NCPA - National Center for Policy Analysis

Farm Subsidies

September 15, 2003

Farm subsidies began in times of hardship -- during the Depression in the United States -- to help farmers survive as their costs rose and market prices stagnated, and after World War II in Europe, to encourage farmers to increase food production and avert malnutrition.

But today western countries are drowning in food, their citizens more likely to suffer from obesity than starvation, and the huge surpluses are sold cheaply overseas.

It is highly unlikely that either the United States or Europe will offer the concessions needed to undo the damage of the system:

  • Agriculture is now one of the few sectors of the American economy where the United States runs a trade surplus, and American businesses that thrive on subsidized global trade want to keep the subsidy system in place.
  • Political contributions from agribusiness jumped from $37 million in 1992 to $53 million in 2002, with the Republicans' share rising from 56 percent to 72 percent, according to figures compiled by the Center for Responsive Politics.
  • President Bush signed into law last year a new farm policy that increases permanent subsidies by $40 billion a year.

Reducing these subsidies and removing agricultural trade barriers is one of the most important things that rich countries can do for millions of people to escape poverty all over the world, says Ian Goldin, the World Bank's vice president for external affairs.

Source: Elizabeth Becker, "Western Farmers Fear Third-World Challenge to Subsidies," New York Times, September 9, 2003.


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