many approaches can have similar aims and share common features. However, they can also differ in their scope, definitions, and extent to which they have been adopted by farmers and taken up in policy (OECD, 2023[36]). Ultimately, regardless of the nomenclature applied to any agricultural production approach, whether the approach advances environmentally sustainable productivity growth depends on its impacts on production efficiencies including as related to impacts on natural resources.
Governments may choose to promote specific farming practices as part of their sustainability strategies. These can produce some environmental benefits but may also have other effects, including being less productive. The net benefits of these depend on the context in which they are implemented and the particular sustainability characteristics including as related to food security, food prices, farmer income, and particular environmental benefits and their distribution, sought by governments, producers and consumers. These practices include, for example:
Organic agriculture is a holistic production management system that promotes agro-ecosystem health, including biodiversity, biological cycles, and soil biological activity, using mainly agronomic, biological, and mechanical methods instead of synthetic materials. The main characteristics are the prohibition of most synthetic inputs and the use of mandatory crop rotations. Standards for organic production have been developed by several associations and governments, aiming to differentiate products and segment markets through food labels (Rousset et al., 2015[37]). Organic products command a price premium and market segmentation that reflects consumer’s interest in health, safety, quality and environmental protection (Popa et al., 2019[38]; Eyinade, Mushunje and Yusuf, 2021[39]). It offers environmental benefits like lower pesticide residues, richer biodiversity, and greater drought resilience, although its environmental, particularly climate, performance per unit of output is context-dependent (OECD, 2016[40]; Seufert and Ramankutty, 2017[41]; Gaudaré et al., 2023[42]).
Agroecology is “a holistic and integrated approach that simultaneously applies ecological and social concepts and principles to the design and management of sustainable agriculture and food systems, seeking to optimize the interactions between plants, animals, humans and the environment while also addressing the need for socially equitable food systems” (FAO, 2020[43]). It gained prominence in the 1990s in the United States and Latin America, it is seen as a science, a set of agricultural practices, and a social movement (Wezel et al., 2009[44]). There are no national or international standards, but the concept is increasingly incorporated in policy. A study of 15 cases in Europe found that agroecological farms tend to enhance biodiversity and water quality compared to non-agroecological farms, though no clear patterns were found regarding soil quality or economic performance (Landert et al., 2020[45]). The study also suggested that while some agroecological practices lead to reduced greenhouse gas emissions, in certain contexts, some practices can increase the energy use of the farms.
Regenerative agriculture involves various practices and ideas. It can be defined by processes (e.g. using cover crops, integrating livestock, reduced or no tillage), outcomes (e.g. improving soil health, carbon sequestration, increased biodiversity), or both (Newton et al., 2020[46]). According to the European Academies’ Science Advisory Council, regenerative agriculture emphasises soil restoration and the interplay of crops and farm animals and is broader and less prescriptive than agroecology and organic agriculture, allowing targeted use of modern technology, tilling, and inorganic inputs (EASAC, 2022[47]). The United Nations Intergovernmental Panel on Climate Change’s Special Report on Climate Change and Land lists regenerative agriculture as one of the sustainable land management practices effective in building agro-ecosystem resilience. In the United States, some municipal governments have incorporated it into their climate action plans (The Climate Reality Project, 2019[48]). While no national or international standards exist, private standards are emerging.
Circular agriculture focuses on using minimal external inputs, closing nutrient loops, regenerating soils, and minimising environmental impact. It is based on the circular economy concept, where re‑using and recycling are integral to production and use choices (Philp and Winickoff, 2018[49]). This includes using manure as organic fertiliser and wastewater in irrigation. Circular agriculture is not defined by specific farm practices or standards but is often associated with mixed crop-livestock production, organic production, and agroforestry. Since 2018, the Dutch Government has promoted a transition towards circular agriculture, emphasising ecological principles combined with modern technology, new partnerships, economic models, and social services (OECD, 2023[50]). This approach aims for good yields, resource and energy efficiency, and minimal environmental, nature, and climate impact (WUR, 2018[51]).
Bioeconomy refers to the sustainable production and use of biological resources (instead of fossil resources), processes, and principles (notably, biogenic instead of fossil resources) to provide goods and services across all economic sectors. Biotechnology and the life sciences contribute centrally to primary production (and industry) through the conversion of biomass into food, materials, chemicals, and fuels. In the last decade, the bioeconomy has outgrown just biotechnology, and it is embedded in the far-reaching transitions that are taking place in energy, transport and industrial production (Philp and Winickoff, 2019[52]). In agriculture and food systems, the bioeconomy focuses on integrating biological innovations and biotechnologies to enhance productivity, environmental sustainability, and economic resilience (Diakosavvas and Frezal, 2019[53]). This includes the use of bio-based fertilisers, advanced plant breeding techniques, and bioprocesses to convert agricultural residues into valuable products such as bioenergy, bioplastics, and bio-based chemicals. The bioeconomy approach aims to reduce dependence on fossil resources, minimise GHG emissions, and promote circularity within agricultural systems. As a holistic concept, the bioeconomy in agriculture not only enhances resource efficiency and reduces environmental impact but also fosters rural development and economic opportunities.
Source: Based on OECD (2023[36]).
The main policy challenge for governments is to create the enabling environment and the right incentives to optimise resource use from an economic, environmental and social perspective (Steensland and Zeigler, 2020[35]). In doing so, governments should consider potential spillover effects, including transboundary spillovers, and trade-offs. The governance framework, regulations and the set of policies can define the right incentives to direct innovation for SPG. In this context, governments could focus on the following actions:
Governance can create an enabling environment that supports SPG. It involves the formulation and implementation of comprehensive strategies that prioritise innovation and provide incentives for all stakeholders. It also includes institutional structures (agencies, co-ordinating groups, independent assessment bodies, as well as horizontal and vertical co-ordination in governments) that ensure that strategies are effectively translated into actions and provide stability and continuity in the efforts to enhance SPG. Governance should facilitate stakeholder’s engagement and strengthen the AKIS system to integrate research, education, and extension services (OECD, 2013[54]).
Policies: governments can implement policies to incentivise sustainable agriculture practices and accelerate the transformation of agriculture towards a more productive and environmentally sustainable sector in many ways:
Reform or reorient support: some forms of support have the potential to distort production and trade or can worsen environmental outcomes, although the effects on the environment are not as clear cut as for production and trade. Reforming or reorienting agricultural policy to address those support measures that are harmful to the environment will help move towards more sustainable and productive agriculture and food systems.
Targeted subsidies and tax incentives: if well-designed and implemented, such policies can encourage farmers to adopt practices that promote soil health, biodiversity conservation, and resource efficiency. Governments may also use taxes to discourage unsustainable practices by applying the polluter pays principle.
Investment in R&D: funding research initiatives focused on sustainable agriculture can lead to the development of innovative technologies and practices although the impact of R&D can take up to 20 years (OECD, 2011[55]). Governments can support research institutions and collaborate with the private sector to drive progress in sustainable farming methods.
Promotion of sustainable certification programmes: governments can develop or support sustainable certification programmes rewarding farmers for implementing environmentally and socially responsible practices. These programmes can help differentiate sustainable products in the marketplace and promote consumer awareness.
Extension services: a traditional source of technical assistance to farmers, extension services help disseminate knowledge and awareness about environmental sustainability. Extension agents can offer guidance on soil management, water conservation, pest control, and other aspects of sustainable agriculture.
Public investments: building rural infrastructure, such as irrigation systems, roads, and market facilities, as well as digital infrastructure and services, can improve access to inputs, markets, and agricultural services while reducing food loss and waste.
Regulations: can encourage the adoption of sustainable practices and technologies to achieve specific environmental goals (Martini, 2023[56]). They include environmental regulations, land use regulation, water resource management, and food safety standards. Regulations are part of an overall policy package to guide the innovation into the direction of both environmental sustainability and productivity growth.
Policy coherence and alignment across different levels of government (local, national, and international) helps promote sustainable productivity growth. By fostering collaboration and co-ordination among stakeholders, integrated policy approaches can address the interconnected challenges of sustainable productivity growth. This alignment also helps to harmonise regulatory frameworks, reduce inefficiencies, and create an enabling environment for innovation and investment.
