A NEW AGRICULTURAL POLICY
DEVELOPMENTS IN AGRICULTURAL POLICY AND SUPPORT BY COUNTRY 2 OVERALL TRENDS IN AGRICULTURAL SUPPORT 3 ARGENTINA 4 AUSTRALIA 5 BRAZIL 6 CANADA 7 CHILE 8 CHINA 9 COLOMBIA 10 COSTA RICA 11 EUROPEAN UNION 12 ICELAND 13 INDIA 14 INDONESIA 15 ISRAEL 16 JAPAN 17 KAZAKHSTAN 18 KOREA 19 MEXICO 20 NEW ZEALAND 21 NORWAY 22 PHILIPPINES 23 RUSSIAN FEDERATION 24 SOUTH AFRICA 25 SWITZERLAND 26 TURKEY 27 UKRAINE 28 UNITED KINGDOM 29 UNITED STATES 30 VIET NAM THIS CHAPTER FIRST PROVIDES AN OVERVIEW ON RECENT ECONOMIC AND MARKET DEVELOPMENTS THAT PROVIDE THE CONTEXT FOR THE IMPLEMENTATION OF AGRICULTURAL POLICIES THE SECOND SECTION PRESENTS MAIN CHANGES AND INITIATIVES IN AGRICULTURAL POLICIES IN 2020-21, FOCUSING ON POLICY RESPONSES TO THE COVID-19 PANDEMIC THAT TARGET, OR STRONGLY AFFECT, AGRICULTURAL PRODUCERS, FOOD CONSUMERS AND OTHER ACTORS ALONG THE FOOD SUPPLY CHAIN THE SUBSEQUENT ANALYSIS OF LEVELS AND STRUCTURES OF AGRICULTURAL SUPPORT INFORMS AN ASSESSMENT OF THE EXTENT TO WHICH CURRENT SUPPORT CONTRIBUTES TO THE FOOD SYSTEMS’ “TRIPLE CHALLENGE” OF ACHIEVING FOOD SECURITY AND NUTRITION, PROVIDING LIVELIHOODS TO THOSE CONNECTED TO THE SECTOR, AND REDUCING THE ENVIRONMENTAL FOOTPRINT AND GREENHOUSE GAS EMISSIONS OF THE SECTOR THE CHAPTER ALSO EXPLORES HOW CURRENT POLICIES PERFORM ACROSS PRODUCTIVITY, SUSTAINABILITY AND RESILIENCE, KEY CHANNELS FOR CONTRIBUTING TO ADDRESSING THESE CHALLENGES IT CONCLUDES WITH AN ASSESSMENT OF POLICY DEVELOPMENTS, AND WITH RECOMMENDATIONS FOR CONCRETE ACTIONS 1 DEVELOPMENTS IN AGRICULTURAL POLICY AND SUPPORT IN 2020, AGRICULTURAL POLICIES AND SUPPORT TO THE SECTOR WERE SIGNIFICANTLY AFFECTED BY THE OUTBREAK OF THE CORONAVIRUS SARS-COV-2, THE SUBSEQUENT SPREAD OF THE COVID-19 VIRUS, AND SUBSTANTIAL RESTRICTIONS TO POPULATIONS AND ENTERPRISES AIMED AT CONTAINING THE VIRUS THESE FACTORS CAUSED ECONOMIC GROWTH TO SLOW SIGNIFICANTLY OR EVEN TURN STRONGLY NEGATIVE IN ALL ECONOMIES, WHILE IN MANY COUNTRIES UNEMPLOYMENT ROSE AS COMPANIES WERE FORCED TO LAY OFF EMPLOYEES COMMODITY MARKETS WERE AFFECTED AS WELL, BUT THE IMPLICATIONS FOR GLOBAL AGRICULTURAL MARKETS REMAINED COMPARATIVELY LIMITED AS, DESPITE SOME SIGNIFICANT STRESSES, FOOD SYSTEMS AND SUPPLY CHAINS PROVED RELATIVELY ROBUST THE PANDEMIC CAUSED MAJOR DISLOCATIONS TO FOOD MARKETS, IN PARTICULAR WITH THE CLOSURE OF RESTAURANTS, AND THE SHIFT IN CONSUMPTION AWAY FROM FOOD OUTSIDE THE HOME BUT THE OVERALL DEMAND FOR FOOD WAS FAIRLY STABLE, AS FOOD SUPPLY WAS GENERALLY RECOGNISED TO BE ESSENTIAL AND THUS