157th

Session of the OECD Committee for Agriculture

Draft Agenda

Session with the participation of G20 members

Starting on 29 November at 9:30

29 November 2011

Session with the participation of G20 members

Item 1.

9:30

Welcoming remarks by the Chair

The Chair of the Committee for Agriculture will provide a short overview of planned

discussions, noting in particular the participation of G20 members.

Item 2.

9:40

Improving Productivity in Agriculture

See page 3

TAD/CA(2011)5

The Secretariat will introduce this item highlighting work to date on this issue. The

discussion will be launched by the Delegations of Australia and of the United States by

sharing their experience with the Committee. An open discussion will follow where

Delegates will have an opportunity to exchange views on the necessary policy framework

likely to improve productivity growth in agriculture.

11:00 Networking break

Item 3.

11:30

Risk management: Policy experiences and plans See page 5

TAD/CA(2011)6

The Secretariat will provide a short overview of work to date on risk management with a

particular focus on the implications for policy making. The Delegations of Canada and of the

United Kingdom will then launch the discussion by sharing their experience with the

Committee. An open discussion will follow aiming to identify the perceived main risks in

agriculture and associated risk management needs, tools used and whether existing policies

are effective in this respect.

Lunch break

2 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

Item 4. Agribusiness in Brazil: Experiences, policies and

perspectives

See page 7

This session is the first of what is potentially a series of country presentations in the

Committee for Agriculture on topical food and agriculture issues, allowing for a frank and

open exchange of policy experiences and perspectives amongst national delegations. The

FGV Foundation, Brazil, will provide a series of presentations outlining Brazil’s

agribusiness performance and prospects.

14:30 Opening Remarks Gregg Young, OECD Committee

for Agriculture Chair

Prof. Dr. Cesar Cunha Campos,

Brazil, FGV Foundation

14:45 Macroeconomic perspective of Brazil: behaviour of the

exchange rate, current infrastructure restrictions and

their implications for growth

Prof. Dr. Márcio Holland

An overview of Brazilian agribusiness: comparative

advantages Prof. Dr. Roberto Rodrigues

Brazilian tropical agriculture: competitiveness based on

science and innovation Prof. Dr. Silvio Crestana

15:30 Open discussion, launched by presentations by the Delegations of Chile and of the

Netherlands.

16:10 Networking break

16:30 Environment and agricultural projects for biofuel and

food production

Prof. M.A. Martina Otto

Impacts of implementing biofuel projects on agriculture,

environment, and the economy of Brazil, Central

American and Central African countries

Prof. M.Sc. Antônio Carlos Kfouri

Aidar

Mr. Cleber Lima Guarany

Innovations in Brazilian social policies, overcoming

poverty and the new middle class in rural areas

Prof. Dr. Marcelo Neri

17:15 Open Discussion launched by presentations by one or two Delegations (to be determined).

18:00 Cocktail reception:

Informal discussion and brief remarks from co-hosts: Prof. Cesar Cunha Campos, FGV

Foundation, Brazil, and Ken Ash, Director, Trade and Agriculture, OECD

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IMPROVING PRODUCTIVITY IN AGRICULTURE

When they met in June 2011 to address the issue of food price volatility with the ultimate objective to improve food security and agree on an “Action Plan on food price volatility and agriculture”*, G20 Agriculture Ministers recognized "the importance of a significant increase in agricultural production and productivity, considering the diversity of conditions world-wide and the need for a sustainable use of natural resources, in order to respond to the challenge of a growing demand." They agreed that responding to growing and more diverse food demand would require a balanced set of measures to increase resilience, production, productivity and resource efficiency, with specific attention dedicated to least-developed countries and smallholders, especially women and young farmers. Among other things, they agreed to strengthen agricultural research and innovation through national agricultural research systems, and international institutions. They committed to creating an enabling environment to encourage and increase public and private investment in agriculture, and stressed the need to support public-private partnership on investments for services (such as access to financial services, agricultural education and extension services), and for infrastructure and equipment for production (such as irrigation), for agro-processing, for access to markets (such as transport, storage, communication) and for reducing pre and post-harvest losses.

OECD coordinated, with the FAO, the preparation of the Policy Report of international organisations on "Price Volatility in Food and Agricultural Markets: Policy Responses"† prepared for G20 Agricultural Ministers, which discusses measures to increase productivity, sustainability and resilience of agriculture (Section 3) and makes a number of recommendations in this area.