Government actions to support innovation for sustainable productivity growth
The countries covered in this report are taking action to promote innovation for SPG. These actions take many different forms and methods. Each country has their own circumstances, and issues that are pressing in one country may be low priorities elsewhere. Despite this, there are some common threads. Investments in new crop varieties and genetics are used in many countries to promote climate change adaptation. Another common thread observed is investments in public infrastructure, particularly for irrigation. The examples of what countries identified as important efforts to promote SPG presented below are taken from their submissions for this OECD report and organised according to the government actions identified in Figure 1.13. The individual country chapters provide more in-depth coverage of the many government actions being taken.
Governance
Governance is the combination of institutions, strategies and frameworks that guide policy-making and defines the relationship between government and citizens. Good governance promotes sustainable productivity growth by facilitating stakeholder’s engagement and strengthening the AKIS system by integrating research, education, and extension services.
Strategies
Many governments have developed a strategy or framework to guide policy development related to innovation for SPG. These set out objectives and timelines and outline the needs and perspectives that will shape government policy. While some of these strategies are explicitly about innovation for SPG, others target specific challenges faced by the country that are strongly relevant for SPG. When a country does not have a formal strategy or framework, there is usually a set of underlying principles behind their approaches to innovation for SPG. Some examples of countries’ strategies are described below.
The Japanese Strategy for Sustainable Food Systems (the MIDORI Strategy) presents the case of an explicit SPG strategy. It is connected to policy action via the Act to Promote Low Environmental Impact Business Activities for the Establishment of Environmentally Harmonized Food Systems (the MIDORI Act), which helps to implement the SPG strategy by supporting producers and business operators who work towards reducing their environmental burden.
Czechia adapted its existing system to frame policies that promote SPG and several related components act together. This includes the Czech Republic 2030 strategic framework, which incorporates the 17 UN sustainable development goals. The New Research, Development and Innovation (R&D&I) Concept of the Ministry of Agriculture for the years 2023-32 creates a basic framework for the direction of departmental research. The Earth II Programme 2024-32 is one of the main tools of this concept, with an emphasis on transfer and usability of the results in practice. These strategic elements are supported with implementation policies that include the Concept of the Advisory System for the years 2017–2025 and the Concept of Protection against the Consequences of Drought for the territory of the Czech Republic 2023‑27.
SPG can also be part of a larger environmental and social strategy. The European Green Deal (EGD) aims to make Europe climate neutral, protect its diverse natural habitats, and transform the European economy. The associated Farm to Fork and Biodiversity Strategies define the prominent role of the CAP in the transition to more sustainable food systems. Notably, European Union Member States are encouraged to include in their CAP strategic plans non-binding national targets – referred to as “national values” – on outcomes that include the overall use and risk of chemical pesticides, expansion of organic farming, sales of antimicrobials, or combating deterioration of soil fertility. Colombia’s Integral Rural Reform includes sustainable productivity as a key component. To enhance land productivity, the government provides the productive factors necessary for agricultural production, such as irrigation equipment, and extension services, but also for rural goods and services such as electricity, drinking water, housing, education, health, roads, and digital connectivity.
SPG strategies can focus on development of rural areas. The Strategy for Sustainable Development of Rural Areas, Agriculture and Fisheries 2030 outlines Poland’s ambitions to achieve multifunctional economic development in rural areas, ensure the country’s food security, increase the value added of agriculture, and promote a sustained increase in the income of rural inhabitants. The Strategy also seeks to minimise economic, social and territorial disparities, and to improve environmental conditions. In Mexico, the Sectoral Programme for Agriculture and Rural Development 2019-2024 stipulates that sustainable productivity growth is mainly approached by improving agricultural productivity for food self-sufficiency and promoting the sustainable use of soil and water.
Strategies may explicitly focus on foresight. The Strategic Plan for Science reflects Canada’s vision for the future of R&D to help the agro-food sector to adjust to the new reality and tackle new challenges. It holds that change begins with a paradigm shift toward sustainable agriculture, which takes into consideration the environmental, social, and economic context in which all their scientific activities are conducted.
SPG and climate change mitigation and adaptation are parallel and overlapping issues. The National Statement on Climate Change and Agriculture in Australia emphasises the importance of sustainably to increase agricultural productivity and profitability. This will be achieved by targeting investment in R&D, and by increasing training, education and capacity building to support uptake and adoption of innovations and technologies. Australia is also exploring pathways for emissions reduction in the sector through the development of an Agriculture and Land Sectoral Plan one of six decarbonisation plans being developed, to guide the country’s transition to a net zero economy by 2050. Belgium’s Wallonia 2030 Air, Climate and Energy Plan seeks to improve farms’ energy efficiency, use and storage of manure, and the use of pesticides. Many R&D activities in New Zealand focus on reducing emissions while maintaining efficiency, improving productivity, and sequestering soil carbon. For example, SFF Futures, a public co-investment programme finances projects that deliver economic, environmental and social benefits. In Türkiye, the Strategic Plan of the Ministry of Agriculture and Forestry (2024-2028) includes targets and indicators for adaptation to climate change and reducing greenhouse gas emissions, increasing the capacity to combat drought, using renewable energy, and controlling the effects of floods within the scope of the aim of Increasing the Capacity and Resilience to Adapt to Climate Change.
SPG strategies can also encompass the broader food system. In Belgium, the Flemish Food Strategy aims to build a better food system in terms of health, environment and climate, economic and social resilience, and innovation. Under this strategy, structural funding is provided for research, innovation and investment that aim to develop a sustainable food system, e.g. through agro-ecological methods or precision farming. The Swedish national food strategy (Livsmedelsstrategin) aims to develop a competitive food supply chain that will increase overall food production while respecting national environmental objectives, that will generate growth and employment, and that will contribute to sustainable development throughout the country.
Institutional structures
Institutions include agencies, coordinating groups, independent assessment bodies, as well as horizontal and vertical co-ordination in governments that ensure that strategies are effectively translated into actions and provide stability and continuity in the efforts to enhance SPG. Some examples of relevant institutional structures are described below.
The Agricultural Knowledge and Innovation System (AKIS) is a key contributor to SPG in many countries. In the European Union, the AKIS encompasses a complex network of actors at regional, national, and European levels, and which includes farmers, research, education, advisory and extension services, the private sector, and others who generate, disseminate, and apply knowledge and innovation in agriculture and related fields. The new CAP 2023-27 does more to integrate agricultural advisory services with other AKIS actors, to improve knowledge flows within the system, particularly between researchers and farmers, and to promote interactive innovation and digitalisation in agriculture. National AKIS co-ordination bodies act as contact points for AKIS-related matters between Member States and the European Commission. These bodies oversee daily AKIS activities, support the implementation of AKIS strategies, monitor and evaluate them, and suggest modifications to the Strategic Plan when necessary.
While private sector innovation is increasingly important, there is a strong role for national research organisations. The National Agricultural Research Organisations (NARO) in Japan is the largest knowledge generator in the field of agricultural science in the country. NARO has more than 1 700 researchers among its 3 200 staff, 21 research centres and departments, including five regional agricultural research centres. The French National Research Institute for Agriculture, Food and Environment (INRAE) follows the roadmap ‘INRAE 2030’ that has identified five scientific priorities and three policy priorities to address the challenges related to agriculture, food and environment through science, innovation and expertise. The National Research Centre for Agricultural Technologies (Agritech) in Italy promotes technologies for a sustainable agriculture with a focus on resilience, low impact, circularity, support to disadvantaged areas, and traceability. The Crop Research Institute in Czechia develops cultivation technologies to support biodiversity, methods to protect plants from pests, and breeding new varieties to ensure high-quality and safe commodities and food.
Multinational institutions can boost research capacity. The European Research Area (ERA) is a unified market for research and innovation across the European Union that helps align national efforts and encourages joint programming towards more sustainable food systems. The Research and Innovation Framework Programme “Horizon Europe” (HE) supports research and innovation in areas such as sustainable land use and the development of a resilient and inclusive agricultural sector. It incorporates partnerships and networks to address societal challenges with initiatives such as the EU Mission “A Soil Deal for Europe”, which seeks to restore soil health by 2030. Mexico is part of several international groups and forums, where technical discussions on strategies for the conservation of pastureland soils in the country are organised. Moreover, a regular forum between indigenous peoples of Mexico and First Nations of Canada allows to exchange experiences on the sustainable development, including agricultural activities, within their territories.
