Analysis n° 13 March 2010 The OECD and agricultural policy : a critical analysis

The present crisis calls for a reconsideration of a number of precepts underlying economic policy.The aim of this analysis is to discuss the recommendations made by the OECD with regard to farmpolicy. Targeting and decoupling appear to be concepts that stem from a will to make public inter-vention more effective and more legitimate. But direct payments should nevertheless not be redu-ced to a merely temporary measure aimed at accompanying uncompetitive producers towards theexit, especially in a context where the hypothesis that all markets function optimally is being aban-doned. Despite the fact that the correction of market failures is put forward as the main justifica-tion for public intervention, one can regret that market power (i.e. the existence of dominant positions)andmarket incompleteness (non-insurability of systemic risks) are largely absent from the OECD’sdescription of the issues facing agricultural policy. The World Bank is currently reviewing the fun-damental role of agriculture in development strategies but the renewal of OECD precepts in thedeveloped world is yet to come.