Agricultural Subsidies: Pros And Cons In The Agricultural Industry
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Agricultural subsidies: “Payments by the federal government to producers of agricultural products for the purpose of stabilizing food prices, ensuring plentiful food production, guaranteeing farmers' basic incomes, and generally strengthening the agricultural segment of the national economy.” (http://legal-dictionary.thefreedictionary.com/Agriculture+Subsidies).
The way subsidies work in general is that governments often intervene with prices in the current market depending on the nature of whether a good or service is one of merit or one that is demerit. In most cases, merit goods will be subsidized to decrease the production costs of the good resulting in lower selling prices and consequently increased demand for said good…show more content… This idea brings us to the next part of this essay; where the pros and the cons of agricultural subsidies will be thoroughly analysed.
4. Pros of agricultural subsidies:
a) Stable and Predictable Farming System
The use and implementation of agricultural subsidies will help most of the farmers to make use of latest farming systems and effective equipment that is available in the agriculture industry, as they are able to buy and afford those systems and equipments. This way, their productivity will increase as well as their work becoming more effective and faster.
b) Subsidized Farming
By being subsidized, a farmer does not need to increase its crop or cattle selling price. This leads to less price spikes for consumers in times of bad harvest and the price of basic needs are less likely to increase.
c) It Will Contribute to Growing…show more content… Agricultural subsidies can have an effect on the cost and supply of commodities. This means that governments can regulate to a certain extent what gets sold, what gets produced and at what price. Of course retailers such as supermarkets are important too in deciding on the value of a certain product, but if the government fixes the original price of a certain good at a very low one, it is likely that that product will be bought a lot more often than one that is much more expensive. In that way, governments could be said to regulate the entire food industry in a certain way. Moreover, “many believe that governments don’t want prices to come naturally through supply and demand because that would make agricultural subsidies