Agricultural subsidy
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An agricultural subsidy is a governmental subsidy paid to farmers to supplement their income, help manage the supply of agricultural commodities, and bolster the supply of such commodities on international markets. Examples of such commodities include wheat, feed grains (grain used as fodder, such as maize, sorghum, barley, and oats), cotton, milk, rice, peanuts, sugar, tobacco, and oilseeds such as soybeans.
Agricultural subsidies by region
United States
The U.S. Agricultural Department is required by law to subsidize over two dozen commodities. Between 1996 and 2002, an average of $16 billion/year was paid by programs authorized by federal legislation dating back to the Agricultural Adjustment Act of 1933, the Agricultural Act of 1949, and the CCC Charter Act of 1948, among others.The beneficiaries of the subsidies have changed as U.S. agriculture changes. In the 1930s, about a quarter of the U.S. population resided on the nation's six million small farms. By 1997, 157,000 large farms accounted for 72% of farm sales, with only 2% of the U.S. population residing on farms.
Congress has made dozens of changes to the program over the years, as agricultural policy and the economy has changed. One of the more recent acts was the Farm Security and Rural Investment Act of 2002, which is in effect until 2007.
Currently (as of Nov. 2005), the USDA (United States Department of Agriculture) forecast for the fiscal year 2005 is for a trade surplus of $4.5 billion with $62 billion in exports. (-source: American Institute for Economic Research (Great Barrington, MA, USA) research report, vol. LXXII No. 22)
European Union
Japan
Japan is best known for having agricultural subsidies put on its rice industry, with the reasoning behind such moves being cultural.
Agricultural subsidies by crop
The New York Times reported on December 8, 2005 that corn subsidies had reached $20 billion per year in the United States and as much as $85 billion per year in the European Union.Criticism
The main criticism of these programs is that they run counter to the spirit of the free market, protecting uneconomical producers and impeding fair competition. This naturally causes agricultural subsidies to be a common stumbling block in free trade negotiations. Some maintain that they promote poverty in developing countries by driving agricultural prices below what third world farming industries can compete with.
Advocates of greater fiscal responsibility will also point out that these subsidies unnecessarily exacerbate public debt when many government programs are underfunded.
See also
Reference
- Farm Commodity Programs: A Short Primer, a Congressional Research Service Report for Congress, June 20, 2002.
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