Innovation lets us do more and better with less. At the farm level, many innovations are “process innovations” that improve production techniques; for example, higher-yielding seeds or more efficient irrigation. “Product innovations” are created by downstream industries, and include new and improved products, such as healthier foods, or new chemical or pharmaceutical products. “Marketing and organisational innovations” are also increasingly important throughout the supply chain.
The OECD’s work on innovation systems in food and agriculture explores the relationships between innovation, productivity and environmental sustainability. The OECD examines how governments and the private sector can work together to strengthen agricultural innovation systems and foster innovative practices on farms and at agri-food firms. The OECD Productivity-Sustainability-Resilience (PSR) Policy Framework looks at the impacts of a wide range of policies on the creation and adoption of innovations that generate sustainable productivity growth and a more resilient agri-food sector.
Productivity improvements have been driving growth, but the environment remains under pressure
Total Factor Productivity (TFP) growth – the efficiency with which producers combine inputs to make outputs – has driven most of the growth in agricultural production in the last two decades, though progress is uneven across countries and sector. Productivity gaps remain significant among farms, and improving the productivity of farms lagging behind remains a challenge for structural adjustment, even for high performing countries.
Innovation can provide an opportunity for agriculture producers to increase productivity while better managing natural resources. This helps to ensure long-term viability and reduce the negative environmental impacts of production, such as pollutants and waste. Sustainable agriculture production systems also take into account how to adapt to climate change and mitigate greenhouse gas (GHG) emissions.
Policy makers must consider the whole policy environment
Evidence from the PSR framework suggests that policy strategies should cover the whole food supply chain, and that improving policy coherence and transparency are crucial to building trust and increasing effectiveness and efficiency.
According to the latest OECD Agricultural Policy Monitoring and Evaluation report, the first step to improving the policy environment is to roll back policies that retain farmers in uncompetitive and low-income activities, harm the environment, stifle innovation, slow structural and generational change and weaken resilience.
Good agricultural policy should focus on measures to improve the sector’s long-term productivity and sustainability, such as investments in human capital, infrastructure and farmers’ connections to markets. A sound regulatory policy environment and well-functioning markets ensure that there is a good business case for producers to innovate responding to current productivity and environmental challenges of food systems.
Stronger agricultural innovation systems must be collaborative, with all actors working in networks to produce innovations that the sector needs and can use. Good governance can help by forming clear strategic objectives (in consultation with stakeholders) and comprehensive mechanisms and procedures for evaluation. Finally, there needs to be a way to bring new ideas into practice, helping farmers to build the skills they need.
The OECD helps countries to evaluate their agri-food policy environment and innovations systems by providing country reviews that apply the Productivity-Sustainability-Resilience Policy Framework and provide tailored policy advice.
Policies for the Future of Farming and Food in the Netherlands
The Netherlands has built an agricultural sector that is a world leader in productivity and competitiveness. But environmental challenges have grown increasingly urgent and the sector will have to adjust.
Policies for the Future of Farming and Food in Spain
Spain has a dynamic and competitive agro-food sector. However, higher productivity has not always reduced environmental pressures. The agricultural innovation and knowledge system could play a key role in addressing the environmental challenges and improving the sector’s resilience.
The OECD Agro-Food Productivity-Sustainability-Resilience Policy Framework (PSR)
Farmers are at the cornerstone of the food system, conversely their operations have a major impact on global emission and they are susceptible to natural shocks and to the effects of climate change. Productivity growth is essential in order to meet the rising demand for food sustainably and generate income growth.
Countries engaging in a PSR review benefit from comparative indicators of performance and country specific policy recommendations to improve the performance of their food and agriculture systems.
To date, the OECD has applied the PSR Policy Framework to a number of OECD and G20 member through in-depth agricultural innovation reviews. Conclusions from these reviews and related OECD work has helped identify crosscutting policy recommendations to improve the sector’s productivity and sustainability performance.
Country reviews based on the PSR Policy Framework: