The Impact of Agricultural Subsidies Essay

1941 WordsOct 28, 20108 Pages
The Impact of Agricultural Subsidies The Impact of Agricultural Subsidies Many countries started to negotiate Doha Development Agenda under the World Trade Organization (WTO) in 2001. In July 2004, members in WTO reached agreement to make a reform in agriculture. One of focused things is to cut agricultural subsidies both in developed countries and developing countries. In recent several years, millions of people from both developed and developing countries give in response to eliminate agricultural subsidies. Agricultural subsidies should be eliminated because they distort free trade, damage the local environment. The meaning of agricultural subsidies "Agricultural subsidies, financial assistance to farmers through…show more content…
(Cahill, C., & Legg, W., 1989 p. 17) Through the formulas people could easily get the PSEs. The PSEs in most developed countries are positive. However, in most developing countries the PSEs could be negative. Form Table 1 it shows the extent of agricultural subsidies in some developed countries. The impact of agricultural subsidies Although agricultural subsidies contribute to stabilize the prices of farm products and increase income of farmers, they also distort free trade and damage the local environment. Trade: Domestic market Agricultural subsidies have a great impact on domestic market. There is an example about the challenges in Quebec to show how agricultural subsidies distort the domestic market. There are two main problems in Quebec in recent years. "Many farmers are unable to cover their expenses and many are becoming increasingly dependent on government subsidies" (Minardi, J. 2008 p .7). In Quebec, government through giving farmers agricultural subsidies executes supply management to make a quota system to let domestic products more competitive. Not only supply management, but also high tariff makes food from other countries cannot come into Quebec's market. Therefore the local food prices are extreme high. However, there are many low-income households, which they use most of their money on food. They
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