Farm subsidies

Posted: 14 December 2007

In 2006, government support to farmers in countries (mostly Western) belonging to the Organisation for Economic Cooperation and Development (OECD) totalled US$268 billion. This is a fall from $327 billion in 2000. The chief beneficiaries of farm supports were large-scale agricultural businesses.

  • Around half of the West's farm support is the form of direct subsidies to farmers. The other half consists of measures to boost the prices of farm products, import tariffs,for example, also advisory services and research and development costs.

  • Levels of support to farmers given by governments varied widely in 2006. Support money accounted for only 1 per cent of farmer income in New Zealand, but more than 60 per cent in Iceland, Norway, Korea and Switzerland.

  • In the European Union, the percentage of farm receipts provided by governments fell only slightly in 2006, to 32 per cent from 33 per cent in 2005. Support to US farmers fell to 11 per cent of farm receipts in 2006 from 16 per cent in 2005. Farmers in Japan and Korea, are among the most highly protected of all OECD countries.

  • The beneficiaries of farm supports are large-scale agricultural businesses, the people who lose out are farmers in poorer countries. Although the West's farm supports have fallen they still allow food crops to be exported at cheap prices from industrial countries to developing countries where they undermine the market for local farmers. In Mexico, Peru, and Colombia, farmers have even turned to drug crops like opium, coca, or cannabis because their food crops could not compete with cheaper, mass-produced imports.