Agriculture in a changing word

OECD Ministerial Meeting 5-6 March 1998
Statement by Mr. Kåre Gjønnes
Minister of Agriculture, Norway

Honourable Ministers,

The world is continuously changing, and on the eve of a new millennium agriculture faces a number of challenges, both nationally and internationally:

The first and most important challenge is to produce enough food. Around 800 million people, that is a population equal to almost the whole OECD area, are hungry every day. Even though the global hunger so far mainly has been a problem of distribution, nature does put limits to how much food that can be produced. Since 1995, the global food stocks have been at a historical low, far below what the FAO considers acceptable from a food security point of view. According to the UN, the world population is expected to reach 8 billion people by year 2020, a 40% increase compared to today. With this situation in mind, it is crucial that all countries take responsibility to meet the increasing food demand, and it may become necessary to make use of the entire production capacity, both in high potential as well as marginal areas, as concluded at the World Food Summit in Rome.

The second challenge that agriculture is facing, is to produce safe food. The outbreak of mad cow disease has had a dramatic impact on the international meat market, and it has strongly reminded us of the importance of safe food in which the consumers can have confidence. In the future, there will be increased focus on food-related pests and diseases, and it will be of invaluable importance to people's health that this issue is placed high on the international agenda and that international trade does not result in increased spreading of pests and diseases.

The third challenge is to take care ofthe environment. In many countries, agriculture safeguards a number of environmental qualities, such as cultural landscape and bio-diversity. However, agriculture is also a source of pollution. In my country, we have a small-scale agriculture, which to a large extent respects nature's carrying capacity. Nevertheless, there is more to be done in order to ensure the safeguarding of important environmental qualities through production methods that are friendlier to the environment.

The fourth and last challenge I would like to mention, is to build thriving and strong rural communities. In Norway, agriculture is a cornerstone in the rural economy. At present, however, outmigration poses a serious threat to many rural communities, and social and environmental problems often follow in the wake of urbanisation. In addition, Norwegian culture and identity depend to a large extent on the viability of the rural communities along our fjords and in our mountains. The Norwegian government is therefore receiving widespread public support in its current efforts to ensure the population of rural areas, and in this context agriculture plays a central role.

Honourable colleagues, these diverse challenges remind us that we cannot lose sight of the number of different functions the future agriculture must secure: to produce sufficient food, produce safe food, safeguard the environment and contribute to strong and thriving rural communities. Thereby the specificity of agriculture is acknowledged: Agriculture is playing a strategic key role in all societies, both from a nutritional, social, cultural and environmental point of view. Due consideration must be given to this key position when we design policies and policy measures. In order to equip agriculture to face the next millennium in the best way possible, the reform process, both internationally and nationally, must be based on the fact that the sector is multifunctional.

The next WTO round on agriculture will be launched by the end of 1999. It is the view of the Norwegian government that the current situation is fundamentally different from the one prevailing when the Uruguay Round was initiated. At the time, we had large food surpluses, low prices and ambiguous trade rules in agriculture. Today, the situation is completely different with unacceptably low stocks, higher prices and a multilateral international trade framework that brings predictability and stability to the trading environment.

This framework must be maintained. However, in order for the reform process to succeed, the national and global challenges must be our point of departure, as I tried to outline introductorily. These are the challenges from which the policy objectives must derive, and only then can the policy measures be designed.

The multilateral trading system and our own economies are based on the acknowledgement that the market mechanisms and international trade frequently result in efficiency gains and increased welfare. However, both economic theory and political realities have taught us that market failures are common, resulting in poor resource allocation . There are no existing markets for a number of benefits related to agriculture, such as cultural landscape and strong and thriving rural communities. Such public goods suggest that agriculture cannot be left to the market alone. In my country, people are strongly interested in preserving the public goods related to agricultural production. Therefore, measures of support and protection that provide the means for national agricultural production cannot always be considered as harmful subsidies to be eliminated. These measures reflect consumers' and taxpayers' willingness to pay for public goods related to agricultural production and are therefore necessary in order to maximise welfare and utility in our society.

I hope these considerations will contribute to a productive discussion and a continuation of the reform process that enables us to meet the challenges that agriculture is facing at eve of the next millenium.

Thank you for your attention.