Refocus Agriculture Spending to Cut Emissions, Boost Productivity, OECD Urges Governments

This story is part of the Food & Water Joint Coverage Week of Covering Climate Now, a global journalism collaboration strengthening coverage of the climate story.

While global spending on agriculture has increased, critical support to help the sector build resilience and reduce emissions has decreased, an international agency concludes, even though effective policies are vital to avert a global disaster as food supplies are threatened by climate disasters and the war in Ukraine.

“This year, we are launching the report at a very particular moment in time,” said Marion Jansen, director of trade and agriculture for the Organisation for Economic Co-operation and Development (OECD).

“It’s a year in which the agricultural sector may be facing a combination of challenges that together are bigger than any single disaster the global level has faced over the past 20 years.”

Climate change imposes “complex and unique challenges” on agriculture, which is both particularly vulnerable to climate and weather conditions and a significant contributor to the emissions that drive the climate crisis forward. But unlike many other emissions-intensive sectors, agriculture can also help reduce emissions by storing carbon in biomass and soils. Given the range of government policies influencing the sector, tackling agriculture emissions will require a careful assessment of how different policies support or hinder environmental outcomes.

The OECD agriculture evaluation covers policies across 54 countries—38 OECD countries, 5 non-OECD European Union states, and 11 emerging economies—that collectively contribute roughly two-thirds of the sector’s greenhouse gas (GHG) emissions. It reveals that agriculture support in those countries totalled US$817 billion between 2019 and 2021, a 13% increase from 2018-20. It attributes the rise to a mix of factors, including the impacts of the COVID-19 pandemic and rebuilding pig herds after the fallout from African swine fever.

But while the overall amount of support has increased, the funding for general services—areas like innovation, biosecurity, or infrastructure, which are “key for increasing sustainable productivity growth and therefore reducing greenhouse gas emissions from agriculture”—declined to 13% of the total, from 16% in the previous term. OECD cast that decline as a bad sign for a sector that, more urgently than ever, is under pressure to adapt to a changing climate.

“This is not a good signal, as a significant boost to sustainable productivity growth is needed to address the challenges facing food systems while simultaneously keeping agricultural emissions on track to reach the Paris Agreement targets,” Jansen said in a release.

The report calls for a renewed focus on reducing agricultural GHG emissions while sustaining food security, livelihoods, and sustainability. Specific policy recommendations include:

• Phasing out market price support and payments that have potential to harm the environment and to distort markets and trade;

• Reorienting budgetary support to public goods and key services to improve agricultural performance;

• Targeting income support to those households most in need;

• Enhancing the resilience toolkit for a world of diverse risks, increasing extreme weather events, and natural disasters;

• Implementing an effective pricing system for agricultural GHG emissions as an incentive for the shift to low-emission agriculture; and

• Where agriculture is not included in broad carbon pricing or equivalent schemes, developing a package of approaches to ensure significant emissions reductions in the sector.

Despite the urgency to reduce emissions, the evaluation points out that only 16 of the 54 countries had set reduction targets specific to agriculture. Jansen said targets are important to drive policy outcomes because they necessitate monitoring and reporting to track success.

“Making a strong case for agriculture and a better story for the agricultural sector could happen through more frequently using explicit targets for that sector and its climate impact,” she said during the report launch.

Martin Von Lampe of the OECD trade and agriculture directorate stressed the importance of setting precise emission targets and discussed some of the approaches countries can take to reduce agriculture emissions. Options include withdrawing disproportionate support for high-emission products like veal, lamb, and rice, and encouraging shifts in consumer dietary patterns to favour low-emission products. He singled out pricing emissions under a “polluter pays” scheme as “the most efficient way of targeting those emissions that we’re using,” but acknowledged the approach would generate costs to producers and, eventually, consumers.

But there are political challenges to some of these options. Governments are often reluctant to use the polluter pays principle because of their “unwillingness to countenance a reduction in output and potential hit to farming communities,” Von Lampe said. “The same reasoning lies behind the reluctance to strongly push for dietary change.”

Actions taken to phase out support for environmentally harmful products should be complemented with other supports to ease the transition for those affected, he added, and key budget areas should be reoriented so that support can be targeted to those farmers and consumers most in need. But doing this successfully requires more research, and better data, so that countries can manage risks.

“As we move to a more climate change-influenced world, of course, the risks farmers are facing are increasing,” he said. “And so there’s an increased need to enhance the resilience against those risks.”