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Seed money: How much do farmers get from government?

7 July 2010
by Patrick Love

In 2008, farmer Jeremy T. James of Blackburn got 32 pence (around $0.45) from the EU’s Common Agriculture Policy (CAP). That’s not much, but it’s still over 30 times more than his Blackburn neighbours A&KM Barnes, who only got a penny. Queen Elizabeth II on the other hand got nearly £500 000 (around $700 000), and she wasn’t the only royal to benefit. Prince Albert II of Monaco got over half a million euros, as did the Duke of Westminster.

The industrial aristocracy didn’t do too badly either, with food giants Nestlé and Tate&Lyle getting around a million pounds each. The biggest UK  payout, over £6.7 million, went to Czarnikow Group Limited of London, a “professional services company in the sugar market” according to their website. In France, the biggest sum from the CAP was the 62.8 million euros going to Groupe Doux, a multinational present in 130 countries, that presents itself as “Europe’s number one producer of poultry and poultry-based processed products”.

Other OECD countries could show a similar pattern for farm subsidies – the rich getting more than their less well-off colleagues.

More what, though? There are problems with vocabulary in such a sensitive area. For some people, we’re talking about handouts or the less pejorative “aid” or “assistance”. Others prefer the dynamism of “incentives”, or the neutral-sounding “transfers”. The OECD term “support” describes the various ways in which governments intervene in the business of agriculture, including subsidies, grants, tax breaks and other policies that boost revenues.

Whatever the terms used, agricultural support costs a lot of money – $252 billion in 2009 for OECD countries according to the newly-published Agricultural Policies in OECD Countries.

Support as % of gross farm receipts, 2007-09 average

That sum represents 22% of total farm receipts in OECD countries, the same as in 2007, but up a percentage point from 2008, when support was less after agricultural commodity prices hit record highs. As the graph shows, the level of support varies enormously, from 1% in New Zealand to 61% in Norway.  

Support to agriculture is often criticised for going to the wrong people (a catering company supplying cruise ships got 148,000 euros in subsidies in 2008 for the sugar and milk powder it “exported” in passengers’ stomachs) or for encouraging harmful practices.

The report argues that with public budgets under pressure in the wake of the economic crisis, governments need to reassess and adapt their farm support policies to meet specific economic, social and environmental objectives, rather than simply encouraging famers to produce as much as they can.

This kind of conditional support in pursuit of broader objectives, such as preservation of the environment, conservation of natural resources or animal welfare, represented only 4% of the OECD aggregate support in 1986-88, but now represents a third. The EU, US and Switzerland provided the highest shares (around 50%) of their total support with some constraints.

Useful links

OECD work on agriculture

OECD agricultural support database includes information by country provides data on who receives EU subsidies

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