Facilitating stakeholder engagement
Several countries emphasise stakeholder involvement to facilitate SPG. For instance, in Austria, the VISION 28+, a stakeholder-driven strategy process, is developing a joint vision for Austria’s agriculture and rural areas by providing strategic guidelines and proposing concrete measures to achieve specific targets. The National Rural Area Programme (NPLG) in the Netherlands uses a consensus model for transformative agriculture. It combines national measures with area-specific measures, including those that focus on knowledge and innovation. Canada’s Agricultural Climate Solutions Living Labs Program brings together scientists, farmers, industry and other stakeholders together in the research and co-development of practices and technologies designed to increase carbon and reduce emissions.
Strengthening the AKIS
Knowledge hubs bring together stakeholders and encourage co-operation. For example, national knowledge hubs for “animal production”, “climate and environment”, “business management and entrepreneurship” and “digitalisation” in Sweden facilitate collaboration between AKIS actors and allows for a better integration of advisors within AKIS. In the United States, ten regional Climate Hubs are led and hosted by the US Department of Agriculture (USDA), with contributions from many agencies. The Climate Hubs link USDA research and programme agencies in their regional delivery of timely and authoritative tools and information to agricultural producers and professionals. The USDA also hosts an International Climate Hub to share research, tools, collaborative efforts, and best practices on a global scale. In Malta AgriHub serves as a place where researchers, innovators, and farmers work together to develop innovative agricultural practices. The European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI) in the European Union encourages groups to come together to solve common problems (Box 1.8).
The European Union applies a unique approach to promote sustainable agricultural productivity by enhancing collaboration within the Agricultural Knowledge and Innovation System (AKIS) in Europe and bridging the gap between research and practical farming (EU SCAR, 2012[57]). The European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI), established in 2012, is based on an interactive innovation model. EIP Operational Groups (OGs) were conceived to address practical problems and to explore new opportunities leading to innovative solutions. They bring together partners with diverse expertise – practical, scientific, technical, and organisational – and include farmers, researchers, advisors, businesses, and environmental groups to foster innovation in agriculture, forestry, and rural areas.
The Common Agricultural Policy (CAP) supports OG projects through national CAP Strategic Plans under the CAP 2023-27, and previously through Rural Development Programmes under the CAP 2014‑22. Member States can support OG projects in two stages through their CAP Strategic Plans: the preparation phase (i.e. setting up the OG) and the implementation phase (which includes disseminating results through at least the EU CAP Network). The Managing Authority of each Member State launches funding calls with or without a thematic focus based on their national, regional, or thematic priorities. OGs are initiated by one of the project members. Under CAP 2023-27, an OG can also involve partners from different regions within the same country (cross-border) or from two or more EU Member States (transnational).
National implementation of EIP-AGRI varies significantly. After a slow start, the number of OG projects has been increasing. By May 2024, approximately 3 500 OGs were active or had completed their projects. Spain, Italy, the Netherlands, and Germany host the largest number of these groups, accounting for over half of all OGs. The most common thematic areas for OG projects are farming practices, agricultural production systems, plant production and horticulture, and the competitiveness and diversification of farming/forestry. Notably, about 60% of OGs were focussed on climate-environment themes before the European Green Deal was launched.
Awards were granted in May 2024 in recognition of OGs that had developed the most innovative practices, solutions, products, and processes. The winning projects include:
“Colorado Beetle Catcher: Sustainable Machine Pest Control” (Netherlands), in the category “Sustainable Management of Natural Resources” for addressing the increasing occurrence of the Colorado potato beetle on Dutch farms due to hotter summers.
“Parsutt – Parma Ham High Sustainability Standard” (Italy), in the category “Animal Welfare and Husbandry” for creating a sustainability protocol for heavy pig farming based on animal welfare and biosecurity.
“SUBALMA – Improving the Productivity and Sustainability of Underground Drip Irrigation Systems Using Oil Mill Waste as Fertilizer Through the Use of Nanobubbles” (Spain), in the category “Climate Change Mitigation and Adaptation” for establishing circular economy strategies that reuse oil mill by-products as fertilisers through techniques ensuring maximum water-use efficiency.
“Precision Farming in Brandenburg” (Germany), in the “Digitalisation” category for developing a fully digitised, site-specific soil acidity management process and decision support system for variable-rate liming.
Source: EC (2012[58]); EU CAP Network (2024[59]), (2024[60]), (2024[61]).
Better data can boost research efforts as the following examples show. The Estonian Agricultural Big Data project aims to link available datasets collected by the public and private sectors and to create digital decision-making tools which enable the agricultural producer to adopt climate and environmentally friendly technologies. The United States’ International Agricultural Productivity data series provides globally comparable data that can be used to support policy decisions related to sustainable productivity growth (USDA, 2023[16]). It provides national and regional indices of total agricultural outputs, inputs, and total factor productivity (TFP). Promoting Application of Information Technology to Collection of Information about and Forecasting of State Agricultural Product Markets in Viet Nam provides timely information to support regulation and trade, and to enhance the competitiveness, value-added, and sustainable development of Vietnamese agricultural products.
Monitoring and evaluation
Monitoring and evaluation is central to achieving sustainable productivity growth in practice. Sustainability is not a particular practice, but an outcome that must be achieved. That requires measurement to assure that policies effectively achieve sustainability objectives, and that progress is happening at the desired pace. Monitoring and evaluation provide important feedback to farmers and policymakers, helping them to take advantage of information to adapt and adjust where needed. Some examples of relevant systems are described below.
Kazakhstan’s Concept for the Development of Agriculture for 2021-2030 put in place an environmental monitoring system, particularly to monitor GHG emissions from livestock. Several Estonian agricultural enterprises are piloting a carbon footprint measuring tool. It will enable carbon footprint audits of agricultural enterprises, which in turn will guide improvements. It will also address the lack of measurable data on farm-level carbon emissions, which has been an impediment in carrying out meaningful improvements. In response to press surrounding high rates of contamination of vegetables by pathogens and pesticide residues, Viet Nam issued a decision to develop “safe, concentrated vegetable production areas.” Within these zones, the government undertakes testing of soil and water quality, monitors pathogens and pesticide residues, and prohibits livestock farming to prevent contamination. The United States is investing in GHG Measurement, Monitoring, Reporting and Verification (MMRV) to establish a comprehensive strategy to improve data, models, and tools needed for quantifying the impact of conservation practices on GHG emissions and carbon sequestration.
Digital monitoring tools improve SPG performance. The SatGrass programme in Austria uses satellite and weather data to assess yield and forage quality of plant populations on grassland. To better monitor the use of fertilisers and pesticides, Switzerland launched the data platform digiFlux, on which all farmers will be required to report their chemical products use as from 2026. Switzerland also deployed a new public platform to increase transparency on trends in agricultural and food market volumes and prices. Since 2023, Spanish authorities, in collaboration with public research institutions, are focusing on evaluating the most sustainable agricultural practices in terms of farm profitability, biodiversity and climate change mitigation.
Policies
Governments can implement policies to incentivise sustainable agriculture practices and accelerate the transformation of agriculture towards a more productive and environmentally sustainable sector in many ways. Supporting farmers’ actions and investments is a main policy tool, but far from the only approach taken by governments. Public investments deliver needed services and infrastructure for farmers to improve their operations.
Targeted subsidies and tax incentives
In many countries tax incentives are used to encourage on-farm investments in innovation. Taxes can also be used to have the polluter pay so that production decisions consider the true cost of resources. However, taxing to constrain production intensity or the use of inputs to reduce the environmental impacts of agriculture in OECD countries is limited, whereas providing tax exemptions such as for fuel is more common (OECD, 2020[62]).
Policies can encourage farmers to adopt practices that promote soil health, biodiversity conservation, and resource efficiency. While innovation for SPG needs public research and extension to reach its full potential, ultimately SPG takes place on the farm through actions taken by farmers. Governments have many policies in place intended to encourage farmers to adopt innovations. This includes financing investments, sharing the costs of new practices, encouraging the setup of young farmers, and the use of regulatory incentives. As shown above, different forms of producer support are linked to either mandatory performance requirements or voluntary constraints encouraging action beyond statutory requirements. While mandatory requirements refer to applicable regulations, 5% of support to producers is made conditional on specific practices to improve the environmental performance of the farm. Some examples of subsidies and tax incentives are described below.
