Trade subsidies, consolidation, and agricultural programs

Trade subsidies, consolidation, and agricultural programs

Trade subsidies favor the developed world

No other industry is more highly subsidized by national governments than agriculture. Food is vital for human life, and all people depend on food to live. Both farmers and governments want to be sure that their people will always have enough to eat without relying on other nations. Agricultural subsidies also create problems around the world. Developed nations can afford to subsidize agricultural production. Agriculture is one of the few areas of production in which the developing world has a comparative advantage. Agricultural subsidies are essential to the way agriculture operates in places such as Europe and the United States; they are a form of protectionism.

Consolidation of small farms

In 1931, 32% of Canadians lived on farms. The average farm was under 300 acres (or about one square kilometre). Today, only 2% of Canadians live on farms. The average farm is 820 acres (or 3.3 square kilometres). (Source: Statistics Canada)

European agricultural programs

The European Union established a common market for agricultural products, which includes a set price for farm products. This means farmers in some countries are heavily subsidized so they can sell their products at the same price as other European farmers. European countries also place tariffs on imported food, making the price of food higher than it would be if imports were allowed.

Not a level playing field

Although the Canadian government offers very little in agricultural subsidies, the United States subsidizes American farms to the extent of more than US$25 billion per year, and the European Union spends US$66 billion per year on agricultural subsidies and programs. These subsidies guarantee farmers good prices for their crops. In turn, this encourages more food to be produced than can be eaten. In the United States, this keeps the prices of foodstuffs low. This system is the opposite of a free trade approach as advocated by globalization. At the same time as the powerful United States and European Union practice protectionism, the nations in the developing world are told by the International Monetary Fund (IMF) and the World Bank that they should eliminate subsidies to increase trade. These programs interfere with the principles of free trade by giving producers and consumers in the developed world an unfair advantage and maintaining the gap in wealth between rich and poor nations.