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Most agri funding distorts prices, harms environment

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Around 87 percent of the $540 billion in total annual government support given worldwide to agricultural producers include measures that are price distorting and that can be harmful to nature and health.

That is the main finding of a new United Nations report calling for repurposing these incentives to achieve more of the 2030 Sustainable Development Goals or SDG and realize the UN Decade of Ecosystem Restoration.

The report, “A multi-billion-dollar opportunity: Repurposing agricultural support to transform food systems,” was launched on Tuesday by the Food and Agriculture Organization, the UN Development Program and the UN Environment Program.

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Global support to producers in the form of subsidies and other incentives makes up 15 percent of total agricultural production value. By 2030, this is projected to more than triple to $1.759 trillion. The Organization for Economic Cooperation and Development defines agricultural support as the annual monetary value of gross transfers to agriculture, from consumers and taxpayers, arising from government policies.

Current support mostly consists of price incentives, such as import tariffs and export subsidies, as well as fiscal subsidies, which are tied to the production of a specific commodity or input.
The report says these are inefficient, distort food prices, hurt people’s health, degrade the environment, and are often inequitable, putting big agri-business ahead of smallholder farmers, many of whom are women.

Last year, up to 811 million people worldwide faced chronic hunger and nearly one in three people in the world, or roughly 2.37 billion, did not have year-round access to adequate food. In 2019, around three billion people, in every region of the world could not afford a healthy diet.

Change, don’t eliminate

The reports note that, even though most agricultural support today has negative effects, around $110 billion supports infrastructure, research and development, and benefits the general food and agriculture sector.

It argues that changing agricultural producer support, rather than eliminating it, will help end poverty, eradicate hunger, achieve food security, improve nutrition, promote sustainable agriculture, foster sustainable consumption and production, mitigate the climate crisis, restore nature, limit pollution and reduce inequalities.

Wake-up call

FAO Director-General Qu Dongyu said the report “is a wake-up call for governments around the world to rethink agricultural support schemes to make them fit for purpose to transform our agri-food systems and contribute to the Four Betters: Better nutrition, better production, better environment and a better life.”

Agriculture is one of the main contributors to climate change. At the same time, farmers are particularly vulnerable to impacts of the climate crisis, such as extreme heat, rising sea levels, drought, floods and locust attacks.

According to the report, “Continuing with support-as-usual will worsen the triple planetary crisis and ultimately harm human well-being.”

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