Farm household income : issues and policy responses

In most OECD countries, farm household incomes figure prominently among the wide and growing range of concerns described as motivating policy interventions in agriculture. The first part of this report provides an overview of the income situation of farm households and examines the influence of agricultural and of tax and social security policies on them. The second part investigates more specifically how efficient some of the most commonly used policy interventions are at transferring income to farm households. Farm household incomes in most OECD countries reach, on average, levels that are close to those in the rest of society, although there are wide disparities by farm size, type and region and a higher incidence of low income among farm households. High levels of support to producers in many countries have raised average income to some extent and reduced income variability, but at a very high cost to consumers and taxpayers and with significant leakages to unintended beneficiaries. The great bulk of support to agriculture in the OECD area is still delivered through mechanisms that distort production and trade and are inefficient in generating increased net income for farmers. The report concludes that budgetary payments decoupled from agricultural activity altogether and targeted to farm households that need them would transfer income much more efficiently.