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. In economics, a subsidy is generally a monetary grant given by a government to lower the price faced by producers or consumers of a good, generally because it is considered to be in the public interest. ... Farmer spreading grasshopper bait in his alfalfa field. ... Commodity is a term with distinct meanings in both business and in Marxian political economy. ... // Foodstuffs Fuels Precious metals Industrial metals Rare metals Other Source This list is partly adapted from [8] (Consumerium) under the clauses of GFDL External links NYMEX.com London Metal Exchange Euronext - Commodities > Commodities Chicago Board of Trade Category: ... Species T. aestivum T. boeoticum T. compactum T. dicoccoides T. dicoccon T. durum T. monococcum T. spelta T. sphaerococcum References:   ITIS 42236 2002-09-22 For the indie rock group see: Wheat (band). ... This article is about cereals in general. ... Fodder growing from barley In agriculture, fodder or animal feed is any foodstuff that is used specifically to feed livestock, such as cattle, sheep, chickens and pigs. ... Corn redirects here. ... Species About 30 species, see text Sorghum is a genus of about 30 species of grasses raised for grain, native to tropical and subtropical regions of Eastern Africa, with one species native to Mexico. ... Binomial name Hordeum vulgare L. Barley (Hordeum vulgare) is a major food and animal feed crop, a member of the grass family Poaceae. ... Binomial name Avena sativa Carolus Linnaeus (1753) The Oat (Avena sativa) is a species of cereal grain, and the seeds of this plant. ... Cotton ready for harvest. ... A glass of cows milk A goat kid feeding on its mothers milk Milk is the nutrient fluid secreted by the mammary glands of female mammals (including monotremes). ... Species Oryza glaberrima Oryza sativa Rice is two species of grass (Oryza sativa and Oryza glaberrima) native to tropical and subtropical southern & southeastern Asia and in Africa. ... Binomial name Arachis hypogaea L. The peanut, or groundnut (Arachis hypogaea) is a species in the legume family Fabaceae native to South America. ... Magnification of typical sugar showing monoclinic hemihedral crystalline structure. ... Species Nicotiana acuminata Nicotiana alata Nicotiana attenuata Nicotiana benthamiana Nicotiana clevelandii Nicotiana excelsior Nicotiana forgetiana Nicotiana glauca Nicotiana glutinosa Nicotiana langsdorffii Nicotiana longiflora Nicotiana obtusifolia Nicotiana paniculata Nicotiana plumbagifolia Nicotiana quadrivalvis Nicotiana repanda Nicotiana rustica Nicotianasuaveolens Nicotiana sylvestris Nicotiana tabacum Nicotiana tomentosa Ref: ITIS 30562 as of August 26, 2005... Vegetable oil or vegoil is fat extracted from plant sources. ... Binomial name Glycine max (L.) Merr. ...

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 Commodity Credit Corporation, among others. The U.S. Department of Agriculture, also called the Agriculture Department, or USDA, is a Cabinet department of the United States Federal Government. ... This is a partial list of notable United States federal legislation, in chronological order. ... The United States Agricultural Adjustment Act (AAA) (P.L. 73-10 of May 12, 1933) restricted production during the New Deal by paying farmers to reduce crop area. ... The Agricultural Act of 1949 (Pub. ... The Commodity Credit Corporation, or CCC, is an agency of the U.S. Department of Agriculture created on October 17, 1933. ...

The beneficiaries of the subsidies have changed as U.S. agriculture changes. In the 1930s, about ¼ of the U.S. population resided on the nation's 6,000,000 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. Agriculture is a major industry in the United States and the country is a net exporter of food. ... The 1930s (years from 1930-1939) were described as an abrupt shift to more radical and conservative lifestyles, as countries were struggling to find a solution to the Great Depression, also known in Europe as the World Depression. ...

