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Current agricultural subsidies distort prices and harm nature and health

ByMicheal Johnson

Sep 14, 2021

Each year the global agricultural sector receives a total of $ 540 billion in aid, an amount that represents 15% of global agricultural production. A new report from three specialized agencies of the UN system found that of that sum, $ 470 billion, or 87%, distorts prices and is detrimental to the environment, society and health.

The Food and Agriculture Organization of the United Nations (FAO), the United Nations Development Program (UNDP) and the United Nations Environment Program (UNEP) published this Tuesday the study “A Multi-Billion Dollar Opportunity: Readapting Agricultural Support to Transform Food Systems”, In which they advocate redirect those funds to initiatives that contribute to the achievement of the Sustainable Development Goals and the goals of the Decade on Ecosystem Restoration. According to the document, by 2030 support to agriculture would triple to reach 1,759 billion dollars.



Screenshot from a WMO video.

An unusually intense heat wave hit Europe in late June and early July 2019, putting health, agriculture and the environment at risk.

Climate and environmental deterioration

The text reminds agriculture is one of the main accelerators of climate change Through greenhouse gas emissions from different sources such as manure in grasslands, synthetic fertilizers, rice cultivation, burning of crop residues, and land use change.

The meat and dairy industries, which receive a lot of support in high-income countries, are responsible for 14.5% of global emissions, while in low-income countries much of the support falls on the use of pesticides and fertilizers, as well as the practice of monoculture of cereals, without incentives to diversify production towards more nutritious foods.


Extreme weather events, such as droughts, are causing severe economic losses among farmers around the world.

UN / Albert Gonzalez Farran

Extreme weather events, such as droughts, are causing severe economic losses among farmers around the world.

Large companies and small farmers

UN agencies stressed that current support to agricultural producers consists mainly of price incentives, such as import tariffs and export subsidies or fiscal subsidies linked to the production of a specific material or input.

“But these schemes are inefficient, distort food prices, harm people’s health, degrade the environment, and often they are not fair, since they place large agricultural companies ahead of small farmers, a large part of which are women, ”they pointed out.

They added that, on the other hand, agricultural producers are especially vulnerable to the impacts of the crisis climatic in the form of extreme heat, rising sea levels, drought, floods, and pests like locusts.

Unhealthy products

Among the most prominent findings, the document states that unhealthy products, like sugar, they receive the largest consignments worldwide despite its known negative health effects. It also maintains that these policies discourage the production of healthier and more nutritious foods, such as fruits and vegetables.

In a section on the state of the world’s food, the report points out that in 2020, some 811 million people suffered from hunger chronic and that 30% of the planet’s population, about 2.370 million, did not have access to adequate food. Furthermore, some 3 billion people could not afford a healthy diet.


Workers load sugar cane into an ethanol distillery in Brazil.  Photo: FAO / Giuseppe Bizzarri

Workers load sugar cane into an ethanol distillery in Brazil. Photo: FAO / Giuseppe Bizzarri

The positive side

To remedy this situation, the study strives to redirect agricultural aid and considers that, well channeled, those supports would help to end poverty, eradicate hunger, achieve food security, improve nutrition, promote sustainable agriculture, promote sustainable consumption and production, mitigate the climate crisis, restore nature, limit pollution and reduce inequalities.

He adds that while most agricultural aid currently has negative effects, about $ 110 billion contribute to infrastructure, research and development, and benefit the food and agriculture sector in general, calling for increased allocations to those areas.

The authors of the study indicate that poorly applied aid can hinder the development of a sustainable market, trigger price shocks on a global scale and incentivize the production of high-emitting products, as well as reducing the availability and affordability of more nutritious foods, especially for the poorest consumers.


Women working in a field in Jubek state, South Sudan, where the World Food Program promotes sustainable agriculture to strengthen income and livelihoods.

PMA / Giulio d’Adamo

Women working in a field in Jubek state, South Sudan, where the World Food Program promotes sustainable agriculture to strengthen income and livelihoods.

Good practices and recommendations

Among the least “distorting” subsidies, the document mentions those that are not linked to the production of a specific crop and fiscal transfers for the provision of services. This type of support does not influence the type or volume of agricultural production, which allows decisions that are more efficient, he emphasizes.

FAO Director-General Qu Dongyu considered that the revelations of the report, published on the eve of the United Nations Summit on Food Systems, “is an attention call for governments around the world to reconsider agricultural support plans in order to adapt them to the purpose of transforming agri-food systems and contribute to improving nutrition, production, the environment and life ”.

If countries continue with the same support models, the triple economic, environmental and health crisis will worsen to the detriment of the welfare of humanity, he warned.

United Nations agencies recognized that there is no single strategy to redirect aid to agricultural producers, although they did issue six recommendations:

  • measure the support given
  • understand its positive and negative impacts
  • identify options for redirecting aid
  • forecast its impacts
  • refine the proposed strategy and detail its implementation plan
  • follow up on the implemented strategy

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