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VI. Developed market economies


General economic performance

Average real GDP in the developed market economies rose by 3.8 percent in 2000.107 However, economic activity was already beginning to slow down owing to the rise in energy prices, a reassessment of corporate profitability and a tightening of monetary policy in late 1999 and 2000 in the United States and in the EU. In particular, developments in the information technology (IT) sector - the declining investment and output and consequent fall in IT-related trade - contributed significantly to the slowdown. The aftermath of the events of 11 September exacerbated the downturn, and real GDP growth in the developed market economies was projected at 1.1 percent for 2001.

Economic growth in the developed market economies slowed in 2001.

Economic activity remained strong in the United States, where real GDP grew by 4.1 percent in 2000, the third year in a row that output expanded at more than 4 percent. However, in mid-2000 economic growth began to slow and following the 11 September terrorist attacks economic activity weakened further, causing real GDP growth to fall to about 1.3 percent in 2001.

In Japan, real GDP expanded by 1.5 percent after rising by only 0.8 percent in 1999 and contracting by 1 percent in 1998. Relatively strong investment and export growth helped generate the positive outcome for 2000. Weakened external demand and a fall in private and public investment underlie the contraction in economic growth of 0.5 percent projected for 2001.

Australia and New Zealand saw real GDP expand by 3.3 and 3.8 percent, respectively, in 2000. Output growth was projected to slow in 2001 but was expected to exceed 2 percent growth in both countries.

The EU area saw real GDP rise by 3.4 percent in 2000, an improvement over the 2.7 percent recorded in 1999. Weakened domestic demand, the downturn in the equity markets and the slowdown in external demand led to a reduction in economic growth in the second half of 2000, with the downturn being most marked in Germany. For 2001, output growth is estimated at 1.8 percent.

Agricultural performance

The year 2000 was marked by relatively slow agricultural production growth in the developed market economies, with output expanding by only 0.9 percent after growth of 2.1 percent the previous year. The slowdown was especially pronounced for livestock production, which rose by only 0.4 percent, whereas crop production increased by 1.4 percent.

The year 2000 was a year of relatively slow agricultural output growth.

Among the developed market economy subregions, only North America saw significant output growth in 2000, with total production increasing by an estimated 2 percent, marginally up from the 1.8 percent growth achieved in 1999. This reflects an expansion of 2.2 percent in the United States and only 0.5 percent in Canada (following a growth in output of more than 6 percent during the previous two years).

Agricultural production in the countries of the EU remained basically stagnant in 2000, recording a contraction of 0.2 percent. This was the net result of a 1.3 percent drop in livestock production and a 1.4 percent increase in crop production. Most of the large countries in the Union recorded negative growth rates, in most cases resulting from poor output performance in both the crop and livestock sectors. In France, Germany, Italy and the United Kingdom, agricultural output fell by between 0.5 and 3.0 percent. Relatively strong output growth of between 3 and 9 percent was seen in Finland, Greece and Spain.

Japan also saw a modest decline in agricultural production of around 0.5 percent in 2000, while the developed market economies of Oceania saw agricultural output increase by only
0.6 percent in 2000 after recording growth of 3.4 percent in 1999. The slowdown was entirely due to the lower output recorded in Australia. New Zealand saw output rise by 5.8 percent, recovering from the decline in output of 5.2 percent in 1999.

Agricultural production actually declined in 2001, according to preliminary estimates.

Preliminary estimates for 2001 point to a contraction of close to 2 percent in total agricultural production in the developed market economies. This contraction is largely attributable to a reduction in output of about 2.5 percent in the EU, with a significant decline in cereal production. Wheat output in the EU declined by more than 12 percent following a reduction in the area cultivated and adverse weather conditions. Barley and oat production is also expected to have fallen quite sharply. Poor weather conditions adversely affected grain production, in particular the wheat crop in France, the Netherlands, Spain and the United Kingdom. In Spain, harsh drought conditions had a substantial negative impact on the unirrigated wheat crop.