The OECD Committee for Agriculture also contributed to the debate on agricultural productivity growth and the role of research and development (R&D). The 2009 OECD-FAO Outlook Report (OECD, 2009) suggests that the agricultural sector has the capacity to meet the rising demand for food. More land can be brought into production; more widespread adoption of existing technology and investments in innovation can improve global productivity growth, but more efforts should focus on making agriculture environmentally sustainable; water use management in agriculture has to improve; and agriculture has to adapt to climate change.

A report on productivity and competitiveness in agriculture (OECD, 2011) provides up-to date evidence on developments in agricultural productivity growth from various sources and discusses measurement issues. In developed countries, productivity growth has slowed down since the mid-90s, while productivity has grown strongly in some emerging and transition economies. Public expenditure on agricultural R&D has increased over recent decades in many OECD countries, both in real terms and as a share of agricultural GDP, but at a slower rate in the 2000s. Investments in agricultural R&D have double-digit rates of return, but can have very long lag times. Evidence suggests that R&D benefits are often under-estimated, and this may result in under-investment.

Improved design of institutions around Agricultural Knowledge Systems (AKS) was discussed at an OECD Conference held in June 2011. It considered how AKS institutions evolve to be more responsive to demand, and how public/private partnerships can be strengthened and regulations improved to facilitate

4 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

adoption of innovation to meet global food security and climate change challenges. It outlined the need to improve the coherence of R&D, agricultural, trade and development policies, and in particular to develop a shared understanding of long-term and short-term objectives for AKS. Looking ahead, more attention could usefully be paid to how agricultural productivity growth could be increased, and three broad areas have been suggested: close the gap between current and potential productivity performance in developing countries; increase investment in agricultural innovation; and improve national and international research collaboration.

* The action plan can be found at: http://agriculture.gouv.fr/IMG/pdf/2011-06-23_-_Action_Plan_-_VFinale.pdf.

† The Policy Report prepared by international organisations for the June meeting of G20 Agricultural Ministers, and

co-ordinated by the FAO and OECD, can be found at: www.oecd.org/dataoecd/40/34/48152638.pdf.

Questions for discussion

Innovation is the main source of future agricultural productivity growth. What incentives need to be put in place, and what disincentives need to be removed, to improve agricultural productivity growth in your country?

What more can be done to ensure stronger national and international collaboration on improving agricultural innovation systems?

This note is available on OLIS under the code TAD/CA(2011)5

5 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

RISK MANAGEMENT: POLICY EXPERIENCES AND PLANS

Recent years have been tumultuous in the agricultural sector. Price volatility has increased, with sharp swings in product and input prices. Markets have been affected by macro-economic disturbances, disease outbreaks and adverse weather events such as floods and droughts, which are expected to become more frequent and more severe through climate change. Agricultural policies in OECD countries are now more decoupled from production and prices, and farmers’ decisions are now more guided by market forces than in the past. Risk management in agriculture is now an essential instrument for farmers and governments to anticipate, to avoid and to react to shocks.

This has been reflected in G20 discussions on price volatility and food security. The Policy Report to the G20 from ten international organizations, coordinated by OECD and FAO, “Price Volatility and Agricultural Markets: Policy Responses”, highlights the need to develop risk management tools for vulnerable producers, consumers and governments. The report calls for a diversity of instruments –particularly market-based solutions to respond to a diversity of price and production risks. The set of tools includes different types of insurance, future contracts, options and cooperative solutions. The “Action Plan on Food Price Volatility and Agriculture” agreed during the G20 Agriculture Ministerial in June 2011 reflects this need of reducing the effects of price volatility on the most vulnerable. This Plan pleads for mainstreaming risk management in development policies and for developing an “Agriculture and Food Security Risk Management Toolbox” for vulnerable groups.

The OECD Committee for Agriculture has been working on risk management for many years, comparing different policy experiences across countries and developing an analytical framework. Under this framework the assessment of the inter-connections between different risks and policies is a crucial first step for policy design. Different risk layers – catastrophic, marketable and normal – will require differentiated responses. Catastrophic events are beyond the capacity of farmers or markets to manage and will require some government intervention. But these policies should not cover risks that could be transferred through market tools such as insurance, and they should let farmers retain normal small and frequent variations of income. This framework has already been applied in five OECD countries (Australia, Canada, the Netherlands, New Zealand and Spain) and its application to the analysis of risk management in developing and emerging economies is currently underway.

Questions for discussion

Is there a good assessment of the main agriculture risks in your country? What are the main risks identified?

How are these risks reflected in policy responses?

OECD policy experiences lead to the conclusion that it is useful for policy making to differentiate responses across layers of risk: catastrophic, marketable and normal. Is this conclusion also relevant for developing and emerging economies – or how should it be adapted?

