Policies for the Future of Farming and Food by OECD

Policies for the Future of Farming and Food How to improve productivity, sustainability and resilience? May 2021

Policies for the Future of Farming and Food

» Farmers are at the cornerstone of the food system. Their

operations have a major impact on global emission and the environment, and they are susceptible to natural shocks and to the effects of climate change. Productivity growth is essential in order to meet the rising demand for food sustainability and to generate income growth.

» The OECD Agro-Food Productivity-Sustainability-Resilience

Policy Framework (PSR) is an evidence-based approach to policy assessment, built to determine if the overall policy environment is conducive to achieving sustainable agricultural productivity growth and increased resilience.

Countries engaging in a PSR review benefit from comparative indicators of performance and country specific policy recommendations to improve the performance of their food and agriculture systems.

The OECD has decades of experience in analysing and discussing policies… We will make sure that the agricultural innovation system is ready for future challenges Mr. State Secretary Widar Skogan Norwegian Ministry of Agriculture and Food, during the release of the Review of Norway

OECD Trade and Agriculture Directorate

What outcomes do governments want to achieve?

The PSR framework recognises each country’s own national objectives and frames them into three interrelated sets of policy goals agreed by OECD Agricultural Ministers:

Productivity

Sustainability

Resilience

or producing more with less, in a more efficient combination of inputs;

of natural resources, improvement of environmental outcomes and contribution to climate change mitigation;

of the agricultural system to absorb the impacts of adverse events, recover from them, and adapt and transform in response to new uncertainties.

Policies for the Future of Farming and Food

Why the whole policy package matters? The policy environment defines incentives (and disincentives) for the agriculture and food sector. Different areas of government policy and regulations affect the capacity of the agro-food system to deliver, including:

Agricultural policies

The agricultural innovation system

Broader policies

The macroeconomic environment

covering farm payments, trade measures, market measures, agrienvironmental policies and sectoral general services create direct farming incentives;

encompassing all public and private actions and institutions involved in investment, research and development, and in knowledge flows and international cooperation;

with impact on the food and agriculture system, such as infrastructure and rural development, natural resource management, food safety and animal health, and economywide policies on entrepreneurship, competition, trade and investment, finance, taxation, labour, education and skills, information and communication technology;

and the quality of the governance

OECD Trade and Agriculture Directorate

What drives the transformation of agro-food systems? The PSR review analyses three main drivers that constitute the transmission belt between policies and outcomes:

Innovation

Structural change

Climate change and natural resources

as a dynamic learning process of development and adoption of new technologies and organisational changes that increase productivity and respond to environmental challenges.

in the characteristics, assets and skills of farms and agrofood businesses. Structural Change contributes to innovation processes and response to climate change challenges.

that define the boundaries within which the agro-food sector operates and outline priorities for innovation and structural change.

OUTCOMES

POLICY AREAS DRIVERS The OECD Agro-Food Productivity-Sustainability-Resilience Policy Framework

Policies for the Future of Farming and Food

What do reviewed countries get out of the process? Higher productivity does not always imply a reduction in environmental pressures such as GHG emissions or nutrient balances (Figure). The PSR policy analysis provides specific recommendations on different policy areas to make productivity growth compatible with improved sustainability and resilience: » How to enhance well-functioning markets and a sound and stable regulatory and policy environment that are key to harness evolving market opportunities; » How the government can act on sector and non-sector policy levers to influence in a coherent manner innovation, structural change, natural resource use and climate change, to drive sustainable productivity growth and resilience along the entire agro-food supply chain; » How to reorient agriculture policy towards long-term productivity and sustainability objectives, making agriculture innovation systems more responsive to sectoral and economy-wide needs. The final set of outcomes of the review process goes beyond the policy analysis report and its specific policy recommendations, and includes an evidence based policy dialogue drawing on other countries’ experiences in order to facilitate the decision-making process.

Benchmarking productivity and sustainability performance: Changes in agricultural total factor productivity (TFP) and nitrogen balance per agriculture land area, 2005-07 to 2013-15 50

AUT

LVA RUS

40 30

NZL

AUS

VNM CAN HUN IND ISL MEX CRI PRT LUX JPN ITA ISR ESP 0 PHL CZE CHN BRA CHE GBRFINTUR KOR NOR BEL EST FRA -10 SVN POL DEU UKR EU24 NLD -20 IRLSVK USA DNK 10

GRC

-30 -40 -10

-50

Decrease

LTU

SWE

COL 0

20 TFP growth

50 Increase

Notes: The widespread heterogeneity in productivity and environmental performance is partly attributed to different starting points across countries. Although environmental pressure grows at a slower pace than agricultural productivity in most of the analysed economies (area below the arrow in figure), there is still a room for further improvements in nitrogen balances to achieve an absolute decoupling of productivity growth from environmental pressure (bottom-right quadrat in figure). The EU24 refers to all European Union countries except Estonia, Hungary, Croatia and the United Kingdom. Source: Adapted from OECD (2020), “Agricultural Policy Monitoring and Evaluation 2020”.

OECD Trade and Agriculture Directorate

How does the PSR review process work?

Engagement with government, experts and stakeholders

First policy discussion (policy challenges and a long-term view)

PSR report (systematic assessment of the factors driving performance, analysis of relevant policy areas and recommendation)

Final policy consultation (peer review, final policy dialogue)

Review of the implementation of policy recommendations

Information exchange and data collection

The PSR framework at work