Food is heavily traded; 20% of global calories consumed cross at least one border and no country is entirely self-sufficient in producing all the foods it consumes. Without the easy flow of food across borders, consumers would face higher prices and limited options on store shelves, while farmers would have less opportunity to sell their products to those who want them. Trade is also vital for food security, with poor harvests in one region made up for by, supplies from other areas. Lastly, trade enables the spread of innovations that improves productivity and sustainability, and farmers in open economies are more likely to adopt innovative methods and technologies than those who are protected by trade barriers.

Yet, trade barriers such as import tariffs and quotas, and other measures that can slow or limit trade, remain widespread. Indeed, policies that restrict trade and thereby lift domestic prices above reference levels account for a substantial share of all the support provided to the sector, at USD 334 billion of the USD 842 billion per year in total support in 2021-23 across 54 countries.

Much of the support provided to the agricultural sector comes in forms that are potentially the most market- and trade-distorting and risk harming the environment. Market price support, payments based on output, and subsidies to fertilisers, fuel or water are the most trade-distorting types of support, notably if no limits have been fixed on the use of these inputs. By encouraging farmers to produce more, these policies can increase the use of polluting inputs and encourage harmful production methods. Support based on production also mainly benefits  larger farms, and drive up the prices farmers pay for land and other inputs, reducing the net benefit of the support provided by up to 75%. Lastly, these policies hinder the structural and other adjustments that are needed for adaptation to climate change and to improve the sector's ability to provide safe, nutritious, affordable food for a growing global population. 

Countries often deal with food security concerns through policies that lift domestic prices above those on international markets as a means to encourage farmers to increase domestic production. These policies, such as high tariffs or other import barriers, generally result in higher costs for food, whichdisproportionately hurt low-income households. In some countries, governments try to offset this through large payments to consumers or food distribution systems; however, these are not always targeted at those in need, can lead to food waste and loss if not well-managed, and can result in a significant budgetary burden. Effective food security policies combine investments in sustainable domestic production with easily available food imports.

Since the green revolution of the 1960s, productivity growth has helped farmers to meet the demand for more food without using more land – something that is essential for combatting climate change. Productivity growth is the result of innovations in genetics, farm management practices, materials, and machinery, supported by public investments in R&D, extension services, training, and advice. At the same time, investments in other services have also provided an enabling environment for agriculture to grow sustainably. Investments in biosecurity, such as inspection and control systems, help prevention and recovery from pests and disease outbreaks, while investments in physical and digital infrastructure and institutions underpin well-functioning production systems and markets. Lastly, governments also pay farmers directly to produce public goods on their land, e.g. for various ecosystem services such as increased biodiversity or water protection.  

Yet, despite the evidence that these investments lead to significant long-term payoffs, they remain a tiny share of support to the sector. Of the total support to the sector across the 54 countries in the OECD's annual monitoring in 2020-22, investments in innovation, biosecurity, infrastructure, and other general services represented only 12.5% of all transfers to the sector. This is a drop from 16% two decades earlier. And while the share of payments for on-farm public goods has almost doubled over the same time, they still accounted for less than 0.2% of the total. Moreover, investment in innovation needs to be well-targeted if it is to achieve sustainability objectives alongside productivity growth. There is significant scope for governments to both increase the share of support that goes to long-term investments in key general services, and to better target those investments for fostering sustainable productivity growth.