Government Subsidies https://www.wsj.com/articles/india-buried-in-sugar-tries-to
ID: 1162706 • Letter: G
Question
Government Subsidies
https://www.wsj.com/articles/india-buried-in-sugar-tries-to-dig-out-1527591604?mod=djem_jiewr_IB_domainid
The Indian government sets price guarantees for growing sugar but the farmers are only paid when refiners sell the sugar. The price of sugar is currently so low that refiners are hesitant to sell of their huge and growing sugar stockpiles. Refiners are hoarding the sugar and waiting for a better price or better incentives to sell. The Indian government wants to incentivize the refiners to sell the sugar, but if the refiners dump the sugar on the global market at too low a price, India risks sanctions from the WTO.
What are the advantages and disadvantages of nations using agricultural subsidies?
Explanation / Answer
Advantages:
Ø Subsidies assist to keep agricultural lands held in reserve for use, even if there is a bad year and keep prices competitive.
Ø Some agricultural subsidies facilitate to let the soil recuperate from long periods of growth.
Ø Agricultural subsidies aid farmers to make more while to do so constantly in every season.
Ø Agricultural subsidies are essential to fund the technology, equipment as not every farmer can buy a piece of equipment required.
Ø Agricultural subsidies act as incentives.
Disadvantages:
Ø A subsidy is essentially taxpayer money while everyone purchases food, consumers pay farmers twice firstly for the product and secondly for the subsidy.
Ø Certain agricultural areas are not fit for certain crops, but the subsidies encourage
Ø Having subsidies may not be sufficient for some farmers/companies having a bad year.
Ø Agricultural subsidies are a form of fiscal burden.
Ø They may be unfair. Some farmers or some foods may get neglected/ignored.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.