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A combine harvester during rye harvest. Copyright: bpa, Schambeck

Cutting agricultural subsidies and improving the chances of developing countries to trade

Background – agricultural subsidies and protectionism

Agricultural subsidies in industrialised states make it difficult for people in developing countries to sell their produce competitively on the world market. In 2008, the OECD states spend 265 billion US dollars on agricultural subsidies. Developing countries will only have a fair chance on the world market if industrialised countries reduce their agricultural subsidies and remove barriers to the import of goods for developing countries.

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Coherent international agricultural policy

The reforms to the common agricultural policy now adopted by the European Union are an important departure from the former European policy on subsidies. In particular the decision to make payments to European farmers independent of their total production is an important step. This will distort competition to a lesser degree and thus improve the chances of developing countries on the world market. The German government was a staunch supporter of these reforms.

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Opening markets in developing countries

An important step in improving the trading opportunities of developing countries would be to open up the markets in industrialised countries for their products. One example is the EU's "Everything But Arms" Initiative (EBA). Under the terms of this initiative, the poorest developing countries were granted unrestricted access to the EU market for their products.

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Strengthening markets in developing countries

There are many different ways of strengthening markets in developing countries. The domestic economy can benefit from good governance, improved transport options and good information systems. Exports from developing countries can be boosted by removing trade barriers. Fair trade also offers major potentials. Producers receive guaranteed minimum prices for their produce, which allows them to cover their costs and earn enough to live on.

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