Table 35









Developed market economies



1.5 2.6 4.0 1.6 0.9


1.6 2.1 -2.1 1.5 0.9


0.7 -0.1 2.9 1.2 1.9


2.1 2.0 -2.7 2.0 1.7


0.9 1.4 3.9 1.0 0.4


-1.9 -3.8 -8.0 -2.2 -0.4




0.3 1.3 1.6 0.3 0.0


0.3 1.2 -0.7 0.2 -0.1


0.2 -0.8 3.4 0.2 1.7


2.4 3.5 -4.6 2.3 0.6


-0.2 1.4 6.9 -0.1 -1.3


-2.6 -4.1 -7.2 -2.6 -1.1

North America



3.0 3.8 5.8 3.1 2.4


3.1 3.6 -1.8 3.2 1.3


1.3 0.6 3.9 2.3 2.5


1.8 0.2 -2.8 1.4 3.3


2.0 1.5 1.4 2.2 2.0


-1.7 -3.2 -7.1 -2.3 -0.2




2.9 11.0 20.5 4.9 0.6


2.1 -2.9 -10.7 1.2 4.6


3.3 7.6 5.2 4.3 1.8


3.4 9.5 8.7 4.2 0.5


0.6 0.5 4.9 0.1 1.8


1.3 -6.7 -16.3 1.0 2.6




-0.4 -0.2 3.9 -0.3 -0.7


0.2 1.4 -2.6 0.1 -0.7


-4.4 -8.1 -10.4 -4.3 -0.7


1.4 2.7 2.8 1.4 -0.1


-0.5 -0.6 4.0 -0.5 -0.6


-1.2 -1.2 -4.3 -1.2 -0.9

1 Preliminary.

2 Australia and New Zealand.

Source: FAO.

In North America, agricultural production appears to have declined significantly in 2001. A reduction in cereal production, in particular, is expected, partly as a result of drought conditions in the wheat plains and partly because 2000 was a bumper year for coarse grains. Canada also saw a reduction in wheat production of about 23 percent - a result of drought in some parts of the country and excess moisture in others. Coarse grain production is estimated to be down by 8 percent over 2000.

A further decline in production of around 1 percent is estimated for Japan in 2001. Although rice yields were very high in 2001, the area cultivated was reduced by about 70 000 ha and rice output is estimated to have fallen by almost 5 percent.

Among the developed market economy subregions, only the countries of Oceania are estimated to have seen a modest increase in agricultural output of between 1 and 2 percent in 2001. This increase is largely due to growth in livestock production.

No major agricultural policy reforms were introduced in 2001.

Agricultural policy changes108

No major agriculture sector-wide reform programmes were introduced or announced in the developed market economies in 2001. In some countries, a degree of progress was made in implementing previously announced reforms, while important new developments, such as the United States Farm Bill and the mid-term review of the EU Agenda 2000 programme, are expected in 2002. Policy discussion in many countries focused on such areas as sustainable development, food safety, the environment, rural development, the multifunctional role of agriculture, market concentration and competition policy, but actual policy changes in these areas were few. Institutional changes in some countries reflected the increasing priority given to food safety and rural development issues.

The levels of support and degrees of market protection fell for some commodities but no new programmes to lower or phase out agricultural producer support prices were announced. A number of countries increased support prices for certain commodities. Some countries introduced or extended support measures to lower input costs, while Australia, Canada and the United States introduced or extended support measures to farmers facing a reduction in farm income.

Table 36









Billion $

239 248 273 242 231

Percentage PSE

38 33 35 32 31



Billion $

302 330 357 321 311

Percentage TSE

2.3 1.3 1.4 1.3 1.3

1 All OECD countries.

2 Estimates.

Source: OECD. 2002. Agricultural policies in OECD countries: monitoring and evaluation. Paris.

