High-Level Meeting of the OECD Committee for Agriculture, 14-15 June 2005 - Chair Franz Fischler's Summary

1. We have welcomed the opportunity for representatives of the thirty OECD Member countries, together with Brazil, China, India and South Africa, to meet here in Paris in the non-negotiating environment of the OECD. The meeting has successfully contributed to our common understanding of the global dimensions of agricultural policy reform, through lively discussions in the two sessions, on achieving domestic objectives, while facilitating trade.

Achieving Domestic Agricultural Policy Objectives …

2. Agricultural conditions differ widely across countries but our societies share many of the same interests and expectations. In all of our countries, policy priorities for the agri-food sector have changed markedly over time, and we foresee further changes.

3. Looking first at Brazil, China, India and South Africa, over the last fifteen years or so, fundamental political and economic reforms have been undertaken, with far reaching implications for agriculture. Considerable progress has been made, not the least in poverty reduction, demonstrating that agriculture can contribute towards achieving sustainable economic development and poverty alleviation.

4. In the OECD area, policies have also changed, though the pace has been slow. Emphasis on demand-side issues has grown considerably as consumers have increasingly turned their attention from concerns about having enough to eat to the ways in which food is produced, its safety, and its quality characteristics. At the same time, the contributions that agriculture can make beyond producing food and fibre have gained in appreciation. These include countryside and nature management, biodiversity, rural amenities, and rural community well being, amongst others.

5. In all countries there is an emphasis on reducing harmful impacts that agriculture has on the environment, and on the urgency in dealing effectively with the increasing scarcity of water and productive land in a world where demand for food continues to grow and the use of agricultural commodities for various non-food uses, including renewable energy, may also expand. There is also interest in ensuring balanced economic development across rural and urban areas, and across economic sectors within rural areas themselves. Increasing off-farm income opportunities can greatly benefit both agriculture and rural areas. Improving infrastructure and encouraging innovation in technology and the knowledge-base remain important priorities.

6. We are all challenged to adjust our policies to evolving priorities, and to aim for balanced policy approaches that are effective, efficient and equitable. It is increasingly necessary to decouple support from commodity production and from prices, moving towards a whole farm approach and allowing markets to guide production decisions in agriculture. Reducing the regulatory and administrative burden on the agri-food sector can play an important role in improving the efficiency of the sector. We recognize that policies that directly target specific objectives, such as helping farmers to manage risks, contributing to viable rural communities, and improving environmental performance, can achieve better results than across-the-board support based on agricultural output and prices.

7. We note that in many countries the strengthening of farmers’ ability to compete in an increasingly globalized economy is a primary objective. In addressing this shared goal, each country will have to focus on the particular advantages of its agriculture and food sector.

While Facilitating Agricultural Trade

8. We have considered the extent to which the policies pursued in other countries affect our ability to meet our own aims. We note that this is of particular significance for countries where agricultural production and trade play a large role in the overall economy. As the overwhelming share of the world’s poor live in rural areas, improving conditions in global agriculture can make a major contribution towards achieving the goal of eradicating extreme poverty and hunger. At the same time, we note that most of the gains from opening markets are expected from unilateral policy reform.

9. We emphasized the sovereign right of all nations to pursue their domestic policy objectives in the food and agriculture sector, at the same time recognizing the responsibility of all countries to adopt policies that minimize any negative international spill-over effects. We have considered the results of OECD analysis that policies which perform best domestically also tend to distort trade the least. Opening up markets and reducing trade distorting subsidies in the process of multilateral trade liberalization, therefore, does not undermine countries’ ability to achieve their domestic aims in agriculture.

10. In this context we discussed the trade implications of different agricultural policies. While it is widely recognized that the decoupling of farm support from production can greatly improve international trading conditions, the amount and duration of support provided remains contentious. Countries with lower levels of farm support continue to be concerned about the trade implications of higher support in other countries. A major reason for providing high support was to compensate farmers for policy reforms that have been made. In many countries there is an interest in paying farmers for services such as care of land, water and ecosystem resources, but which are not remunerated by markets. The common aim of all countries in pursuing their domestic interests is to avoid depressing global markets and imposing unfair burdens on producers in other countries.

11. We all recognise that improving market access globally in parallel with reducing trade distortions from export competition measures remain a priority for international policy reform in agriculture, and that non-tariff barriers must not be used to replace tariffs. Both governments and industry are responding to consumers who increasingly require a wide range of assurances about the safety, quality characteristics and methods of production of the food they purchase. We recognise that efforts must be made to enable competitive producers in all parts of the world to meet these demanding standards and to access global markets. We considered the beneficial role that preferential tariff treatment of imports from developing countries can play, but also stressed that such preferences must not hinder global tariff reductions.

12. While policy and trade reform yields global welfare gains, there are winners and losers. We discussed the importance of policies that assist individuals, sectors and regions negatively affected in their efforts to cope. We all recognise that trade liberalization needs to be accompanied by well-targeted national and multilateral assistance mechanisms and domestic reforms to ensure that all nations benefit from the progressive opening of agricultural markets. But we also underlined that adjustment needs should not be used as a reason to slow the reform process.

13. We all stressed that rapid progress must be made in the ongoing multilateral trade negotiations. Such progress would also help to overcome political resistance to domestic policy reform. We reconfirm the importance of the development dimension in these negotiations, not least in agriculture. For developing countries to benefit from trade and growth potential provided by more open markets, there is a need for development assistance and trade capacity building including through well-targeted technical assistance.

14. We found our exchange of views during this High Level Meeting rewarding. We strongly support the OECD in continuing to provide relevant, practical and widely available policy analysis and to facilitate dialogue and co-operation among a broad range of countries, to help our governments’ efforts towards further policy reform and economic development. In particular, we welcomed OECD efforts to continue to reach and engage less developed economies, with a view to improving not just the performance of national policies, but also the functioning of global agricultural markets.