The Impact of Agricultural Subsidies Essay

Agricultural subsidies is a very complex and controversial economic topic today. It will continue to be a hot topic as government continues it. It is largely debated in the United States as well as in other countries. The reason it is so largely debated is because it

Like much of the midwest, Indiana is especially dependent on agricultural success to boost their economy. Farming is the backbone of the Hoosier state, with 57,500 farming operations functioning in 2016, per the United States Department of Agriculture. While Indiana relies heavily on the agricultural sector of their economy, the agricultural sector in turn often relies upon subsidization. According to “Food Policy: Looking Forward from the Past”, a book written by Arlene Spark and Janel Obenchain, “An agricultural subsidy is governmental assistance paid to farmers and agribusiness to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such commodities.” Now that we accurately

While the Midwest may be “the breadbasket of the United States,” the Central Valley of California is the entire rest of the Thanksgiving meal on the table for the country. With its fertile soil, Mediterranean climate, and expansive flat land, the Central Valley produces more than 250 different crops that

Astyk and Newton, in their essay: The Rich Get Richer, the Poor Go Hungry, explains that “around the world, industrial agriculture has consolidated land ownership into the hands of smaller and smaller populations” destroying local self-sufficiency (518). Individuals are no longer able to grow own fresh, healthy foods to feed their family. They now depend on industrially grown crops and processed foods loaded with chemicals for food. Additionally, because of the farm policy, farmers that continue to cultivate healthy produce like fruits and vegetables get little or no government support, thus the higher prices of fresh produce seen today at our grocery stores.

In this research essay the article “Farmers Get Biggest Subsidy Check in Decade as Prices drop,” written by Alan Bjerga. The article brings forward the pressing issues of the agriculture downturn of prices in the United States of America. The article reviews crop surplus and reduced income in terms of the drop of agriculture prices. The article also touches on the fact that the united sates of America agriculture system needs more aid to provide safety for net farmers.

Farm subsidies ARE horrible. Americans can first do themselves a favor and save money by abolishing farm subsidies and trading with developing nations for lower-cost, higher-quality food. This not only puts tax money back into our hands, but we are then able to buy cheaper food, and at the same

Local farm food is usually cheaper since your not paying for the packaging and the shipping across the country. Also the food is way fresher and healthier for consumption since it is freshly grown and has not been sitting on a shelf for days. In addition the farmers that live on the farm are used to the quiet area of the farm and using the farm as their income source. By converting the land it means the farmers and their families will lose their homes and will need to adapt to the noisy and dense areas and in addition they will need to find a new job. Also some farms have been in families for generations and will break their hearts to sell it. In conclusion the conversion of farmland into commercial areas will affect the economy and innocent

Agricultural subsidies have existed in the United States for over a hundred years. The 1916 Federal Farm Loan Act provided affordable loans to farmers. Several programs emerged during the New Deal Era that supported the development of crop insurance, limited competition, production controls and much more. A struggling finance industry in the 1980s led to an increase in the government financial support of farms, despite calls from the Reagan administration to cut subsidies. In 1996, the ‘Freedom to Farm’ law drew away from the subsidies and support market supply and demand. However, in the years following, Congress started to again funnel subsidies to the agricultural industry. The original provisions of the 1996 law would have resulted in $47 billion in subsidy cost over 7 years; instead, spending reached well over $120 billion (Orden, Paalberg, Roe, 1999).

PESTEL Analysis of Agricultural Industry Political factors impact the agricultural sector in factors relating to regulation, distribution, and consumption of foods in a given country. Government policies and imposed regulations have a direct effect on nutritional choices that a consumer makes, and this, in turn, affects the agriculture market (KPMG, 2012). For example, policies governing food prices or the amount of information that a consumer will receive affects the choice of the consumer. Food regulation and safety measures implemented influence the supply of food products, and ultimately determines the market choice for consumers (KPMG, 2012). Economic factors have a direct effect on the agricultural industry. On one hand, the input cost such as the price of seeds, fertilizers, and cost of labor affect the productivity of the industry. The economic status of a country also affects the industry’s productivity. For example, in developing countries, the agricultural sector is less developed owing to limited resource input and poor infrastructure (KPMG, 2012).

