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Agricultural Subsidies: a Boon or a Bane?

Agricultural Subsidies: a Boon or a Bane?

Agricultural subsidies: A Boon or a Bane?

The use of agricultural subsidies is widespread in the western and European countries. The objectives behind agricultural subsidies are: to encourage adoption of improved agricultural practices for increasing agricultural production and conservation of natural resources. The subsidies are provided in the form of cash, production inputs and, more recently, as rebates on income taxes. There are many rather small cash and other incentives. Farmers do not perceive these as incentives to practice adoption but rather as snippets of assistance or dole provided by governments to farmers. This perception, plus the disproportionate amount of energy and time small farmers must exert in order to obtain these small subsidies can create in them feelings of irritation and frustration. As a result they tend to perceive these small subsidies as needed nuisances, more bane than boon.

Farmers are market oriented and respond to meaningful monetary incentives. Given a choice they would prefer to have an assured market and a "reasonable" price for their farm produce or the availability at reduced prices of production of marketable produce. Agricultural subsidies were originally intended to assure small farmers a fair price for their products and prevent over production. This is why some land owners, (not necessarily farmers), are paid to NOT produce anything on their land. All these good intentions went up in smoke when large corporations bought out small farmers, and then exerted influence on politicians to increase subsidies for non production.

In Indian context; Subsidies given by Indian government is not enough to make the agricultural products competitive in international market in terms of pricing. Subsidies given by U.S or many other European countries help their farmers in yielding high productivity and subsidizing actually help the farmers there in low cost of production. Now lets take one example, Indian farmers’ cost of...

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