Support to agriculture declined somewhat in 2000 and 2001, but remains high with wide differences among countries and commodities.

Support to agriculture and the degree of protection to the sector provided through various policy instruments remained high in the developed market economies, but varied widely among countries and commodities. In 2000, the overall support to agriculture for all the Organisation for Economic Co-operation and Development (OECD) countries, measured by OECD's total support estimate (TSE) (see Box 9), amounted to $321 billion, or about 1.3 percent of GDP. This figure marks a drop compared with that of the previous year and, in terms of percentage TSE, is well below the 1986-88 average of 2.3 percent of GDP. In 2001, the total TSE in the OECD area declined to $311 billion.

Box 9


OECD uses a number of indicators to measure support to agriculture. Two key indicators are the producer support estimate (PSE) and the total support estimate (TSE), defined here.

Producer support estimate
This is an indicator of the annual monetary value of gross transfers from consumers (resulting from policies that keep domestic prices above world market levels) and from taxpayers (resulting from budgetary financed policies) to agricultural producers. The percentage PSE expresses producer support as a percentage of gross farm receipts.

Total support estimate
This is an indicator of the annual monetary value of all gross transfers from taxpayers and consumers arising from policy measures that support the agriculture sector. It includes transfers to producers (PSE) and general services provided to agriculture. The percentage TSE expresses overall support as a percentage of GDP.

Support provided directly to agricultural producers in all OECD countries, as measured by OECD's producer support estimate (PSE) (see Box 9), decreased from $271 billion in 1999 to $242 billion in 2000. In 2001, PSE is estimated to have declined further, to $231 billion. The fall in support over the last two years was mainly due to a narrowing of the gap between prices received by farmers and world prices. The PSE expressed as a percentage of gross farm receipts fell from an average of 38 percent in the 1986-88 period to 32 percent in 2000 and is estimated to have fallen by a further 1 percent in 2001, although the figures vary substantially among countries and commodities.

Wheat crop in a natural reserve in the Tiber Valley in Italy
The crop is grown without chemical fertilizers and artificial nutrients. A number of countries are introducing incentives for organic farming and more environmentally friendly production methods.


New policies setting environmental targets, reducing pollution or encouraging more sustainable agricultural production were introduced in a number of countries. Australia and the EU, for example, presented goals for biodiversity conservation. Other countries, including Belgium, France and Denmark, introduced measures to reduce pollution from livestock production, while measures to reduce pesticide levels were introduced in France, Denmark and the Netherlands. New or enhanced incentives in favour of organic farming were introduced in 2001 in Austria, France, Norway and Switzerland. These countries also increased payments to farmers to encourage them to adopt more environmentally friendly production methods. Australia and the United States saw the introduction or extension of important natural resource conservation programmes.

Many countries are encouraging more environmentally friendly agricultural production.

In 2001, as in the previous year, several policy measures were introduced following natural disasters or concern about animal, plant or human health. The EU continued to provide support to beef farmers hurt by weak demand following the bovine spongiform encephelopathy (BSE) crisis, and several Member States announced additional measures to help farmers affected by the BSE crisis and the foot-and-mouth disease outbreak.

Food safety is another priority area for many countries.

Many countries have continued to strengthen their institutional structures and regulatory frameworks in order to improve food safety. The establishment of the European Food Authority in the EU was a significant development in this regard. New agencies and systems are also being developed in a number of other countries. Biotechnology and its relationship with food safety and the environment continued to be central concerns for many consumers and governments. A number of international meetings were held in 2001 and several countries introduced mandatory labelling requirements for genetically modified foods, while others were proposing to do so.

An important development in the area of trade policies in 2001 was the removal by the EU and New Zealand of tariffs on imports from the 48 least developed countries, although in the case of the EU the removal will be delayed for a few years for rice, sugar and bananas. Norway and Poland have announced similar tariff removal programmes, to be implemented in 2002.

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