Abstract:

Indicators of real support make it possible to compare policies across countries. EU farmers are more supported than their US colleagues, but EU support generates little distortion on world markets. US and Canada adjust support to protect farmers from adverse situations. Like the growing levels of support in Russia and China, these policies generate market distortions. Swiss support is directed towards the provision of public goods. In some countries such as Brazil, agricultural support targets innovation while most EU support has a focus on farm income.

CONTENTS

LIST OF ABBREVIATIONS 5

LIST OF TABLES 7

LIST OF FIGURES 7

EXECUTIVE SUMMARY 11

1. Introduction 25

1.1. Measuring agricultural support 25

1.1.1. The need for measures of agricultural support 25

1.1.2. Limitations of measures of agricultural support 26

1.2. The types of policy instruments used to support agriculture 26

1.2.1. Price support 26

1.2.2. Production control 27

1.2.3. Payments to producers 27

1.2.4. Demand based instruments 28

1.2.5. Trade-related instruments 29

1.2.6. Other forms of support 29

1.3. The indicators most commonly used 29

1.3.1. Conceptual benchmarks 30

1.3.2. Empirical modelling 30

1.3.3. OECD indicators 31

1.3.4. WTO indicators 31

1.3.5. Indicators of the gap between domestic and world prices 32

1.3.6. Indicators of support dispersion 33

1.4. Political issues associated with these systems of comparison 33

2. Methodology for comparison 35

2.1. Identifying the goals of agricultural support 35

2.1.1. Non market objectives 35

2.1.2. Market failures 35

2.1.3. Political economy 36

2.2. What is asked from a measure of agricultural support? 37

2.2.1. Desirable properties 37

2.3. The pros and cons of the main measures of farm support 38

2.3.1. Budget expenditure 38

2.3.2. Subsidies received by farmers 39

2.3.3. Producer Support Estimates 40

2.3.4. The Aggregate Measure of Support 44

2.4. How measures differ? The case of the EU 46

2.5. The methodology adopted in the study 48

2.5.1. Data sources 48

2.5.2. Indicators 49

2.5.3. Using purchasing power parities 50

2.5.4. An illustration of indicators of support in real terms 54

2.6. Conclusion: the methodology adopted 59

6.2.3. More ecological compensation areas? 133

6.2.4. More emphasis on research and innovation? 135

7. Conclusion 137

8. Bibliography 139

Annexes 147

Annex 1. The OECD indicators 147

Annex 2. PSE categories and sub categories 148

Annex 3. PSE labels 149

Annex 4. The US layers of payments to farmers 150