6 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

References

OECD (2011): Risk Management in Agriculture: What Role for Governments? (Briefing note)

OECD (2011): Risk Management in Agriculture: Policy Assessment and Design

OECD (2009): Risk Management in Agriculture: A Holistic Approach

For more information on OECD work on risk management in agriculture, visit our website: www.oecd.org/agriculture/policies/risk

This note is available on OLIS under the code TAD/CA(2011)6

7 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

APPENDIX

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AGRIBUSINESS IN BRAZIL: POLICIES, EXPERIENCES AND PERSPECTIVES

INTRODUCTION

The FGV Foundation, one of the leading think tanks worldwide, will provide an overview of Brazil’s agribusiness performance and prospects. This discussion intends to establish a constructive and focused debate about Brazil and its main socioeconomic success stories, as well as its challenges or impediments to its growth in the agribusiness and biomass sector. Topics include Brazil’s macroeconomic environment, its agribusiness performance to date, and key challenges and opportunities for business and for policy makers (environmental sustainability, economic growth and income distribution, food, feed and biofuel markets, infrastructure development).

1) Macroeconomic perspective of Brazil: behavior of the exchange rate, current infrastructure restrictions and their implications for growth;

2) A view of Brazilian agribusiness: comparative advantages;

3) Brazilian tropical agriculture: competitiveness based on science and innovation; 4) Environment and agricultural projects for biofuel and food production; 5) Impacts of implementing biofuel projects in agriculture, environment and the economy of Brazil

and Central American and African countries;

6) Innovations in Brazilian social policies, overcoming poverty and the new middle class in rural areas.

TOPICS AND SPEAKERS

OPENING SESSION

Over the past decade, Brazil has received increasing international attention and recognition as a stable and promising economy, with significant and solid growth in a variety of sectors. Our economy, conceived of and planned in consistent pillars, leaves no space for interventions and fragile experimentations as verified in the past. Last year, Brazil has jumped from 15th to 5th place in global rankings of Foreign Direct Investment, and now accounts for 30% of overall investment in Latin America.

This session will examine the reasons for Brazil's impressive macroeconomic performance over the last decade, with special attention to economic growth, monetary and currency-exchange policies and strategies, investment in infrastructure and inflation. Brazil’s socioeconomic development is outstanding not only for its high growth rate overall, but also due to its relative even distribution to all parts of the population, especially compared with neighboring countries and with previous periods of growth. Social indicators based on income, particularly in rural areas, have improved tremendously, and it is important for us to examine the causes and consequences, with a focus on overcoming poverty and ensuring the continued emergence of a new middle class.

9 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

The agriculture sector, an important base for Brazil’s recent development, has evolved in a striking and sustainable manner. Today Brazil has a strong family-based agriculture sector that provides 70% of the country's food, as well as an extensive agriculture sector that achieves high levels of productivity. This guarantees Brazil a prominent global position in food and ethanol exports.

Nevertheless, important improvements in infrastructure are still needed to ensure the continuation and sustainability of recent gains. In this field, Brazil has a good opportunity to leverage infrastructure projects as it prepares for the 2014 World Cup and the 2016 Olympics, while the area of logistical infrastructure for the outflow of inland harvests with diverse models of transportation also offers diverse opportunities.

1) MACROECONOMIC PERSPECTIVE OF BRAZIL: BEHAVIOR OF THE EXCHANGE RATE, CURRENT INFRASTRUCTURE RESTRICTIONS AND THEIR IMPLICATIONS FOR GROWTH

Prof. Dr. Márcio Holland Secretary of Economic Policy, Brazilian Ministry of Finance and Professor, FGV Foundation’s School of Economics (EESP/FGV) Prof. Dr. Holland lectures at the FGV Foundation School of Economics (EESP/FGV) and is coordinator of its post-graduate program in Economics. He holds a post-doctorate in economics from the University of California, Berkeley, and a doctorate in economics from the Institute of Economics, Unicamp, and received a research scholarship from the

National Council for Scientific and Technological Development (CNPq) in March 2000. Holland is a researcher of open macroeconomics and international finance, specializing in exchange rate behavior, exchange and monetary strategies, and interest rate determination; working on issues relating to economic growth, balance of payments and productive specialization. Currently Secretary of Economic Policy of the Brazilian Ministry of Finance.