The subsidy programs give farmers extra money for their crops, as well as guarantee a price floor. For instance in the 2002 Farm Bill, for every bushel of wheat sold farmers were paid an extra 52 cents and guaranteed a price of 3.86 from 2002-03 and 3.92 from 2004-2007^[1] . That is, if the price of wheat in 2002 was 3.80 farmers would get an extra 58 cents per bushel. This effect of this is that subsidies encourage overproduction, and therefore low food prices, because they pay farmers more than what the free market would. REDIRECT Farm Security and Rural Investment Act of 2002 This page was kept as a redirect to the corresponding main article of the subject matter, in order to preserve its after the content was merged. ...

European Union

Main article: Common Agricultural Policy

See Also Intervention storage The examples and perspective in this article or section may not represent a worldwide view. ... // The creation of the EUs Common Agricultural Policy was the trigger for the creation of Europes intervention storage. ...

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 following is the subsidies by crop in 2004 in the United States. 2004 (MMIV) was a leap year starting on Thursday of the Gregorian calendar. ...

Source USDA 2006 Fiscal Year Budget ^[2] Species T. aestivum T. boeoticum T. compactum T. dicoccoides T. dicoccon T. durum T. monococcum T. spelta T. sphaerococcum References:   ITIS 42236 2002-09-22 For the indie rock group see: Wheat (band). ... Species Oryza glaberrima Oryza sativa Rice is two species of grass (Oryza sativa and Oryza glaberrima) native to tropical and subtropical southern & southeastern Asia and in Africa. ... Cotton ready for harvest. ... Species Nicotiana acuminata Nicotiana alata Nicotiana attenuata Nicotiana benthamiana Nicotiana clevelandii Nicotiana excelsior Nicotiana forgetiana Nicotiana glauca Nicotiana glutinosa Nicotiana langsdorffii Nicotiana longiflora Nicotiana obtusifolia Nicotiana paniculata Nicotiana plumbagifolia Nicotiana quadrivalvis Nicotiana repanda Nicotiana rustica Nicotianasuaveolens Nicotiana sylvestris Nicotiana tabacum Nicotiana tomentosa Ref: ITIS 30562 as of August 26, 2005... Dairy farm near Oxford, New York A dairy is a facility for the extraction and processing of animal milk (mostly from cows, sometimes from buffalo, sheep or goats) and other farm animals, for human consumption. ... Binomial name Glycine max Soybeans (US) or soya beans (UK) (Glycine max) are a high-protein legume (Family Fabaceae) grown as food for both humans and livestock. ... Seeds which are grown for their oil. ... Peanuts was a syndicated daily comic strip written and illustrated by Charles M. Schulz, which ran from October 2, 1950, to February 13, 2000 — the day after Schulzs death. ... Magnification of typical sugar showing monoclinic hemihedral crystalline structure. ... A jar of honey, shown with a wooden honey server and scones. ... Long and short hair wool at the South Central Family Farm Research Center in Boonesville, Arizona Wool is the fibre derived from the fur of animals of the Caprinae family, principally sheep, but the hair of certain species of other mammals such as goats, alpacas and rabbits may also be... Mohair is a silk-like fabric made from the hair of the Angora goat, not to be confused with the angora rabbit whose fur is called angora. ... Vegetable oil redirects here. ... The United States Department of Agriculture (also called the Agriculture Department, or USDA) is a United States Federal Executive Department (or Cabinet Department). ...

Benefits

Proponents of agricultural subsidies argue that they are necessary because of the unusual nature of the agricultural industry. For one, a big part of crop yield, and therefore price, is based upon the weather both at home and abroad in remote parts of the world. Because of the uncertain nature of the weather, price subsidies are necessary to ensure that farmers receive a liveable wage. In agriculture, crop yield (also known as agricultural output) is a measure of the yield per unit area of land under cultivation. ... Weather is a term that encompasses phenomena in the atmosphere of a planet. ...