In addition to policies directly targeting SPG, major agricultural support policies can also be used to support SPG through mandatory constraints linked to performance requirements or voluntary constraints encouraging action beyond statutory requirements. About one quarter of support in the PSE is linked to either mandatory or voluntary environmental constraints (see Figure 1.9). However these constraints have often been unsuccessful in achieving their objectives (Deboe, 2020[63]).
Co-financing is a common tool to accelerate investments in new technologies. Slovenia helps with investments in low-emmission stables, low-emission manure storage capacities and the efficient use of nitrogen fertilisers. An investment programme in Germany supports agricultural farms that want to invest in modern technology in order to implement more climate, nature and environmental protection in the area of fertilisation and plant protection. The Basin-Based Support Model in Türkiye plans and supports the production of appropriate agricultural products based on basin characteristics and serves as the framework for several types of support payments and irrigation development. An essential part of government support in Kazakhstan is to encourage farmers to adopt modern water-saving technologies by conditioning support on the type of irrigation method adopted. In Belgium, the Flemish Agricultural Investment Fund support investments that promote increased productivity and innovation, sustainable processing and marketing of agricultural products, and in farms that have a sustainable business strategy. Portugal has implemented measures to increase water efficiency at the farm level via both investment and farming practices and supports farm-level investments in machinery. Romania is equipping farms with machinery and equipment to reduce the use of pesticides and improve manure management and supports farm-level investment in technologies related to precision agriculture. Environmental measures in Sweden incentivise farmers to adopt advanced technologies, including support for precision farming, to reduce emissions of carbon dioxide and other climate gases, and to produce biogas from manure. In Brazil precision farming technology is promoted through the National Policy for Incentives on Precision Agriculture and Livestock (Law No. 14 475). To support this approach, most rural credit lines finance precision farming equipment. The Targeted Agriculture Modernisation Schemes (TAMS 3) in Ireland provide grants to farmers to build or improve farm buildings and equipment. A recent report suggests that these investments have increased the use of low emissions slurry spreading techniques from 5% to 75% of dairy farms between 2018 and 2022.
Several governments provide incentives for farmers to act on SPG. The Stimulus Programme for Agriculture supporting climate change mitigation and adaptation in Austria is complemented by support for voluntary biodiversity reserves and area-specific conservation measures. European Union countries can provide incentives as part of the CAP or via state aid. In India, the National Mission for Sustainable Agriculture (NMSA) promotes environmentally-friendly practices and site-specific approaches via a gradual transition to green technology, energy efficient equipment, conservation of natural resources, and integrated agriculture. In Chile, the Sustainable Soil Management System (SIGESS) uses incentives and training to promote sustainable soil management practices by farmers and improve the chemical, physical and biological properties of soils. Subsidies for Soil Conservation and Sustainable Agriculture in Israel provides direct payments to farmers to convert from conventional tillage to soil conservation and sustainable agriculture practices that promote soil health, minimum soil disturbance, biological diversity, and improved microclimate. The ecological plan France Nation Verte, includes 25 actions to support the building of 50 000 km of new hedgerows by 2030. Programmes that are targeted and tailored to enviornmental challenges can accelerate progress, and spending in this area is growing in importance (Box 1.9).
In the European Union, the new CAP offers farmers more opportunities to boost farm sustainable modernisation and productivity than ever before. Over time, CAP support has increasingly incorporated environmental and climate goals, with increasing mandatory and voluntary constraints tied to payments. CAP has also focused more on promoting sustainable practices, resource efficiency, biodiversity conservation, and climate actions, with a growing portion of payments linked to environmental requirements through the enhanced conditionality, agri-environmental measures and new eco-schemes. Fostering knowledge exchange and collaboration within the agricultural sector has gained importance under the CAP 2023-27. Non-agricultural instruments at the EU-level, such as the Recovery and Resilience Facility (with associated National Recovery and Resilience Plans), the Digital Europe Programme (DIGITAL), and the European Social Fund+ (ESF+), contribute to sustainable productivity growth in European agriculture (see chapter on the European Union for more information).
In the United States, the Inflation Reduction Act directed additional resources towards several USDA programmes that benefit environmental conservation. This allowed a substantial expansion in the Environmental Quality Incentives Program, Regional Conservation Partnership Program, Conservation Stewardship Program, Agricultural Conservation Easement Program, and the Conservation Technical Assistance Program. Many of these programmes were oversubscribed, with more farmers wanting to participate than prior funding would allow. This spending will be distributed over ten years and is designed to support adoption of specific practices with climate benefits. The conservation funding is in addition to otherwise available program funds, and participation is voluntary, incentive-based and targeted to support climate-smart mitigation activities and other conservation activities that facilitate them (see the US chapter for more information on these programmes).
Helping new farmers get established also supports innovation by bringing fresh ideas to the sector (Campi et al., 2024[33]). The Establishment of Young Farmers programme in Lithuania supports greater diversity of agriculture systems in addition to facilitating sustainable business development in rural areas. In Latvia, programmes targeting social sustainability include Young Farms and Business Development, which provides start-up support to young farmers. France launched a guidance pact for the generational renewal of agriculture, after one year of public consultation process with the farming community, education and research players, local representatives, associations and young people in agricultural education. It identifies around 20 measures to reconcile agriculture and society, foster the emergence of a new generation of farmers at the forefront of the food transition, redesign production systems at farm level as well as supply chains and local areas.
Partnerships for Climate-Smart Commodities provides grants in the United States to fund pilot projects that support marketing of climate-smart commodities. These projects pilot innovative and cost-effective methods for quantification, monitoring, reporting and verification of greenhouse gas benefits; and develop markets and promote the resulting climate-smart commodities. The Agriculture Innovation Fund in Italy aims to support the development of innovation projects in agriculture, fisheries and aquaculture sector by financing digital and precision technologies for water saving and to reduce the use of chemical products.
Several governments help the sector to align with environmental limits to encourage SPG. Luxembourg is working to decrease cattle herds in order to reduce greenhouse gas and ammonia emissions via the measures Aid to Reduce the Stocking of Cattle and Helping to Maintain a Herd and a Low Livestock Stock. The Netherlands has a similar programme called National Termination Scheme for Livestock Farming Locations (Landelijke beëindigingsregeling veehouderijlocaties met piekbelasting, Lbv-plus). Flanders (Belgium) provides payments to pig farmers to reduce or entirely close their operations.
Governments can also provide incentives in other parts of food chains. In Canada, the AgriScience programme supports activities related to pre-commercialisation and pre-adoption of innovation. Funding covers areas such as health claims and human clinical trials, variety development, pest and disease surveillance, and indigenous knowledge. The AgriInnovate programme supports the phases of technology demonstration, technology commercialisation and technology adoption, providing financial aid to businesses on an interest-free repayable basis. Key areas include advanced manufacturing, automation, robotics, and digitisation. As part of a larger policy to fight food waste, France provides a fiscal incentive by offering a 60% tax deduction on food donations. Spain provides participative loans (Agroinnpulso) for agro-food SMEs to finance innovative technology-based projects. The Bionova tool in Norway helps to reduce emissions by supporting innovation and value creation within the bioeconomy related to agriculture, forestry and aquaculture. In the United Kingdom, the Farming Innovation Investor Partnership provides later-stage investment in agri-tech businesses that are developing and implementing new technologies. The scheme combines grant funding with equity funding from private investors for businesses that have the potential to grow and generate revenue through farm-focused innovations which work towards resolving the challenges of productivity, sustainability, and net-zero emissions.
Better integrating farmers in the food chain supports SPG by encouraging value creation. Primary producers in Portugal are helped to integrate the agro-food chain through quality schemes, adding value to agricultural products, promoting local markets, by shortening supply chains, and through producer groups. Support at the farm-level is directed towards helping farmers participate in collective organisations. The Food Fund Act in Iceland supports development and innovation in producing food and food products from side products in agriculture and fisheries. The fund emphasises innovative and sustainable projects for food production. Agri-Business Corridors in the Philippines are designed to attract more investment in agriculture and to introduce innovative technologies to farmers. Several innovation pilot sites were created in different regions, including the rehabilitation of post-harvest facilities (such as ice plant or cold storage facilities), the development of high-yielding seed laboratories, and the development of technology business incubation hubs.
