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What are agricultural subsidies?

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Quick Answer

Agricultural subsidies are a form of financial assistance offered to farmers by the government. Subsidies are usually given in order to help farmers produce more and keep a constant flow of supply to the market. Subsidies may also be given to farmers in order to help them stay competitive within the global market.

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Full Answer

It is estimated that the United States Department of Agriculture gives subsidies that range from $10 billion to $30 billion, according to the Cato Institute. One of the reasons why the government may give subsidies is to help farmers produce a large amount of products in a season of hardship. This means the government may help farmers who are dealing with disasters, such as drought, earthquakes, pest invasion and crop disease.

Another instance when agricultural subsidies may be given is when prices are too high for consumers. In such an instance, the government gives subsidies to farmers in order to compel them to cut down on their prices and allow consumers to buy more. As a result of this, the economy is likely to remain stable.

Subsidies can be provided for a variety of agricultural products including milk, wheat, maize, rice, sugar, beef, tobacco and cotton. The question of whether governments should give subsidies or not is still a matter of debate with some favoring it and others opposing it.

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