EXEMPT FROM LOCKDOWNS, WHILE CONSUMERS PRIORITISED FOOD AMONG THEIR EXPENDITURES HOWEVER, SEVERAL ADVANCED ECONOMIES SAW INCREASED RECOURSE TO FOOD BANKS AMONG LOW INCOME CONSUMERS WHO HAD SEEN A DRASTIC FALL IN THEIR INCOMES LABOUR INTENSIVE SECTORS, SUCH AS MEAT PROCESSING AND SECTORS REQUIRING SEASONAL LABOUR FOR PLANTING OR HARVESTING, WERE ALSO DEEPLY AFFECTED BY THE VIRUS AND MEASURES TO CONTAIN IT AS A LAND BASED ACTIVITY, THE PRODUCTION OF MOST COMMODITIES WAS GENERALLY ABLE TO WITHSTAND THE PANDEMIC, ALTHOUGH THOSE PRODUCTS REQUIRING MORE LABOUR INPUT – PRINCIPALLY FRUITS AND VEGETABLES – OR WHERE SUPPLY IS DESTINED PRIMARILY FOR THE RESTAURANT TRADE, WERE MORE AFFECTED IN GENERAL, DEVELOPMENTS ON AGRICULTURAL MARKETS WERE DRIVEN AS MUCH BY NON-COVID FACTORS AS BY THE IMPACTS OF THE PANDEMIC OVERALL, THE AGRICULTURAL SECTOR PROVED REMARKABLY RESILIENT, WITH FARM INCOMES INCREASING IN 2020 FOR A MAJORITY OF COUNTRIES COVERED IN THIS REPORT TO HELP PEOPLE AND COMPANIES TO COPE WITH THE ECONOMIC CONSEQUENCES OF BOTH THE VIRUS AND CONTAINMENT STRATEGIES, GOVERNMENTS INTRODUCED A WIDE SET OF POLICIES AS OF EARLY 2020 IN LOOKING AT CHANGES MADE TO AGRICULTURAL POLICIES AND SUPPORT, THIS REPORT THEREFORE BEGINS BY DISCUSSING POLICY RESPONSES TO THE COVID-19 PANDEMIC THAT FOCUS ON, OR STRONGLY AFFECT, AGRICULTURAL PRODUCERS, OTHER ACTORS ALONG THE FOOD SUPPLY CHAIN, AND FOOD CONSUMERS THE REPORT THEN ANALYSES THE LEVEL AND STRUCTURE OF AGRICULTURAL SUPPORT, IN PARTICULAR IN TERMS OF THE EXTENT TO WHICH THEY HELP OR HINDERS THE PERFORMANCE OF FOOD SYSTEMS, GAUGED IN TERMS OF THEIR CONTRIBUTION TO THE “TRIPLE CHALLENGE” OF: 1 ACHIEVING FOOD SECURITY AND NUTRITION FOR A GROWING WORLD POPULATION 2 PROVIDING LIVELIHOODS TO FARMERS AND OTHERS CONNECTED TO THE SECTOR, EITHER VERTICALLY ALONG THE VALUE CHAIN OR SPATIALLY ACROSS RURAL ECONOMIES 3 REDUCING THE ENVIRONMENTAL FOOTPRINT OF THE SECTOR AND CONTRIBUTING TO LOWER GREENHOUSE GAS (GHG) EMISSIONS DRAWING ON INSIGHTS FROM THE OECD FRAMEWORK FOR PRODUCTIVITY, SUSTAINABILITY AND RESILIENCE, THIS PART OF THE REPORT ALSO EXPLORES HOW CURRENT POLICIES PERFORM ACROSS THE THREE DIMENSIONS OF PRODUCTIVITY, SUSTAINABILITY AND RESILIENCE, WHICH ARE IDENTIFIED AS KEY CHANNELS THROUGH WHICH AGRICULTURE CAN CONTRIBUTE TO THE CHALLENGES FACING FOOD SYSTEMS LASTLY, THIS PART OF THE REPORT CONCLUDES WITH AN ASSESSMENT OF THE DEVELOPMENTS IN POLICIES AND SUPPORT, AND WITH RECOMMENDATIONS FOR CONCRETE ACTIONS TO IMPROVE THE PERFORMANCE OF AGRICULTURAL POLICIES IN MEETING