Some countries provide low levels of support with the aim to avoid resource misallocation. For example, low support in Australia, New Zealand and elsewhere is intended in part to motivate innovation, resource efficiency, to facilitate competitiveness and to improve productivity and sustainability.
Investment in R&D
Funding research initiatives focused on sustainable agriculture can lead to the development of innovative technologies and practices. Governments can support research institutions and collaborate with the private sector to drive progress in sustainable farming methods. In many countries tax incentives are used to encourage investments into research and development (OECD, 2020[62]). Available data suggest that the share of public expenditures on knowledge generation within general services for the sector has increased over the past two decades. However, these expenditures have grown more slowly than the size of the sector. Some examples of policies supporting investment in R&D are described below.
Public R&D can tackle priority issues. Germany aims to reduce the use and risk of pesticides and to promote the development of environmentally friendly alternatives. It also focuses on research on sustainable agriculture and agroecology, i.e. adapting agriculture to natural and climatic conditions and cycles, and to regional and local needs. New Zealand places an increasing focus on technological solutions to increase productivity and reduce emissions. For example, NZ Sheep of the Future focusses on new farm system approaches for a range of sheep breeds, using genetics to help future-proof the industry, breeding sheep with optimum meat and wool production, as well as a greater tolerance for hot weather and with lower methane emissions. Public-sector research in India focuses on developing new crop varieties and management practices to improve yields and tackle pests and diseases under various agro-climatic conditions. The Agricultural Research Master Plan in Türkiye sets out priorities for planning of R&D to support sustainable productivity growth. Its project selection criteria to cope with climate change in the field of soil and water resources consider both climate adaptation-mitigation and agricultural drought mitigation strategies.
Many R&D programmes revolve around improved genetics. The China Climate-Smart Staple Crop Production project has been helping to select new crop varieties with high yields and enhanced climate stress resistance, to optimise cropping structures, and to improve agricultural infrastructure. R&D in the Philippines has developed rice varieties adapted to environmental stresses. In Ireland, public research has enabled selection of animals with low-methane traits, delivering up to 30% mitigation with no impact on production. The Greenbreed project has led to the publication of the world’s first national genomic evaluations for methane emissions in Irish beef cattle. The Plant Breeding Programme 2020–2030 in Estonia helps to develop new varieties for food, feed and industrial purposes that have higher productivity, quality and resilience. In Costa Rica, the National Seed Policy for 2017-30 includes the development of seed varieties that are adapted to local conditions, and having higher yields and better quality, via modern plant breeding techniques. In Poland, research is aimed at preserving the genetic diversity of plants, including innovative studies in plant breeding. This research has led to the development of more productive crop varieties that are more resistant to biotic and abiotic stresses. The first national gene bank in Malta will serve as a national repository for plant genetic diversity, conserving the genetic diversity of local plant varieties and animal breeds, heirloom varieties, crop wild relatives, and other wild plants. In Brazil, a major focus of its Integrated Landscape Approach has been R&D in developing high-yielding crops and livestock. In Japan, an ongoing project is developing crop varieties that require less nitrogen input, following the recent success of Biological Nitrification Inhibition (BNI)-enabled wheat that can produce the same or higher yield with 30-50% less fertiliser.
R&D helps develop improved production systems. The National Program on Sustainable Agricultural Systems is the leading research programme covering SPG at the US Department of Agriculture’s principal in-house research agency, the Agricultural Research Service. The goal of this programme is “diversified agricultural systems that sustain and improve productivity, profitability, ecosystem health, and human well-being.” The programme is built around three components: building agroecosystems for intensive, resilient production via the interaction of genetics with environment and management; increasing the efficiency of agroecosystems; and achieving agroecosystem potential. The National Growth Fund in the Netherlands funds Regeneratieve Landbouw (Re-Ge-NL), with a focus on the transition towards a regenerative agricultural system.
Promotion of sustainable certification programmes
Governments can develop or support sustainable certification programmes rewarding farmers for implementing environmentally and socially responsible practices. These programmes can help differentiate sustainable products in the marketplace and promote consumer awareness.
Many countries, especially in Europe, view organic farming as a driver of SPG. For example, the 2030 Organic Farming Strategy in Germany reflects the objective that by 2030 30% of agricultural land will be organically farmed. This aims to align agricultural diversity with the goals of environmental protection and resource conservation via the extension of organic farming so as to improve biodiversity, water conservation, soil fertility, resource efficiency, and more. A major strategic approach to SPG in Croatia is its focus on organic agriculture and related value chains, formalised in the country’s National Action Plan for the Development of Organic Agriculture for the period 2023-2030. New Zealand enacted the Organic Products and Production Act to help develop new standards for organic products, and to set requirements for businesses in the organic sector from production through to sale.
Extension services
A traditional source of technical assistance to farmers, extension services help disseminate knowledge and awareness about environmental sustainability. Extension agents can offer guidance on soil management, water conservation, pest control, and other aspects of sustainable agriculture. Available data suggest that public expenditures for knowledge transfer represents just under 9% of the GSSE, a share that has remained largely unchanged from the early 2000s. However, relative to the sectors value of production, such investments have almost halved over the same period. Some examples of policies supporting related activities are described below.
Model farms are a popular tool to demonstrate new technologies for SPG. The 2035 Arable Farming Strategy in Germany funds model, demonstration, research and development projects supporting plant breeding, plant protection, biodiversity, climate adaptation, crop diversity, crop rotation, and nutrient management. The Smart Farm Expansion Plan in Korea is designed to strengthen the overall competitiveness of the smart farming industry by establishing basic infrastructure and creating innovative models. Policy targets include young farmers and upstream and downstream industries. Two hundred and twenty water-saving agricultural demonstration areas were established in dry farming areas in north and northwest China to demonstrate and promote technologies for water-resource efficiency. A network of pilot farms in Luxembourg demonstrates innovative techniques and decision support tools for pesticides and presents recommendations in a digital user interface. Mexico has an agricultural bioeconomy training programme for small-scale farmers with three objectives: waste and pollution reduction, circular use of products and materials, and regeneration and conservation of natural resources. This programme aims to offer consumers food products produced in an environmentally sustainable way, but also products that have social and economic benefits to poor farmers.
Agriculture education can start early. Czechia supports practical teaching at secondary and higher vocational schools of agricultural orientation to make agriculture more attractive to young students by implementing the Lifelong Learning Strategy and creating professional content of educational programs. AgriFutures, an Australian R&D corporation, is working with education providers and industry on a National Food and Fibre Education Strategy. This strategy is aimed at fostering an interest in food and fibre industries amongst school students from an early age.’
Public investments
Public investments such as for irrigation systems, roads, market facilities, and digital infrastructure and services can improve access to inputs, markets, and agricultural services while reducing food loss and waste. These investments can enable on-farm actions and investments that would not otherwise be possible. Available data suggest that public expenditures for agriculture-related infrastructure represents nearly half of the GSSE, a share that has increased slightly over the past two decades. Much of these are related to off-farm irrigation investments notably in a number of Asian countries. Some examples of relevant infrastructure investments are described below.
Many countries have taken advantage of the digital revolution in connectivity, data collection, sensing, and use of information and automation to improve productivity. The France 2030 Plan includes the agroecology and digital programme that prioritises research that will accelerate the agroecological transition with digital tools. This programme encompasses research on digital technology, the characterisation of genetic resources, the development of new digital and robotic equipment, and on connected infrastructure and decision support tools. The Act on Fostering and Supporting Smart Farming in Korea outlines the policy direction for infrastructure development, distribution, expansion, and support for smart agriculture. This Act provides a legal foundation to expand smart farms and will help to enhance the technical capabilities of farmers, industrial workers, and experts. It will also promote the introduction of new equipment and services in the agriculture sector. The Digital Public Agriculture Infrastructure, Digital Agriculture Mission and the electronic National Agricultural Market (e-NAM Scheme) in India aim to promote the diffusion and adoption of agri-tech solutions. It includes AI-based precision agriculture, IoT-based real-time data collection systems, and drone-based agriculture to improve yields and profitability.
