Table of Contents

  • Governments in OECD countries intervene in agriculture with a view to achieving a wide range of economic and social objectives. One of the most cited reasons for intervention is to improve the income position of farm households. Although largely a legacy of concern with the economic plight of farm families in earlier times, the belief that government intervention is needed to ensure adequate income levels for farm families is wide-spread. References to the level, variability or distribution of farm household income can be found in framework documents, legislation and political speeches, but such references are usually quite imprecise concerning the target populations or the target levels of the variables mentioned. Although there is significant government intervention leading to high levels of support and protection in many countries, it is difficult to identify which policies are designed and put in place to address income problems specifically. This creates considerable difficulty in programme evaluation, difficulties that are compounded by a lack of appropriate data.

  • In recent years, several OECD studies have looked at income issues in the agricultural sector. This synthesis combines and updates material from recently published reports to produce a comprehensive study of farm household income issues in OECD countries. The background is one of significant government intervention in the agricultural sectors of many OECD countries that has led to high levels of support and protection, often justified in terms of a need to support the incomes of farmers and their families. This synthesis first presents income objectives in OECD countries and discusses measurement problems. Without attempting cross-country comparisons, it then reviews the income situation of farm households in OECD countries for which data are available, and examines the role which agricultural policies, whatever their objectives, have played in determining the observed outcomes. Finally, policy solutions are proposed that would improve farm household income more effectively and equitably.

  • The PSE indicates the gross value of monetary transfers from consumers and taxpayers to farmers resulting from agricultural policies. The PSE can be interpreted as the additional money farmers receive in a particular year because governments intervene in agriculture. How much of this extra money should be counted as net economic benefit for the intended beneficiaries? How much of it ends up in the pockets of unintended beneficiaries and how much of it is wasted?