THE CHALLENGES FACING GLOBAL FOOD SYSTEMS KEY ECONOMIC AND MARKET DEVELOPMENTS CONDITIONS IN AGRICULTURAL MARKETS ARE STRONGLY INFLUENCED BY MACRO-ECONOMIC FACTORS, SUCH AS ECONOMIC GROWTH (MEASURED BY GROSS DOMESTIC PRODUCT, GDP), WHICH GENERATES THE INCOME SUPPORTING DEMAND FOR AGRICULTURAL AND FOOD PRODUCTS, AS WELL AS PRICES FOR CRUDE OIL AND OTHER ENERGY SOURCES WHICH AFFECT THE PRICES OF NUMEROUS PRODUCTION INPUTS IN AGRICULTURE, SUCH AS FUEL, CHEMICALS AND FERTILISER ENERGY PRICES A NEW AGRICULTURAL POLICY NOTES: 1 PERCENTAGE CHANGES; LAST THREE COLUMNS SHOW THE INCREASE OVER A YEAR EARLIER 2 MOVING NOMINAL GDP WEIGHTS, USING PURCHASING POWER PARITIES 3 PER CENT OF LABOUR FORCE 4 PRIVATE CONSUMPTION DEFLATOR SOURCE: OECD (2020), OECD ECONOMIC OUTLOOK N°108 - DECEMBER 2020, LAST UPDATED NOVEMBER 2020, HTTP://DOTSTAT OECD ORG/INDEX ASPX?DATASETCODE=EO108_INTERNET A NEW AGRICULTURAL POLICY THE CONSEQUENCES OF THE COVID-19 PANDEMIC AND OF RELATED RESTRICTIONS ARE STRONGLY VISIBLE IN INTERNATIONAL TRADE IN REAL TERMS, GLOBAL TRADE DECLINED BY MORE THAN 10% YEAR-ON-YEAR, FOLLOWING ALREADY SLOW GROWTH IN 2019 LOWER ECONOMIC GROWTH AND RESTRICTIONS ON PERSONAL AND ECONOMIC MOBILITY PUT SIGNIFICANT PRESSURE ON PRICES FOR ENERGY AND OTHER NON-FOOD COMMODITIES (IMF, 2021[2]) ON AVERAGE, ENERGY PRICES IN 2020 WERE 30% LOWER THAN IN 2019, AND MORE THAN 40% BELOW THEIR 2018 LEVELS CRUDE OIL PRICES, WHICH HAD FALLEN TO LEVELS CLOSE TO (AND ON CERTAIN MARKETS EVEN BELOW) ZERO IN APRIL 2020, AVERAGED 33% LOWER OVER THE FULL YEAR COMPARED TO 2019 LOWER ENERGY PRICES ALSO PULLED DOWN FERTILISER PRICES, WHICH ON AVERAGE WERE 9% LOWER YEAR-ON-YEAR IN COMPARISON, FOOD PRICES REMAINED ROBUST AFTER DROPPING BY 7% IN THE SECOND QUARTER OF 2020, AVERAGE INTERNATIONAL FOOD PRICES INCREASED TOWARDS THE END OF THE YEAR, AND ANNUAL AVERAGES ENDED 3% HIGHER THAN IN 2019, WITH CONTRASTING MOVEMENTS BETWEEN CROP AND LIVESTOCK MARKETS, AS EXPLAINED BELOW FIGURE 1 1 COMMODITY WORLD PRICE INDICES, 2007 TO NOTE: THE TOP PART OF THE GRAPH RELATES TO THE LEFT SCALE, WHILE THE BOTTOM PART OF THE GRAPH TO THE RIGHT SCALE SOURCE: IMF (2021), COMMODITY MARKET REVIEW, FOR ALL COMMODITIES, FOOD AND ENERGY INDICES (BASE YEAR: 2016), WWW IMF ORG/EXTERNAL/NP/RES/COMMOD/INDEX ASPX; FAO (2021), FAO FOOD PRICE INDEX DATASET, FOR MEAT, DAIRY AND CEREAL INDICES (BASE PERIOD: 2014- 16), WWW FAO ORG/WORLDFOODSITUATION/FOODPRICESINDEX/EN STATLINK 2 HTTPS://STAT LINK/4N31TE ALL COMMODITIES FOOD ENERGY MEAT DAIRY CEREALS A NEW AGRICULTURAL POLICY