Question

The United States has subsidies for farmers in the United States which drives down the cost of food. Proponents of free trade argue that these subsidies are a form of government waste and that allowing the free market to work will produce greater competition to help keep food prices low. They also argue that the system had loopholes that contribute to excessive waste. Proponents of market intervention argue that subsidies are needed to keep farmers competitive with the rest of the world which also subsidizes their farmers. They also argue that lower food prices benefits outweigh the increase in tax to subsidize food.

Identify arguments for and against each side of the topic. What are the objectives of each side? ( please provide citation of website used)

Answer 1

Ans. For the proponents of the free trade, subsidies are a kind of incentives the home producers get to help them cut their costs and thus is not an example of free and fair trade. The WTO ministerial conference has been debating on this for last 18 years at the biannial meets. This subsidies provided undue advantage to the native producers comparing to others developing or poor countries producers who doesn't have any type of such support. It is also against the principle's of WTO.

For the proponents of market interventionists, these subsidies are needed for the farmers to remain competetive with other's which provides subsidies to the farmers. It is true that most of the countriers provides subsidies to their farmers such as input subsidies, Minimum support prices, power and irrigation subsidies etc. In USA govt. mostly provides input subsidies like for buying equipments, tractors and cold storages. These are helpful for farmers to invest in these costly products and use them in farms and thus increase the productivity of the farmlands and make USA self sufficient. This also helps them to compete with farm producers of the world in the era of LPG.