Another problem with this market is that it does not behave like a natural market. Today, farms are too efficient, and produce more food in industrial countries than can be eaten. ^[3] In other markets, this would cause producers to cut back until a new equilibrium was reached. However, in agriculture, this does not happen as land will always be farmed and therefore is fixed. Demand is also inelastic in the case of food. That is, people will not eat more if food is cheap. As the commodity prices lower, farmers work to become more and more efficient in order to minimize their loses.^[4] This causes supply to increase and the price to lower further, exacerbating the problem. In economics, this problem is known as the fallacy of composition. It should also be noted that subsidization makes this problem worse. The supply and demand model describes how prices vary as a result of a balance between product availability at each price (supply) and the desires of those with purchasing power at each price (demand). ... One typical application of the concept of elasticity is to consider what happens to consumer demand for a good (for example, a product) when prices increase. ... A fallacy of composition arises when one infers that something is true of the whole from the fact that it is true of some (or even every) part of the whole. ...

Farm subsidies have the effect increasing production and therefore lowering the price of food. Today, consumers spend less on food than they ever have before. Food is, of course, a necessity and so every dollar saved on food can be spent elsewhere in the economy. Over the past 70 years, food spending has steadily declined in America. In 1929, before agriculture subsidization, Americans spent 23.9% of their income on food, by 1997 this had lowered to only 10.7%. ^[5]

In the 1960's, President Lyndon B. Johnson made food surpluses a weapon in the war on poverty. Since then, food has been donated to poor urban areas in the United States. Also both critics and proponents of the WTO have noted that export subsidies, by driving down the price of commodities, can provide cheap food for consumers in developing countries. ^{[6] [7]} Lyndon Baines Johnson (August 27, 1908 – January 22, 1973), often referred to as LBJ, was the 36th President of the United States (1963–1969). ... To meet Wikipedias quality standards, this article or section may require cleanup. ... For other uses of the initials WTO, see WTO (disambiguation). ...

Criticism

One criticism of subsidy comes from conservatives and libertarians arguing that subsidies is against the will of the free market. For example, poor store owners don't receive relief from the market and therefore neither should poor farmers. Furthermore, justification of subsidies from the uncertain nature of the weather can be countered by considering that many other areas of economy experience equivalent risks for which the free market can provide solutions e.g. insurance.

Critics of agricultural subsidies argue that they promote poverty in developing countries, by artificially driving down world crop prices. Agriculture is one of the few areas where developing countries have a competitive advantage. This makes developing countries into dependent buyers of food from wealthy countries, causing local farmers to lose their land rather than allowing them to develop their own agriculture and therefore self-sufficiency. Agricultural subsidies often are a common stumbling block in trade negotiations. In 2006, talks at the Doha round of WTO trade negotiations stalled because America refused to cut subsidies to the other countries' desired level. ^[8] A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows his find. ...  High human development Medium human development Low human development Unavailable A developing country is a country with a relatively low standard of living, undeveloped industrial base, and moderate to low Human Development Index (HDI). ... In marketing and strategic management, sustainable competitive advantage is an advantage that one firm has relative to competing firms. ... The Doha round of World Trade Organization negotiations aims to lower barriers to trade around the world, with a focus on making a more fair system of trade for developing countries. ...

In America, critics also argue that agricultural subsidies go mostly to the biggest farms who need subsidization the least. Research from Brian M. Riedl the Heritage Foundation showed that nearly three quarters of subsidy money goes to the top 10% of recipients.^[9] Thus, the large farms, which are the most profitable because they have economies of scale, receive the most money. The discrepancy is only widening. Since 1990, payments to large farms have nearly tripled, while payments to small farms have remained constant. ^[10]. Brian M. Riedl argues that the subsidy money is helping large farms buy out small farms. "Specifically, large farms are using their massive federal subsidies to purchase small farms and consolidate the agriculture industry. As they buy up smaller farms, not only are these large farms able to capitalize further on economies of scale and become more profitable, but they also become eligible for even more federal subsidies--which they can use to buy even more small farms."^[11] Critics also note that, in America, over 90% of money goes to staple crops of corn, wheat, soybeans and rice while growers of other crops get shut out completely. In Europe, for instance the Common Agricultural Policy has provisions encourage local varieties and pays out subsidies based upon total acreage and not production. Although, in fairness, research has shown that small farms receive more payments in relation to value of their crops than big farms.^[12] Look up corn in Wiktionary, the free dictionary. ... Species T. aestivum T. boeoticum T. compactum T. dicoccoides T. dicoccon T. durum T. monococcum T. spelta T. sphaerococcum References:   ITIS 42236 2002-09-22 For the indie rock group see: Wheat (band). ... Binomial name Glycine max Soybeans (US) or soya beans (UK) (Glycine max) are a high-protein legume (Family Fabaceae) grown as food for both humans and livestock. ... Species Oryza glaberrima Oryza sativa Rice is two species of grass (Oryza sativa and Oryza glaberrima) native to tropical and subtropical southern & southeastern Asia and in Africa. ... The examples and perspective in this article or section may not represent a worldwide view. ...

Agricultural subsidies also can harm the environment. Indeed, in order to produce more, farmers convert wetlands to agriculture and intensify the use of pesticides, fertilizers and phosphates which run into the groundwater. Agriculture uses 75% of the world's available fresh water, and it is argued that, given the seriousness of the world's crisis in fresh water, incentives should be reversed to encourage less use of water. A cropduster spreading pesticide. ... spreading manure, an organic fertilizer Fertilizers (British English fertilisers) are compounds given to plants to promote growth; they are usually applied either via the soil, for uptake by plant roots, or by foliar feeding, for uptake through leaves. ... Above is a ball-and-stick model of the inorganic hydrogenphosphate anion (HPO42−). Colour coding: P (orange); O (red); H (white). ... Groundwater is water located beneath the ground surface in soil pore spaces and in the fractures of geologic formations. ...

See also

• Agricultural policy

This article needs to be cleaned up to conform to a higher standard of quality. ...

External links

• Farm Security: The mohair of the dog that bites you - Comedy writer Dave Barry on farm subsidies

• Kick out Agricultural Subsidies - a campaign run by the Guardian newspaper in the UK

• Still at the Federal Trough: Farm Subsidies for the Rich and Famous Shattered Records in 2001- a paper presented by The Heritage Foundation arguing that farm subsidies are corporate welfare and do not benefit small family farms.

• Environmental Working Group's Farm Subsidy Database

The Heritage Foundation, a conservative think tank located in Washington, D.C., is widely regarded as one of the worlds most influential public policy research institutes. ...

Reference

1. ^ The 2002 Farm Bill: Title 1 Commodity Programs. USDA (2002-05-22). Retrieved on 2006-12-2006.
2. ^ USDA Budget Summary 2006. Farm and Foreign Agriculture Services.
3. ^ Outline of the US Economy: American Agriculture, it's changing significance. USDA. Retrieved on 2006-12-26.
4. ^ Schlosser, Eric (2002). Fast Food Nation. New York: Perennial, 119. ISBN 0060938455. 
5. ^ Food Spending in Relation to Income. USDA. Retrieved on 2006-12-26.
6. ^ Panagariya, Arvind (2005-12). Liberalizing Agriculture. Foreign Affairs. Retrieved on 2006-12-26.
7. ^ Center for Economic and policy research (2005-11-22). World Bank's Claims on WTO Doha Round Clarified. Press release.
8. ^ US blamed as Trade Talks end in acrimony. Financial Times (2006-7-24). Retrieved on 2006-12-26.
9. ^ Riedl, Brian M. (2002-4-30). Still at the Federal Trough: Farm subsidies for the rich and famous shattered records in 2002. Heritage Foundation. Retrieved on 2006-12-27.
10. ^ Farm Programs: Information on Recipients of Federal Payments 14. US General Accounting Office (2001-06). Retrieved on 2006-12-27.
11. ^ Riedl, Brian M. (2002-4-30). Still at the Federal Trough: Farm subsidies for the rich and famous shattered records in 2002. Heritage Foundation. Retrieved on 2006-12-27.
12. ^ Farm Programs: Information on Recipients of Federal Payments 15. US General Accounting Office (2001-06). Retrieved on 2006-12-27.

• Farm Commodity Programs: A Short Primer, a Congressional Research Service Report for Congress, June 20, 2002.