Digital tools for farmers are used to foster SPG. An updated version of the National Color-Coded Agricultural Guide (NCCAG) Map, in the Philippines displays the suitability of crops (such as water availability and climate data) and identifies eight major hazards based on projected climate scenarios for 2050. In Spain, DigiMAPA helps the agro-food sector to connect with agrotech companies. This initiative and others like grants for smart agriculture investments and calls to encourage agri-food data spaces (both funded by recovery and resilience European funds) have been implemented to strengthen the AKIS in the country. A smartphone-operated paddy field water management system in Japan as well as agriculture management applications linked to location information will allow even unskilled farmers to digitise and automate work records. The Smart Farming Action Plan in Austria targets digital transformation related to infrastructure, training, and promotion of digital solutions. The AgNav digital platform in Ireland is a support tool which enables the estimation of farm-level emissions, enabling farmers and their advisors to create and model the environmental impact of a farm sustainability plan.
Regulations
Governments use regulations to require farmers to do more for environmental sustainability. For example, in the European Union, the Nitrates Directive sets out maximum amounts of organic fertilizer that may be applied per hectare (normally 170 kg/ha) to help prevent nutrient runoff. In the United Kingdom, the Control of Agricultural Pollution Regulations seeks to reduce the impact of pesticides, fertilisers, and manure on water quality, ecosystems, and soils. Regulations are typically in place to ensure, among other things, that pesticides are used responsibly (e.g. the Federal Insecticide, Fungicide, and Rodenticide Act in the United States), that soil additives are safe (e.g. Sewage Sludge Ordinance in Austria), that fertilisers are used correctly (Danish Act on Agriculture Use of Fertilizers and Plant Cover) and that manure is stored in a way that ensures proper use (such as the Ontario Nutrient Management Act in Canada).
Governments also can leverage support programmes to motivate improved compliance with regulations. Often called “cross-compliance regulations” these provisions require recipients of support to take or avoid certain actions as part of eligibility criteria. In the PSE, these are labelled as having input constraints that are mandatory when the requirement is to comply with a law in effect and voluntary when eligibility requires actions beyond legal minimums. In the United States, eligibility of most main support programmes requires compliance with mandatory conservation provisions. The CAP in the European Union contains mandatory requirements as part of “enhanced conditionality” under the form of Statutory Management Requirements (SMR) – which are applicable to all farmers – and Good Agricultural and Environmental Condition (GAECs) standards, which apply to all farmers receiving CAP support.
This section provides examples of government actions that are designed to contribute to SPG. They demonstrate the complexity of the task facing countries, and some of their priorities and approaches. Many countries have reported different types of strategic frameworks to guide the direction of their agro-food sector towards SPG. The scope of these strategies and the balance between productivity and other goals, and what aspect of sustainability of most concern differs in many cases. Whether SPG objectives are being achieved is something that can be observed only in retrospect, which requires time and monitoring to determine.
Countries appear to agree on the importance of innovation for SPG. Examples show the strengthening of the AKIS and investments in education and extension services. Attention is also being paid to digitalisation and data, and enabling technologies that help to strike a balance between productivity and sustainability. However, innovation needs the right incentives to encourage SPG. This is why several examples support specific research areas that contribute to the environmental sustainability of agriculture, as well as government support for the adoption of sustainable technologies and practices by producers.
Regulations provide important incentives that if well-designed can steer the innovation process towards more sustainable outcomes. Only a few countries have reported regulations that seek to improve the environmental sustainability of agriculture. Low reporting of regulations for SPG doesn’t mean that regulations are absent, but that they may be considered as less relevant.
All countries in this report have taken actions towards achieving SPG according to what it means to them. An overall assessment of the results of these efforts remains elusive. Every country would benefit from an agreed comparable measurement of performance in achieving SPG that would allow governments to monitor their progress, obtain evidence of the degree of success, and adjust policies accordingly. Being able to measure outcomes serves as a compass to ensure that countries are on the path to SPG. Moving towards a common view of SPG will help coordinate international efforts.
Preliminary evidence suggests that the overall level of support in the countries included in this report has declined slightly between 2022 and 2023 but remains significantly above levels observed in the pre-pandemic era. Whether this higher level of support is a structural change that will persist or simply a response to the currently still unsettled nature of markets and trade remains to be seen. With the war in Ukraine continuing, evolving conflicts in the middle east affecting trade on the Suez Canal, drought affecting the Panama Canal, and the possibility of climate-change affecting weather trends and variability, it is safe to say that policy makers are currently acting in a world much different than even five years ago.
While levels of support relative to gross farm receipts have declined in most countries over the past two decades, the evidence suggests that the way support is being delivered to producers has not fundamentally changed in recent years. For example, the share of MPS and other most distorting forms of support in the overall positive producer support has been relatively stable, declining only 5 percentage points over the last 20 years to 65% in 2021-23. OECD work has shown that these measures can have the potential to harm the environment.
One important change is that the centre of gravity of agricultural support has moved from OECD countries towards the emerging economies, in particular China and India. The level of support in China began to increase in the mid-2000s, as that country made increasing use of border measures to protect domestic production. India’s overall PSE is negative, but the support package in that country contains elements of positive and negative support to producers that have a cumulative market impact that is likely greater than the aggregate PSE number suggests.
Governments have demonstrated their interest in agricultural policy reform, and accelerating the pace of reforms could bring benefits. For example, the OECD has estimated that reorienting budgetary support towards targeted investments in productivity and abatement technologies could reduce global agricultural greenhouse gas emissions (Valin, Henderson and Lankoski, 2023[4]). To this end, OECD members acknowledged the need to examine harmful and beneficial support measures and committed to “intensify efforts as appropriate to reform or reorient agricultural policy, and in particular to address those support measures that are harmful to the environment, to move towards more sustainable agriculture and food systems” in 2022 (OECD, 2022[10]).
At COP28 in 2023, 160 countries endorsed a Declaration which included a stated intention to “revisit or orient policies and public support related to agriculture and food systems to promote activities which increase incomes, reduce greenhouse gas emissions, and bolster resilience, productivity, livelihoods, nutrition, water efficiency and human, animal and ecosystem health while reducing food loss and waste, and ecosystem loss and degradation” (COP28, 2023[64]). Target 18 of the Kunming-Montreal Global Biodiversity Framework also commits to a reduction or reform of incentives that harm biodiversity and scaling up positive incentives for the conservation and sustainable use of biodiversity (CBD, 2022[65]).
Regardless of the challenges faced in recent years, farmers, ranchers and other agricultural producers have demonstrated impressive resilience. The value of production of agricultural commodities has been steadily trending upward as producers adopt innovations to increase production while also reducing their environmental impact. This fact alone accounts for the decline in the %PSE, the share of support as a share of gross farm receipts, which has halved from 18% in 2000‑02 to 9% in 2021‑23. As a consequence, the average farmer has become much less dependent on producer support. This statistic of course masks important variations across countries, and the following chapter will investigate individual country experiences in more detail.
Governments want sustainable productivity growth that contributes to environmental, social, and economic sustainability objectives to meet the food and nutrition needs of current and future generations. The evidence shows that governments are taking action by developing strategies and frameworks, investing in R&D institutions and the AKIS, and by providing incentives to producers to develop and adopt new methods. But more should be done to accelerate progress. Spending on the agricultural knowledge and information system (AKIS) is declining as a share of general services support in emerging economies. In all countries AKIS spending is a small portion of total support provided to the sector, USD 25 billion out of USD 842 billion in 2021-23. More broadly, general support to the sector, public investments that underpin its health and performance, made up only 16% of the TSE, a share that has been declining over time. At the same time, Total Factor Productivity, an important indicator of innovation performance, has slowed significantly in the last decade. In OECD countries, agricultural TFP grew by 1.4% annually between 1991‑2000, 1.6% between 2001-10, and 0.85% in 2011‑21.
Governments can also be more ambitious about using support to achieve environmental objectives. While 20% of support is subject to some kind of mandatory constraints much of this has to do with complying with existing regulations and only about 5% is designed to explicitly encourage voluntary environmental action. This share is low because most support still is in the form of MPS; if only payments based on A/An/R/I are considered, nearly half of support has some condition attached to it that encourages farmers to follow regulations, to take action to protect the environment, to improve the welfare of animals, or other public objective. Reorienting more support from those forms considered potentially most distorting to other forms would also increase the opportunity for governments to use support effectively to encourage sustainable productivity growth.
