Agriculture and the Green Transition

This research paper by David Laborde of the FAO examines the intersection of agricultural policy and modern green industrial strategies. It argues that agriculture's history of state intervention, subsidies, and market distortions provides critical lessons for current industrial policy debates, while highlighting how the energy transition and the expanding bioeconomy are actively reshaping agricultural production and costs.

• Agriculture has a long history of high state intervention and market distortion, with some commodity support levels reaching 25%–30% of production value. This history offers warnings for modern industrial policy, particularly regarding the difficulty of 'repurposing' subsidies. Removing such subsidies is complicated by the fact that land prices capitalize these payments, meaning phasing them out could potentially bankrupt farmers who took loans to purchase land.
• The global agrifood system generates significant hidden costs, estimated by the Food and Agriculture Organization of the United Nations (FAO) to be equal to 10% of global GDP. These costs stem from soil loss, degraded ecosystems, and health issues related to obesity and undernutrition. Consequently, policy-makers must balance the need for food security against these unsustainable environmental and health costs.
• Green industrial policies are creating new pressures and opportunities for agriculture through upstream and downstream linkages. Upstream, the transition to green ammonia for maritime fuels may increase costs for farmers, as ammonia is essential for fertilizers. Downstream, the shift toward biogenic carbon for biofuels and bioplastics increases demand for biomass, which can raise commodity prices but also trigger 'food vs. fuel' tensions and land competition.
• There is a significant global asymmetry in the fiscal capacity to support agricultural transitions. Half of all fiscal transfers to farmers are found in high-income countries and half in middle-income countries, leaving low-income countries—which have the highest number of farmers—with almost no support due to a lack of fiscal space. This means richer nations can better protect farmers from adjustment costs associated with green policies.
• Traditional productivity metrics, such as yield per hectare, are insufficient because they only measure land productivity and ignore non-market externalities. The FAO and OECD are developing 'sustainable productivity' measures that integrate biodiversity impacts, water use, and carbon footprints to better reflect collective welfare and societal productivity.

APA

Laborde, D. (2025). Agriculture and the Green Transition. International Institute for Sustainable Development. https://www.iisd.org/articles/policy-analysis/agriculture-green-transition

Chicago

Laborde, David. Agriculture and the Green Transition. International Institute for Sustainable Development, 2025. https://www.iisd.org/articles/policy-analysis/agriculture-green-transition.

Wikipedia

{{cite report |last1=Laborde |first1=David |title=Agriculture and the Green Transition |publisher=International Institute for Sustainable Development |date=8 December 2025 |url=https://www.iisd.org/articles/policy-analysis/agriculture-green-transition |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{laborde2025agriculture, author = {Laborde, David}, title = {{Agriculture and the Green Transition}}, institution = {International Institute for Sustainable Development}, year = {2025}, month = dec, url = {https://www.iisd.org/articles/policy-analysis/agriculture-green-transition}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }