05.10.2018

The expansion of agricultural production in China has been remarkable, but at the expense of the sustainable use of its natural resources, - says the recent OECD Report.  

The expansion of agricultural production in China has been remarkable, but at the expense of the sustainable use of its natural resources, - says the recent report of the OECD Innovation, Agricultural Productivity and Sustainability in China.

Today, the environmental pressures, coupled with rising labour costs and a rapidly ageing rural population, require structural policy reforms. The Report seeks to review and assess recent policy developments in terms of their impact on productivity growth and environmental sustainability.

The report reviews the support agricultural policies for farms target price system for agricultural products, agricultural policies targeted at environmental sustainability (agri-environmental payments, subsidies to support wetlands) and agricultural trade policies. 

In respect to price support policies the report concludes that they induce intensive production, leading to an excessive use of inputs.

The Report underscores that designing agri-environmental policies requires the definition of the environmental quality reference levels and environmental target, which play crucial role in choosing the policy instruments. The price support schemes need to be reviewed to improve their coherence with the environmental objectives, - says the report and underscores, that greater policy coherence with agri - environmental policy objectives could also be achieved through stricter enforcement of environmental regulations. In addition to a more effective law enforcement, agricultural policy should include the mechanisms to encourage the producers to adopt the environment-friendly production practices. For instance, payments linked to specific environmental actions by producers account for only 1,2% of total producer support and 4,2% of budgetary transfer to producers in 2014-2016. In contrast the majority of payments in the EU and the US have such conditionality.  

Finally, the agricultural innovation system - a key engine to promote sustainable growth and agricultural productivity in China - could play a greater role by placing the focus on public agricultural R&D in areas such as the environment and resource conservation, and in other areas which do not attract much private sector investment, says the Report. 

By Katsiaryna Serada

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