References
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Producer Support Estimate (PSE): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level, arising from policy measures that support agriculture, regardless of their nature, objectives or impacts on farm production or income. It includes market price support, budgetary payments and budget revenue foregone, i.e. gross transfers from consumers and taxpayers to agricultural producers arising from policy measures based on: current output, input use, area planted/animal numbers/receipts/incomes (current, non-current), and non-commodity criteria. PSE categories are defined in Box 1 A.1.
Market Price Support (MPS): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers arising from policy measures that create a gap between domestic market prices and border prices of a specific agricultural commodity, measured at the farm gate level. MPS is available by commodity, and sums of negative and positive components are reported separately where relevant along with the total MPS.
Producer Single Commodity Transfers (producer SCT): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level, arising from policies linked to the production of a single commodity such that the producer must produce the designated commodity in order to receive the payment. This includes broader policies where transfers are specified on a per-commodity basis. Producer SCT is also available by commodity.
Group Commodity Transfers (GCT): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level, arising from policies whose payments are made on the basis that one or more of a designated list of commodities is produced, i.e. a producer may produce from a set of allowable commodities and receive a transfer that does not vary with respect to this decision.
All Commodity Transfers (ACT): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level, arising from policies that place no restrictions on the commodity produced but require the recipient to produce some commodity of their choice.
Other Transfers to Producers (OTP): The annual monetary value of gross transfers from consumers and taxpayers to agricultural producers, measured at the farm gate level, arising from policies that do not require any commodity production at all.
Consumer Single Commodity Transfers (consumer SCT): The annual monetary value of gross transfers from (to) consumers of agricultural commodities, measured at the farm gate level, arising from policies linked to the production of a single commodity. Consumer SCT is also available by commodity.
Consumer Support Estimate (CSE): The annual monetary value of gross transfers from (to) consumers of agricultural commodities, measured at the farm gate level, arising from policy measures that support agriculture, regardless of their nature, objectives or impacts on consumption of farm products. If negative, the CSE measures the burden (implicit tax) on consumers through market price support (higher prices), that more than offsets consumer subsidies that lower prices to consumers.
General Services Support Estimate (GSSE): The annual monetary value of gross transfers arising from policy measures that create enabling conditions for the primary agricultural sector through development of private or public services, institutions and infrastructure, regardless of their objectives and impacts on farm production and income, or consumption of farm products. The GSSE includes policies where primary agriculture is the main beneficiary, but does not include any payments to individual producers. GSSE transfers do not directly alter producer receipts or costs or consumption expenditures. GSSE categories are defined below.
Total Support Estimate (TSE): The annual monetary value of all gross transfers from taxpayers and consumers arising from policy measures that support agriculture, net of the associated budgetary receipts, regardless of their objectives and impacts on farm production and income, or consumption of farm products.
Total Budgetary Support Estimate (TBSE): The annual monetary value of all gross budgetary transfers from taxpayers arising from policy measures that support agriculture, regardless of their objectives and impacts on farm production and income, or consumption of farm products.
Gross Farm Receipts (GFR): The annual monetary value of production, to which budgetary transfers to individual producers are added (i.e. VP + PSE – MPS).
Commodity Gross Receipts: The annual monetary value of production for an individual commodity, to which budgetary transfers to producers of that commodity are added (i.e. VP + producer SCT – MPS).
Percentage PSE (%PSE): PSE transfers as a share of gross farm receipts (including support in the denominator).
Percentage SCT (%SCT): Single Commodity Transfers as a share of gross receipts for the specific commodity (including support in the denominator).
Share of SCT in total PSE (%): Share of Single Commodity Transfers in the total PSE. This indicator is also calculated by commodity.
Producer Nominal Protection Coefficient (producer NPC): The ratio between the average price received by producers (at farm gate), including payments per tonne of current output, and the border price (measured at farm gate). The Producer NPC is also available by commodity.
Producer Nominal Assistance Coefficient (producer NAC): The ratio between the value of gross farm receipts including support and gross farm receipts (at farm gate) valued at border prices (measured at farm gate).
Percentage CSE (%CSE): CSE transfers as a share of consumption expenditure on agricultural commodities (at farm gate prices), net of taxpayer transfers to consumers. The %CSE measures the implicit tax (or subsidy, if CSE is positive) placed on consumers by agricultural price policies.
Consumer Nominal Protection Coefficient (consumer NPC): The ratio between the average price paid by consumers (at farm gate) and the border price (measured at farm gate). The Consumer NPC is also available by commodity.
Consumer Nominal Assistance Coefficient (consumer NAC): The ratio between the value of consumption expenditure on agricultural commodities (at farm gate) and that valued at border prices.
Percentage TSE (%TSE): TSE transfers as a percentage of GDP.
Percentage TBSE (%TBSE): TBSE transfers as a percentage of GDP.
Percentage GSSE (%GSSE): Share of expenditures on general services in the Total Support Estimate (TSE).
Share of potentially most distorting transfers in aggregated gross producer transfers (%): represents the sum of positive MPS, the absolute value of negative MPS, payments based on output and payments based on unconstrained use of variable inputs, relative to the sum of positive MPS, the absolute value of negative MPS, and all budgetary payments to producers.
Definitions of categories
Category A1, Market price support (MPS): Transfers from consumers and taxpayers to agricultural producers from policy measures that create a gap between domestic market prices and border prices of a specific agricultural commodity, measured at the farm gate level.
Category A2, Payments based on output: Transfers from taxpayers to agricultural producers from policy measures based on current output of a specific agricultural commodity.
Category B, Payments based on input use: Transfers from taxpayers to agricultural producers arising from policy measures based on on-farm use of inputs:
Variable input use that reduces the on-farm cost of a specific variable input or a mix of variable inputs.
Fixed capital formation that reduces the on-farm investment cost of farm buildings, equipment, plantations, irrigation, drainage, and soil improvements.
On-farm services that reduce the cost of technical, accounting, commercial, sanitary and phytosanitary assistance and training provided to individual farmers.
Category C, Payments based on current A/An/R/I, production required: Transfers from taxpayers to agricultural producers arising from policy measures based on current area, animal numbers, revenue, or income, and requiring production.
Category D, Payments based on non-current A/An/R/I, production required: Transfers from taxpayers to agricultural producers arising from policy measures based on non-current (i.e. historical or fixed) area, animal numbers, revenue, or income, with current production of any commodity required.
Category E, Payments based on non-current A/An/R/I, production not required: Transfers from taxpayers to agricultural producers arising from policy measures based on non-current (i.e. historical or fixed) area, animal numbers, revenue, or income, with current production of any commodity not required but optional.
Category F, Payments based on non-commodity criteria: Transfers from taxpayers to agricultural producers arising from policy measures based on:
Long-term resource retirement: Transfers for the long-term retirement of factors of production from commodity production. The payments in this subcategory are distinguished from those requiring short-term resource retirement, which are based on commodity production criteria.
A specific non-commodity output: Transfers for the use of farm resources to produce specific non-commodity outputs of goods and services, which are not required by regulations.
Other non-commodity criteria: Transfers provided equally to all farmers, such as a flat rate or lump sum payment.
Category G, Miscellaneous payments: Transfers from taxpayers to farmers for which there is a lack of information to allocate them among the appropriate categories.
Note: A (area), An (animal numbers), R (receipts) or I (income).
Definitions of labels
With or without current commodity production limits and/or limit to payments: Defines whether or not there is a specific limitation on current commodity production (output) associated with a policy providing transfers to agriculture and whether or not there are limits to payments in the form of limits to area or animal numbers eligible for those payments. Applied in categories A–F.
With variable or fixed payment rates: Any payments is defined as subject to a variable rate where the formula determining the level of payment is triggered by a change in price, yield, net revenue or income or a change in production cost. Applied in categories A–E.
With or without input constraints: defines whether or not there are specific requirements concerning farming practices related to the programme in terms of the reduction, replacement, or withdrawal in the use of inputs or a restriction of farming practices allowed. Applied in categories A–F. The payments with input constrains are further broken down to:
Payments conditional on compliance with basic requirements that are mandatory (with mandatory);
Payments requiring specific practices going beyond basic requirements and voluntary (with voluntary).
