Question

Suppose that you are a U.S. policymaker, and wish to change American agriculturalpolicy so that poor countries, like Haiti and Belize, are benefitted. How would youaddress the issue of agricultural subsidies? Write a policy brief outlining your approach,keeping in mind that there are good reasons for agricultural subsidies in wealthy nations.

Answer 1

I would address the issue of agricultural subsidy by throwing light on the both sides of the coin.

According to the reports, the federal government is spending a huge sum of money in the form of the agricultural subsidies. Around 39 percent of the farmers in the states are receiving subsidies from the federal government. These subsidies are mainly going to the producers of the corn, wheat, cotton and rice. The federal government is providing subsidies to the agricultural sector in almost all the spheres starting from the crop insurance coverage, marketing, research and development.

However, in the recent years there are voices which are being raised against the agricultural subsidies both inside and outside the United States. The poor countries are against the farm subsidies as they are unable to compete with the United States crop prices in the international markets. There are protests within the Unites States which are being raised as people believe that price fluctuations and risk in the agricultural sector is no different than any other industry in the country. The burden of the agricultural subsidy is falling on the shoulders of the taxpayers. The arguments given against the farm subsidy is the fact that the subsidy is hampering the innovation, cost cutting ideas and better use of land.

The agriculture subsidy undermines the trade relation of the United States with other countries as well. As we all know, when a country subsidizes the farm production it boosts the domestic consumption and the export quantity. It is noticed that most of the high-income countries are now subsidizing their farmers. The policy makers can suggest the idea of slashing the farm subsidy (save the interest of the tax payers) and aim for efficient allocation of resource in the global supply markets.

The other side of slashing the idea of providing subsidy to the advanced country’s farmers is endangering the global stability. The lower-income countries benefit from trading in the international market and removal of the subsidy can effect the trade relations of the poor nations with the rich nations.