Abstract: The economic crisis and the need for a balanced global recovery have raised major challenges for those who formulate economic policies for both countries and economic blocs. The emerging economies have been showing signs of significant drive in overall growth, thanks to the dynamics involving the increase in their population’s purchasing power, business opportunities, investments and increased productivity. To achieve the goal of balanced global economic recovery, in-depth discussion is required to adopt trade mechanisms that prevent future imbalances that could prove detrimental to recovery. The Secretary of Economic Policy for the Brazilian Ministry of Finance will discuss the Brazilian macroeconomic performance over the past decade and the perceived impacts on the economy. Economic growth, monetary and exchange policies and strategies, infrastructure investment, and inflation will also be addressed, along with the connection between infrastructure investment and socioeconomic development.

2) A VIEW OF BRAZILIAN AGRIBUSINESS: COMPARATIVE ADVANTAGES

Prof. Dr. Roberto Rodrigues Coordinator, FGV Foundation’s Agribusiness Center (GV Agro) and Former Brazilian Minister of Agriculture (2003-2006) Prof. Dr. Roberto Rodrigues, Brazilian Minister of Agriculture from January 2003 to June 2006, coordinator of the Agribusiness Center (GV Agro) of FGV Foundation and president of the Superior Council of Agribusiness of São Paulo Federation of Industries (FIESP), is a farmer and agricultural engineer by training, following in the footsteps of his father and grandfather. He is also a professor of Rural Economics at São Paulo State University

10 | OECD Committee for Agriculture Session with the participation of G20 members 29 November 2011

(UNESP). Professor Rodrigues is a strong supporter of the cooperative movement and has chaired the Brazilian Cooperatives Organization, the World Committee on Agricultural Cooperatives and the International Cooperative Alliance. He has traveled the world in that capacity, visiting 80 countries while performing his duties. He is a distinguished agribusiness leader and has served as president of the prestigious Brazilian Rural Society and Brazilian Agribusiness Association and as a board member of dozens of Brazilian producer associations.

Abstract: OECD forecasts that a 20% increase in world food production is needed to meet growing demand by 2020. Brazil is the country with the best competitive conditions for increasing its farm production, with a predicted increase of 40% over this period. The purpose of this lecture is to show how Brazil will be able to contribute to meeting this global demand for food. 3) THE BRAZILIAN TROPICAL AGRICULTURE: COMPETITIVENESS BASED ON SCIENCE

AND INNOVATION

Prof. Dr. Silvio Crestana, Former president of Embrapa (Brazilian Agricultural Research Corporation) (2005 -2009) Prof. Dr. Silvio Crestana holds a degree in physics from the University of São Paulo (USP), has a masters in physics and a doctoral degree in Sciences from USP. He also occupied the position of associate member at the International Center for Theoretical Physics in Trieste, Italy and has post-doctoral trainings in USA at the University of California, Davis (1988 and 1989), and USDA-Agricultural Research Service, Beltsville, Maryland (1998 to 2001). He was CEO of the Brazilian Agricultural Research Corporation

(Embrapa) between January 2005 and June 2009. He was head of the Embrapa Agricultural Instrumentation between 1992 and 1997, coordinated the implementation of the pioneering Virtual Laboratory of Embrapa Abroad (Labex) in the period 1998 to 2001, in the USA, and is a member of several scientific societies and editorial boards of national and international magazines.

Abstract: Nowadays, Brazil is a global player concerning the production of food, fibers and agri-energy. In the last decades the country was able to reach its food security and transform its position as “food dependant” into one of the world largest agricultural commodity exporters. The Brazilian agricultural competitiveness was reached due to scientific, technological and institutional innovation, essential tools for sustainable development. The presentation will highlight what was implemented in science and innovation in order to properly manage tropical ecosystems, the impacts of the generated technologies and some of the scientific and innovation challenges we will face in the coming years.

4) ENVIRONMENT AND AGRICULTURAL PROJECTS FOR BIOFUEL AND FOOD PRODUCTION

Prof. M.A. Martina Otto Head, Energy and Transportation Policy Unit, UNEP Martina Otto holds an LLM from London University in International Environmental Law and a qualification from the Erstes & Zweites Staatsexamen, Frankfurt/Main, Germany. Professor Otto is head of the Energy and Transport Policy Unit and oversees the development and implementation of UNEP energy and transport policy-related activities, with direct responsibility for related interagency aspects and for creating synergies among

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different projects in this unit. She manages UNEP activities relating to modern forms of bioenergy, especially biofuels, and is a member of the Technical Committee of the Global Bioenergy Partnership. From 2004 to 2006, she worked as Executive Assistant to the Executive Director in UNEP’s Nairobi headquarters. Prior to this, she was a program officer in UNEP’s Energy Branch, coordinating UNEP work in the area of sustainable mobility as well as in two of the UNEP voluntary projects with the private sector, the Mobility Forum and the Global & Sustainability Initiative. Before joining UNEP, she worked on 'Trade and Environment' and 'Economic Instruments in the Area of Environmental Protection' with the UN Conference on Trade and Development, the European Commission and the Foundation for International Environmental Law and Development. She has also worked for the US law firm Cleary, Gottlieb, Steen & Hamilton on environmental due diligence in the context of mergers and takeovers.