In 2002, the United States of America passed a policy that granted United States farmers access to subsidies, in order to protect the domestic market in agriculture. In retaliation to this policy being passed the Brazilian government sued the United States in the court under the World Trade Organization for violating free trade agreements. The Brazilian government claimed that the United States was liberalizing its trade, making it unfair in a free market. The World Trade Organization enacted punitive measures against the United States by imposing tariffs and lifting patent protection on various United States goods. The United States had to act in some way because these measures would hurt markets in other areas including agriculture. The U.S. then agreed to subsidize farmers in Brazil by giving them one hundred and fifty million dollars. Many people argue that the other countries do not face the same regulations as in America, and there for are more protected, but other countries say that subsidizing farmers takes away a free market. There are pros and cons to subsidizing farmers in any country. The good side is that it provides job security for farmers and helps them to work around regulations and still acquire profits. The bad side is that these subsidies result in inefficient farmers that just get their compensation at the end of the year without producing a standard amount of product. It is also argued that subsidizing farmers restricts economic growth. I believe that

Levels of support to US farmers has been consistently below the OECD average and shows a declining trend over time. There has also been a shift away from direct output subsidies. This includes a progressively smaller share of support directed towards market price support. Low levels of support since 2002

reasons for why: 1. Industries buy the farmers’ products very cheap and sell them more expensive. 2. They doesn’t get a lot of economical help from the government. Their salary is very

Agricultural Subsidies: Their Original Purpose and Impact Today Contents Introduction: What are Farm Subsidies? 3 Government Intervention in Agribusiness 7 The Reality 9 Works Cited 12 Introduction: What are Farm Subsidies? The Agriculture sector has changed monumentally over the past century in response to vast economic change and technological advancements. Farm subsidies are various forms of payments from the federal government put in place in an effort to stabilize prices, keep farmers in business, and ensure quality of crops. The federal government currently pays $20 billion in cash each year to US farmers and spent an estimated $250 billion between 1995-2005. Presently, a new farm bill is passed every five years

In 2002, a dispute over agricultural trade liberalization between the United States and Brazil arose. Brazil filed a lawsuit against the United Stated in the World Trade Organization Dispute (WTO) Settlement System arguing that the subsidies the United States provided to US farmers violated WTO trade agreements and gave US farmers unfair advantages (Unit 7, lesson 5). Fortunately for Brazil, the World Trade Organization agreed with their claim and authorized them to take “punitive measures against the United States” (Cengage unit 7, 3).  As a result of that authorization, Brazil decided “to impose tariffs and lift patent protections on US goods” (Cengage unit 7, 3). In order to limit the damage that could have been created by Brazil’s actions, the United States had to make a smart move. As a matter of fact, they decided to provide cottons to Brazilians rather than removing the subsidies. Over 150 Million in subsidies have been provided to the Brazilians, in 2010 so that Brazil do not impose punitive measures (Cengage unit 7, 3). There exists both, pros and cons for subsidizing U.S. farmers. In fact, US farmer strongly support subsidies claiming that it gives the US an important industry and helps the regulations. However, subsidizing US farmers has some consequences. The cons argue that “subsidies provided to US agricultural producers create inefficiency in the global economy” (unit 7). Also, according to economists, subsidizing stands in the way of the economy growth

The implementation of subsidies in a specific industry cause major distortions in the market. The distortions are created because the subsidy creates a rent that is unable to be competed away. The rent that is generated is especially problematic when considering subsidies that are only available to current firms in the industry. The firms that join the industry after the subsidy is implemented are unable to compete with the lower price created by the subsidy. The benefit that the producer receives from the subsidy causes a gain in profit in the short run which the firms want to maintain into the long run. Furthermore, in the long run, since this surplus is considered a rent, the firms who receive the surplus are much better off than the