Forms of farm support/subsidy as operated in selected countries and associated conditions

Northern Ireland Assembly - Mark Allen

Type: Discussion Paper
Knowledge level: Intermediate

Farm Table says:

Written in 2016 - provides a table that outlines farm support mechanisms in EU and 11 non EU countries.

This paper, written in 2016, looks at methods and levels of agricultural support available to farmers across the world.

The paper states, in terms of the UK, average payments per hectare under the Common Agricultural Policy deal, are:

  • UK as a whole – €229/ha
  • England – €265/ha
  • Scotland – €130/ha
  • Wales – €247/ha.
  • Northern Ireland – €339/ha (access to the Basic Payment Scheme)

Whilst Northern Ireland appears to fare well in terms of direct payments, the fact remains that based on 2014-15 data direct payments represented 103% of the value of average Farm Business Income.

The paper outlines support mechanisms for agriculture utilised in a selection of countries, including EU countries and 11 non-EU countries.

In addition, a ranking of each of the countries is provided.

In analysing the data, the author found:

  • Appears to be a positive correlation with total support as a proportion of GDP, agricultural employment and contribution of agriculture to GDP.
  • Producer Support Estimates as a % of Gross Farm Receipts – greatest variation across countries. Highest in Switzerland (62.4%) and lowest in Australia (1.3%) and New Zealand (0.7%).

It is not clear from the available data however if this reflects the state of agriculture within a country and an apparent need to protect it in instances where it is struggling, or the fact that farming could be doing well and does not require direct support.

  • Majority of countries analysed make annual direct payments to farmers
    • China, EU, Iceland, Norway, South Korea and Switzerland
  • Remaining do not make annual direct payments but have mechanisms to make direct payments in some circumstances, mostly linked to drought or natural disaster alleviation
    • Australia, Canada and New Zealand
  • USA and Brazil
    • Currently no direct payments to farmers. But US did until 2014 and passing of Farm Act *Please note this is now outdated with Trump Administration
  • Types of Direct Payments
    • EU, Norway and Switzerland – emphasis on area payments
    • Norway – also has a production based payment for meat
    • Turkey, Iceland, South Korea and China – headage/area based systems but emphasis more restrictive and focused on particular commodities.
    • South Korea and Turkey – provide direct payments to farmers for additional elements of activity, including early retirement payment, environmental friendly agriculture, certified seed and chemicals etc.
    • EU, Norway, Switzerland and Turkey – environmental or enhancement conditions apply.
  • Additional forms/mechanisms of support include:
    • Border tariffs and guaranteed minimum pricing (Aus and NZ do not employ any direct market price support mechanisms)
    • Turkey: exempt from income tax
    • Canada: access to credit through cash advances for their produce.
    • Brazil: preferential interest rates
    • Australia and NZ: drought/disaster relief, tax credits, childcare assistance, Farm Household Allowance

The author finishes with the following:

Raises the question as to whether agriculture in places such as New Zealand, Brazil or Australia is more efficient than other countries, as agricultural employment is relatively high but support is comparatively low in terms of both percentages of GDP and PSE as a percentage of GFR, and if so why is this case? Are the other forms of support available in these countries more effective than direct payments and if so could this be the case in other countries too? Do other farmers in other countries simply need more direct support, and if so why, or is it simply a case that dependency has been built on these payments?

2016 - Europe - Northern Ireland Assembly - Mark Allen
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