Specific practices related to environmental issues.
Specific practices related to animal welfare.
Other specific practices.
With or without commodity exceptions: defines whether or not there are prohibitions upon the production of certain commodities as a condition of eligibility for payments based on non-current A/An/R/I of commodity(ies). Applied in Category E.
Based on area, animal numbers, receipts or income: defines the specific attribute (i.e. area, animal numbers, receipts or income) on which the payment is based. Applied in categories C–E.
Based on a single commodity, a group of commodities or all commodities: defines whether the payment is granted for production of a single commodity, a group of commodities or all commodities. Applied in categories A–D.
Decomposition of PSE
Per cent change in PSE: Per cent change in the nominal value of the PSE expressed in national currency. The per cent change is calculated using the two most recent years in the series.
Contribution of MPS to per cent change in PSE: Per cent change in nominal PSE if all variables other than MPS are held constant.
Contribution of price gap to per cent change in the PSE: Per cent change in nominal PSE if all variables other than gap between domestic market prices and border prices are held constant.
Contribution of quantity produced to per cent change in the PSE: Per cent change in nominal PSE if all variables other than quantity produced are held constant.
Contribution of budgetary payments (BP) to per cent change in PSE: Per cent change in nominal PSE if all variables other than BP are held constant.
Contribution of BP elements to per cent change in PSE: Per cent change in nominal PSE if all variables other than a given BP element are held constant. BP elements include Payments based on output, Payments based on input use, Payments based on current A/An/R/I, production required, Payments based on non-current A/An/R/I, production required, Payments based on non-current A/An/R/I, production not required, Payments based on non-commodity criteria and Miscellaneous payments.
Change in Producer Price
Per cent change in Producer Price: Per cent change in Producer Price (at farm gate) expressed in national currency. The per cent change is calculated using the two most recent years in the series.
Decomposition of the change in the Border Price
Per cent change in Border Price: Per cent change in Border Price (at farm gate) expressed in national currency. The per cent change is calculated using the two most recent years in the series.
Contribution of Exchange Rate to per cent change in Border Price: Per cent change in the Border Price (at farm gate) expressed in national currency if all variables other than Exchange Rate between national currency and USD are held constant.
Contribution of Border Price expressed in USD to per cent change in Border Price: Per cent change in the Border Price (at farm gate) expressed in national currency if all variables other than Border Price (at farm gate) expressed in USD are held constant.
Note: The change in Producer Support Estimate (PSE) is not decomposed when PSE is negative for the current and/or previous year. The producer price change and the border price change are not calculated when both negative and positive market price support (MPS) occur at the commodity level for the previous year. Note that negative MPS estimates for livestock products may arise in cases of aligned product prices if there is positive MPS for feed commodities.
Agricultural knowledge and innovation system
Agricultural knowledge generation: Budgetary expenditure financing research and development (R&D) activities related to agriculture, and associated data dissemination, irrespective of the institution (private or public, ministry, university, research centre or producer groups) where they take place, the nature of research (scientific, institutional, etc.), or its purpose.
Agricultural knowledge transfer: Budgetary expenditure financing agricultural vocational schools and agricultural programmes in high-level education, training and advice to farmers that is generic (e.g. accounting rules, pesticide application), not specific to individual situations, and data collection and information dissemination networks related to agricultural production and marketing.
Inspection and control
Agricultural product safety and inspection: Budgetary expenditure financing activities related to agricultural product safety and inspection. This includes only expenditures on inspection of domestically produced commodities at first level of processing and border inspection for exported commodities.
Pest and disease inspection and control: Budgetary expenditure financing pest and disease control of agricultural inputs and outputs (control at primary agriculture level) and public funding of veterinary services (for the farming sector) and phytosanitary services.
Input control: Budgetary expenditure financing the institutions providing control activities and certification of industrial inputs used in agriculture (e.g. machinery, industrial fertilisers, pesticides, etc.) and biological inputs (e.g. seed certification and control).
Development and maintenance of infrastructure
Hydrological infrastructure: Budgetary expenditure financing public investments into hydrological infrastructure (irrigation and drainage networks).
Storage, marketing and other physical infrastructure: Budgetary expenditure financing investments to off-farm storage and other market infrastructure facilities related to handling and marketing primary agricultural products (silos, harbour facilities – docks, elevators; wholesale markets, futures markets), as well as other physical infrastructure related to agriculture, when agriculture is the main beneficiary.
Institutional infrastructure: Budgetary expenditure financing investments to build and maintain institutional infrastructure related to the farming sector (e.g. land cadastres; machinery user groups, seed and species registries; development of rural finance networks; support to farm organisations, etc.).
Farm restructuring: Budgetary payments related to reform of farm structures financing entry, exit or diversification (outside agriculture) strategies.
Marketing and promotion
Collective schemes for processing and marketing: Budgetary expenditure financing investment in collective, mainly primary, processing, marketing schemes and marketing facilities, designed to improve marketing environment for agriculture.
Promotion of agricultural products: Budgetary expenditure financing assistance to collective promotion of agro-food products (e.g. promotion campaigns, participation on international fairs).
Cost of public stockholding: Budgetary expenditure covering the costs of storage, depreciation and disposal of public storage of agricultural products.
Miscellaneous: Budgetary expenditure financing other general services that cannot be disaggregated and allocated to the above categories, often due to a lack of information.
More detailed information on the indicators, their use and limitations is available in OECD’s Producer Support Estimate and Related Indicators of Agricultural Support: Concepts, Calculation, Interpretation and Use (the PSE Manual) available on the OECD public website https://www.oecd.org/en/topics/policy-issues/agricultural-policy-monitoring.html.
Million USD
Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient.
A/An/R/I: Area planted/Animal numbers/Receipts/Income.
The OECD total for 1986-88 includes all 38 OECD member countries except Chile, Colombia, Costa Rica, Israel, Latvia, Lithuania and Slovenia, for which data are not available. The OECD total for 2000-02 includes all 38 OECD member countries except Latvia and Lithuania. TSE as a share of GDP for 1986-88 for the OECD is an estimate based on available data.
1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities: see notes to individual country tables.
Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.
Million USD
Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. The Emerging Economies include Argentina, Brazil, China, India, Indonesia, Kazakhstan, the Philippines, Russian Federation, South Africa, Ukraine and Viet Nam. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities: see notes to individual country tables.
Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.
Million USD
Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. The All countries total includes all OECD countries, non-OECD EU Member States, and the Emerging Economies: Argentina, Brazil, China, India, Indonesia, Kazakhstan, the Philippines, Russian Federation, South Africa, Ukraine and Viet Nam. The All countries total for 2000-02 includes data for all countries except Latvia and Lithuania, for which data are not available. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities: see notes to individual country tables.
Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.
← 1. See https://www.economicsobservatory.com/update-how-is-the-war-ukraine-affecting-global-food-prices.
← 2. See https://farmdocdaily.illinois.edu/2024/01/ripple-effects-of-shipping-lane-disruptions-on-u-s-agriculture.html.
← 3. See https://www.ifpri.org/blog/global-fertilizer-trade-2021-2023-what-happened-after-war-related-price-spikes.
← 4. See https://www.robert-schuman.eu/en/european-issues/738-the-various-causes-of-the-agricultural-crisis-in-europe.
← 5. Tables with the breakdown of the Total Support Estimates for the three regional aggregates used in this report, including OECD, Emerging Economies, and All Countries, can be found in Annex 1.B.
← 6. Includes 15 countries.
← 7. Cost of public stockholding are expenditures to cover the cost of storage or disposal of agricultural commodities, as well as their depreciation.
← 9. At present, OECD monitoring of biodiversity is limited to the farmland bird index, which, due to differing agrobiodiversity conditions and cultural norms, is reported by only 23 of the 54 countries covered by this report. The use of a habitat-based indicator, currently under development in the OECD Joint Working Party on Agriculture and the Environment, is appealing because habitats describe the environment within which diverse taxa live and the resources available for their survival. Also, there are practical advantages to tracking biodiversity by monitoring habitats, such as the ability to draw on remote sensing and aerial imagery to examine changes over time at a landscape level appropriate to any given country (Bayr et al., 2023[66]).