U'S' and European agriculture subsidies are necessary to protect their domestic farmers from cheap f

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U.S. and European agriculture subsidies - are
necessary to protect their domestic farmers from
cheap foreign farmers

• Adam Rogers
• Jeff Schierlman
• Sirwat Visoldilokpun

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Disclaimer

• The contents of this presentation may or may NOT
  accurately reflect the true views of these
  students. Any reproduction of this material for
  the use of exposure of these students is strictly
  prohibited.

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Presentation Outline

• Definitions
• Policy Tools
• History of Agricultural Subsidies
• Objectives of a Subsidy
• United States and Europe (CAP)
• Job loss
• Benefits of Agricultural Subsidies
• Conclusion

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Definitions

• Subsidy
• a grant, tax break, or trade barrier, in order to
  encourage the production or purchase of a good
• Agricultural Policy
• set of laws relating to domestic agriculture and
  imports of foreign agricultural products.
• Policy Tools
• Price Controls
• Import Barriers

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Definitions (Cont.)

• Agricultural Subsidy
• a governmental subsidy paid to farmers to
  supplement their income, manage the supply of
  agricultural commodities, and influence the cost
  and supply of such commodities on international
  markets.

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History

• World War I
• Europe severely hurt
• America to take Advantage
• 1920s
• European agriculture recovers
• America found more difficult to export farming
  goods.
• Farmers produced in Surplus
• Prices began to fall

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History

• 1930s
• Farmer Difficulty
• Financial Crisis for US farmers.
• FDR
• Henry Wallace
• 1933
• Tax on specific companies

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History

• 1936
• Unconstitutional
• Unfair, Illegal
• 1938
• Separate AAA passed
• General Taxation Acceptable

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History

• 1949
• Agricultural Act of 1949
• Section 416 (b)
• Permanent legal basis.
• Surplus commodities.
• Type of goods can vary, but what is available
  depends on previous harvest in the USA.

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Objectives of the Subsidy

• National Security
• Sufficient domestic production capability
• Foreign food producers
• Adequate domestic capability
• Agricultural policies
• Net gain

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Objectives

• Rural poverty and unemployment relief
• Remain on the land.
• Assistance to the poor.
• Cheap (inexpensive) food
• Organic Farming
• Favor small gardens and Greenhouses.

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United States

• Farmers received 164.1 billion dollars in
  Subsidies from 1995-2005
• 33 of all farmers receive subsidies
• Top 10 receive on average 34,190
• Bottom 80 receive on average 704

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United States
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Texas

• Texas ranks 1!
• Farmers received 14.9 billion dollars in
  Subsidies from 1995-2005
• 18 of all farmers receive subsidies
• Top 10 receive on average 44,278
• Bottom 80 receive on average 762

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Texas
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Common Agricultural Policy

• CAP budgeted for 48.5 billion euros (2005)
• Average Farm Payment
• Great Britain 14,473 euros
• France 15,200 euros
• Germany 14,357 euros

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Why Subsidize Farmers?

• Food quality
• Stability and Farm Security
• Employment
• Consequences of Subsidy Phase Out

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Benefits of Agricultural Subsidies

• Preservation of employment for farmers.
• Keeps agriculture in business and provides
  reserves in the United States and Europe.
• Preservation of a traditional cultural way of
  life.
• Reduction in trade pressure to other countries.
• Drive down food prices so that food is more
  affordable to the lower class.
• Wealth transfer from Rich to Poor.

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Summary

• To encourage and strengthen the agriculture
  industries.
• Encourage growth until they can thrive without
  aid.
• Allow them to compete with foreigner.
• A net gain for the government.

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Summary

• National security.
• The government must be involved in the nations
  food supply.
• Protection against a global supply disruption.
• As a consumer, we want a food supply to be over
  supply.

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Summary

• Insurance policy.
• Levels of support held constant in nominal
  dollars.
• Precipitous drop on farm programs.
• Average at 7 billions/year.
• 2 cents/meal.
• A goof premium to preserve the nations food
  supply.

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Summary

• Environmental protection and land management.
• Majority of land is farms and undeveloped lands.
• Policy encourages land used.
• Particular farm methods help preserve land and
  environment.
• Average erosion rate has dropped.
• Societys long run benefit.

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Summary

• Rural poverty and unemployment relief.
• Encourage people to remain on the land, and earn
  income.
• Necessary helps required for rural population.
• 38 of producers provide 92 of food receive 87
  of farm program payments.
• Assist poor people.

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Summary

• Rural poverty and unemployment relief.
• A study by Gonzalez et al., University of
  California.
• Impact of elimination of farm subsidies in Colusa
  county, CA.
• Rice, almonds, tomatoes, and beans.
• 58 millions, 22 of agriculture product.
• Results.
• Economy will decrease by 73.5 millions.
• Agriculture products will dramatically decrease.
• Employment will drop about 30.

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Summary

• Global market is a zero-sum game.
• Average tariffs faced by countries trying to land
  their agriculture products in US is around 12.
• Our farmers face about 62 tariffs.
• Primary leverage is our domestic support
  programs.
• To date, they have not yet reduced significant
  tariffs to offset the domestic support
  reductions.

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Summary

• As a results of agriculture subsidies.
• Agriculture sector has been an amazing success
  story.
• The nation food supply is continue growing.
• We are making a better use of our resources.
• New opportunities for agriculture sector is
  still available.
• Renewable fuels, and bio-energy