Abstract: Prof. Otto will summarize the existing methodologies for biofuel project recommendation, with emphasis on FGV Foundation projects in Central America and Africa. Professor Otto will also address the parameters used to confirm agricultural feasibility, such as climate, soil and biodiversity, as well as the expected environmental challenges and possible mitigating solutions for sustainable biofuel and food production in new cropping regions.

5) IMPACTS OF IMPLEMENTING BIOFUEL PROJECTS ON AGRICULTURE, ENVIRONMENT AND THE ECONOMY OF BRAZIL AND COUNTRIES IN CENTRAL AMERICA AND AFRICA

Prof. M.Sc Antônio Carlos Kfouri Aidar Director of Control, FGV Projects Prof. Antônio Carlos Kfouri Aidar holds a degree in business administration from the FGV São Paulo School of Business Administration (EAESP/FGV) and a master’s in economics from Michigan State University. He has also taught as a professor for graduate courses in the EAESP/FGV Economics Department since 1977.

Mr. Cleber Lima Guarany Coordinator, FGV Projects Mr. Cleber Guarany holds a degree on metallurgical engineering from São Paulo University (USP). He was a multinational CEO in the primary sector for four years, developing the South American market and expansion projects in Brazil. With 25 years experience in the private sector in national and multinational corporations, he structured the implementation of palm oil and biomass production for family farming businesses and associations. Over the past six years, he has coordinated, prepared and implemented

agro-industrial projects at FGV Projects. Mr. Guarany has coordinated work in the biofuel and food areas in more than 13 African and Latin American countries in partnership with local governments, professional bodies, multilateral banks, research institutes, and development and environmental agencies.

Abstract: This lecture will address the contributions of biofuel and food production projects to generating wealth and distributing income in countries in the Tropical Belt. With the end of the low-cost petroleum era and increasing food prices worldwide, an important window of opportunity is opening. But although these countries have excellent conditions for producing various types of food and biofuels, they are also the countries that suffer most from their shortage. Agro-industrial projects have characteristics of intensive labor use and a low technological barrier that combine the ideal elements for furthering sustainable economic development and social inclusion.

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6) INNOVATIONS IN BRAZILIAN SOCIAL POLICIES, OVERCOMING POVERTY AND THE NEW MIDDLE CLASS IN RURAL AREAS

Prof. Dr. Marcelo Neri Economist - Head of the FGV Social Policies Center (CPS) and Professor of the FGV Foundation Post-graduation School of Economics (EPGE/FGV) Prof. Dr. Marcelo Neri holds a bachelor’s degree and a master’s degree in economics from Rio de Janeiro Catholic University (PUC-RJ), and a doctorate from Princeton University in the United States. He is head of the Social Policies Center (CS/FGV) and a professor at the Post-graduate School of Economics (EPGE/FGV). He is distinguished for his work

charting innovations in the areas of social welfare, poverty, education, and income distribution. He is active in addressing, assessing and discussing public policy, has contributed to the creation of the state minimum wage system, and has been involved in the implementation of income transfer programs throughout Brazil. He is a specialist in micro-econometrics and social program assessment, and in measuring inequality and poverty. He has published papers and articles in various national and international journals and other medias.

Abstract: The accurate measurement of income and wealth must include indicators that reflect their distribution. Between 2001 and 2009, the growth rate of real income per capita for the poorest 50% of Brazilians was 580% higher than that of the richest 10%. More recent studies of CPS show continued income gains for Brazil’s poorest citizens even as the opposite trend -increased inequality - has been occurring in developed countries such as the USA and England and emerging countries such as China and India. The purpose of this lecture is to address the performance of social indicators based on income in Brazil overall, and in rural areas in particular, and its causes and effects, with an emphasis on poverty reduction and other policies aimed at expanding and strengthening Brazil’s middle class. The lecture will also discuss successful Brazilian social programs, such as “Zero Hunger”, “Family Allowance”, and “Brazil without Poverty” that have been exported to other countries.