Agricultural Policy Subsidies Status Arguments For Subsidies

Currently, economic studies place the average farmer subsidy at US$17,000/year for European farmers, and US$16,000/year for U.S. farmers. The subsidies are mainly in the form of tax reductions and very low prices on the water needed to grow plants.

2 Arguments for subsidies

Most agricultural policy or subsidy has purposes other than profit. A very strong evidence for this is that huge amounts of excess food are often disposed of very cheaply, e.g. by export to developing nations as foreign aid, or as part of local food bank or food stamp programs. Agricultural economics studies these 'other purposes' to see what insights they provide into economics, and to help set such policies in the context of a larger economy in which most activity is not agricultural.

A key stated goal of agricultural subsidies is food self-sufficiency to prevent the shock of rapid price rises in essential groceries. To submit the entire food supply of a nation to the whims of commodity markets is considered a poor idea. Another goal is to improve biosecurity by minimizing the amount of overall organic material imported, e.g. recent United States Food and Drug Administration rules applied to foreign exporters of food to the US.

Another stated goal is to encourage organic farmingOrganic farming is a way of farming that avoids the use of synthetic chemicals and genetically modified organisms (GMOs), and, according to its proponents, follows the principles of sustainable agriculture. Its theoretical basis puts an emphasis on soil h and precision agriculturePrecision farming or precision agriculture is an agricultural concept relying on the existence of in-field variability''. It requires the use of new technologies, such as global positioning (GPS), sensors, satellites or aerial images, and information mana, often combined in the idea of the " garden economy ". When the USSRThe Union of Soviet Socialist Republics (USSR ( Russian: ; tr. Soyuz Sovetskikh Sotsialisticheskikh Respublik (SSSR) also called the Soviet Union ( ; tr. Sovetsky Soyuz , was a state in much of the northern region of Eurasia that existed from 1922 until 1 was unable to feed itself it was often observed that over half of the local foodLocal food (also regional food is a principle of sustainability relying on consumption of food products locally grown. It is part of the concept of local purchasing, a preference to buy locally produced goods and services. The concept is often related to supply was coming from small private gardens growing native varieties with organic means, despite the fact that the government had done everything in its power to discourage such small-scale organic entrepreneurs.

3 Opposition to subsidies

However, many political observers argue that the true purpose of agricultural subsidies is in the end to protect farmers so that they will continue to vote for the politicians that vote for these subsidies. It should be noted, however, that only a small percentage of the population actually works in agriculture in the WestWest is most commonly a noun, adjective, or adverb indicating direction or geography. West is the direction towards which the sun sets at the equinox. It is one of the four cardinal points of the compass, upon which it is considered the opposite of East, (about 5% in the European UnionFor other uses, see EU (disambiguation). The European Union or EU is a supranational organisation of 25 European states. It was established with that name by the Treaty on European Union (commonly known as the Maastricht Treaty) in 1992 but many aspects o in 19971997 was a common year starting on Wednesday (see link for calendar), and was designated the International Year of the Reef''. Events January January 3 NBC's Today Show Bryant Gumbel signs off for the last time January 8 Mister Rogers receives a star on t and 1.7% in the United StatesThe United States of America also referred to as the United States U. America ¹ or the States is a federal republic in central North America, stretching from the Atlantic in the east to the Pacific Ocean in the west. It shares land borders with Canada in in 1990). On the other hand, a much larger percentage of the population is affected by the rise and fall of the farm economy. In many areas, agriculture comprises the primary economic base. Many economists regard farm subsidies as objectionable because they cause the economy to be less efficient than they would otherwise be. There have been well-publicized cases of large corporations receiving subsidies implying that all those receiving subsidies do not deserve much sympathy. Many farmers are opposed to subsidies because they tend to result in overproduction and lower prices, which then increases future reliance on subsidies. Thus a vicious downward spiral is formed, which becomes increasingly more difficult to escape from.

