Chapter 6 “Agricultural Subsidies & Development”

Topics: Developed country, Cyprus, Developing country Pages: 2 (653 words) Published: July 13, 2012
1.If agricultural tariff and subsidies to producers were removed overnight, what would the impact be on the average consumer in develop nations such as the United States and the EU countries. What would be the impact on average farmer? Do you think the total benefits overweight the total costs, or vice versa? A.For decades the rich countries of the developed world have levied subsidies on their farmers typically guaranteeing them a minimum price for the products they produce. The aim has been to protect the domestic industry from the foreign competition and give an impact on the average consumer in develop nations such as the United States and the EU countries

If agricultural tariff and subsidies to producers were removed overnight, the average consumer in developed nations would probably see a slight rise in the cost of commodities as the commodity price reached a global equilibrium. The effect on the farmer would be more substantial because they would no longer be protected from international demand and prices. On the contrary also, the removal of tariffs and subsides to developed nation farmers could allow the average consumers to save as well. The prices for these products might become cheaper and the taxes paid would be eliminated because there would no longer be any subsidies to pay for. On the other hand, this would be a negative for the average farmers in these nations. There would no longer be a surplus of goods that could be sold to monopolize the market. Farmers would no longer benefit from the subsidies they received all profits would be based on production.

2.Which do you think would help the citizens of the world poorest nations more, increasing foreign aid or removing all agricultural tariffs and subsidies? A. Removing all agricultural tariffs and subsides it’s giving more opportunities to people.

3.Why do you think governments in developed nations continue to lavish extensive support on agricultural producers, even though...
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