China's farm subsidies up but OECD states' at record low

21st September 2011, Comments 0 comments

China's subsidies to farmers grew six-fold from 2008 to reach $147 billion in 2010, with an increasing amount going to propping up farmers' pay, the OECD said Wednesday.

Conversely, support to farmers in OECD member states fell to a record low in 2010.

"The number and scope of programmes providing budgetary support to agriculture has been increasing" in China, said the Organisation for Economic Cooperation and Development.

"To an increasing extent, they take the form of direct income support payments," added the organisation, which noted that this could help to enhance farmers' pay more effectively.

However, a significant part of the subsidies are still allocated for farming tools such as chemical fertilisers.

"Such payments not only are distortive but also have negative impacts on the environment," warned the organisation in a statement, calling on them to be discontinued.

The OECD's agricultural policy analyst Vaclav Vojtech noted that the main factor for the increase is that "China isolates domestic prices from world prices."

"The isolation was translated into increasing price gap and support. That isolation in prices is the key driver of this rise," he said.

China is a net food importer, particularly of soybeans.

The share that agriculture contributes to output in China has halved from 20 percent in 1995 to 10.3 percent in 2010, said the report, which looked at the agriculture policies in OECD countries as well as five major emerging economies.

While China is increasing its support to farmers, among OECD member states, subsidies for producers are falling.

In 2010, support to producers across the bloc reached $227 billion, a historic low, the OECD said.

The European Union's $101.4 billion made up nearly half of that sum. Nevertheless, the EU support marked a fall to about a fifth -- 22 percent of the bloc's farm income in 2010.

The highest proportion of farm support was recorded in Norway, where 60 percent of farm receipts came from subsidies, followed by Switzerland with 56 percent and Japan with 49 percent for the year.

In the United States, this percentage was seven percent.

© 2011 AFP

0 Comments To This Article