Agricultural surpluses to continue—O.E.C.D.

Press, 31 January 1986, Page 23

Agricultural surpluses to continue—O.E.C.D.

PA Wellington Farm production in countries belonging to the Organisation for Economic Co-operation and Development will continue to outstrip world demand, in spite of some members’ efforts to curb output, says an O.E.C.D. report on agricultural policies and markets. None of the main agricultural producers is free from surpluses. To blame climatic and short term economic factors for the gluts was to ignore the part that monetary factors, technological progress and farm subsidies have played in causing a continuous rise in production, the report says.

It is pessimistic about the future demand for farm products. Consumption in developed countries had already peaked

and developing countries cannot afford to buy more food, the report says.

Even if food aid were to rise further and if the Soviet Union’s imports were kept high in the short term, surpluses in O.E.C.D. countries would worsen, it says. Public spending in member countries has reached record levels, with most now trying to cut farm support. The report says the cuts are all the more necessary because recent reforms have seldom been applied with the necessary rigour. It urges member countries to reduce jointly protectionism, trade conflicts, and the cost of agriculture.

Amidst predictions of increasing production, New Zealand expects a fall in milk and sheepmeat output, it says.

Only New Zealand and Australia forecast a significant decline in milk production.

The report attributes this to New Zealand’s withdrawal of Government support for milk production and to Australia’s attempts to make its dairy industry more responsive to market conditions.

The removal of supplementary minimum payments is expected to reduce New Zealand sheep flocks which will then stabilise, the report says. Beef prices in the United States will pick up this year, which will encourage New Zealand and Australian farmers to build up their herds. However, large European beef surpluses continue to threaten New Zealand and Australian meat markets in the Pacific basin, the report says.