Agricultural policy in developing countries should focus on raising productivity so that farmers can seize an opportunity of high food prices, the OECD said in a study on Friday. The OECD also urged governments of these countries to accept a shrinking farming sector as people move from the land, drawn by improving opportunities elsewhere.
The report, Agricultural Policies for Poverty Reduction, also argues that developing nations should create solid social protection systems for rural households, including education and primary healthcare. The Paris-based Organisation for Economic Co-operation and Development also
stressed that "policymakers need to accept that rising opportunities will lead many smallholder farmers to leave the agricultural sector". The OECD called on governments "to smooth, rather than impede that adjustment". "Equally important is the overall investment climate, which depends on peace and political stability, sound macroeconomic management, strong institutions and good governance," the OECD said in s statement.
It noted in South Korea, agriculture's share of employment fell from 40 percent to 16 percent in just 14 years until 1991. The same transition took 53 years in the United States and 68 years in the United Kingdom, the OECD said. In the study, the organisation warned against market interventions, such as price guarantees and subsidies, "because they treat the symptoms rather than the causes of underdevelopment".
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