Another critique is that these subsidies prevent farmers in the third world from competing in local and export markets, thereby creating third world poverty. This line of reasoning is increasingly used as the main opposition to subsidies, as exemplified by the 2003 Cancun WTO ministerial conference , where 22 third-world nations strongly argued against agriculture subsidies in US and Europe. Their complaint is that the first world talks about free trade and free markets, but does not implement them when their agriculture products are subject to competition by cheaper products from the third world.

In April 2004 the WTO ruled that $3 Billion in US cotton subsidies violate trade agreements and almost 50% of EU sugar exports are illegal.

4 Other opinions

Most green economists argue that such measures ought to be strongly encouraged, and so consider agricultural policy that exempts small gardens and greenhouses from regulations to be desirable, especially if produce is consumed locally. They argue for tax, tariff and trade rules to exempt such production for local use, especially family farm or farm co-op production, and strongly deny that agricultural and industrial policy should be linked, or should be subject to the same law. One rationale is that local production of organic produce by families in their own gardens for their own consumption is not taxed or regulated, and that little or no use of the energy-and-land-intensive transport system, or energy-and-labor intensive regulation system is required for these same people to sell the same product to neighbors.

Rules for rural land ownership typically affect both agricultural policy and family farms. Some economists, e.g. Hernando de Soto, Joseph Stiglitz, argue that comprehensive land reform is more likely than any amount of tax, tariff and trade system, and more likely than any specifically agricultural policy, to improve life in developing nations.

Immigration policy in some developed nations has exceptions specifically to enable agricultural policy, e.g. migrant farm workers in Canada and the US.

5 U.S. initiatives

The United States has almost ended farm subsidies several times, most recently with the enactment of the "Freedom to Farm" act, which was intended to provide diminishing payments to farmers over a period of years in lieu of price supports and production subsidies. It was supplanted in 2002 by new legislation that contained direct subsidies and countercyclical payments designed to limit the effects of poor prices and yields in bad years. Grain crops are most heavily subsidized.

Another major U.S. subsidy program is the "conservation reserve program" (CRP) which leases land from producers who take marginal land out of production and convert it back to as near its natural state as possible, by planting native grasses and other plants. In addition, there are major regulatory frameworks that have environmental, safety, and food quality goals.

Another program is the "environmental quality incentives program" (EQIP) which subsidizes improvements which promote water conservation and other measures. This program is conducted under a bidding process using a formula where farmers request a certain percentage of cost share for an improvement such as drip irrigation or a LEPA center pivot conversion ( Low energy precision application ). The producers which offer the most environmental improvement (based on a point system) for the least amount of government money are funded first. The process continues until that year's allocated funds are expended.

Other, more subtle measures enacted by the states and local governments affect farming, such as zoning and tax policy.

Since imported/exported agricultural produce is mostly traded and entirely priced on commodity markets, but presents special biosafety and biosecurity risks, there is a strong bias in all agricultural markets to compromise safety to achieve low prices.

6 International initiatives

Safe trade rules to encourage organic farming and self-reliance, led by opponents of genetically modified food and monoculture, e.g. Greenpeace.

Fair trade rules to ensure that poor farmers in underdeveloped nations that produce crops primarily for export are not exploited to put local farmers in developing nations out of work - which advocates consider a dangerous " race to the bottom" in agricultural labor and safety standards . Opponents point out that most agriculture in developed nations is produced by industrial corporations (or " agribusiness") which are hardly deserving of sympathy, and that the alternative to exploitation is poverty.

Free trade advocates desire the elimination of all market distorting mechanisms (subsidies, tariffs, regulations) and argue that, as with free trade in all areas, this will result in aggregate benefit for all. This position is particularly popular in competitive agricultural exporting nations in both the developed and developing world, some of whom have banded together in the Cairns Group lobby.

Plans to reduce or remove agricultural subsidies have led often to violent confrontations even in developed nations, e.g. very often in France. The issue is very politically loaded and there are strong constituencies both for and against agricultural reforms.

7 Articles and papers

8 See also

Economics

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1 Subsidies status