Agricultural Policy Explained
Ashly Chole Senior Finance Researcher
Agricultural Policy Table of Contents
Agricultural policy
The production and exchange of agricultural goods are impacted by a system of laws, rules, and regulations known as an agricultural policy. It has an impact on international imports as well. A person's ability to grow food (e.g., how much land a person can utilize) is greatly influenced by agricultural policy, and this, in turn, has an impact on a person's ability to purchase healthy food, which has an impact on a person's health.
Types of agricultural policies
The main types of agricultural policies include import quotas, in which the government establishes caps on imports by nation or region so that they don't exceed certain levels without prior consent from the governments of other nations. These caps aid in protecting local farmers by preventing the importation of less expensive foreign goods that might reduce their profits if consumers choose to purchase them instead. Government-funded subsidies lower costs for farmers who otherwise wouldn't be able to raise prices high enough due to competition from foreign producers who have lower prices because they receive lower wages per hour worked than do workers here in America's southeast. These subsidies can be given directly by the government or indirectly through tax breaks, deductions, etc.
Laws governing domestic agriculture and the importation of agricultural goods from other countries are referred to as having an 'agricultural policy' in this context. It also includes the regulations governing the import of agricultural goods from foreign nations. Import quotas are limitations on the quantity or kind of commodities that may be brought into a nation, sometimes because of worries about the safety of the nation's food supply or the environment.
Governmental subsidies may offer financial support directly or indirectly through entities under their control, such as banks and insurance firms. Direct consumer payments made out of pocket, indirect state subsidies from monies set aside, particularly for this purpose, and tax benefits offered to firms that buy specific types, manufacturers, or models are all examples of this kind of assistance. Governments put tariffs on imported goods to defend local manufacturers that are unable to compete with imports that sell for less money because they lack access to financial markets.
How we raise our food is greatly impacted by agricultural policy
On how we raise our food, agricultural policy has a significant influence. A government's agricultural policy is a collection of laws and rules that control both domestic agriculture and the importation of agricultural goods from other nations. Policies that can be incorporated into an agricultural policy include import quotas, subsidies, and tariffs.
To prevent nations from selling their surplus food on global markets for cheap, an international system for regulating food trade was initially created (to create artificial shortages). However, over time, these restrictions lost their effectiveness because they did not address the issue that prompted their implementation: developing nations' increasing reliance on exports due to loans from developed nations like Japan or West Germany, etc., who then use these funds to fund military buildups instead, giving them even more control over the world's markets through currency manipulation strategies like selling off dollar reserves.
Import quotas
Import quotas can be used to shield domestic manufacturers from international rivalry, especially if they lack the ability or resources to fulfill the demand for their goods. By giving them a reason to boost exports and manufacturing, import limits frequently assist emerging nations. By prohibiting excessive use of natural resources like water and land, import limits also safeguard the environment. For instance, if a person had an apple tree in their backyard and wanted some apples but couldn't eat them all (or even share them with family members), they could be better served by planting more trees so they could enjoy all of those fruits.
Subsidies
Subsidies are payments made by the government to farmers for several purposes, including assisting them in producing food more affordably. to motivate farmers to cultivate a certain kind of food. to limit the importation of food from other nations. Subsidies can also be used to regulate the amount of food produced by local farmers and the amount of foreign agricultural goods sold on the domestic market. For instance, Japan subsidized rice production during World War II when there was an excess of rice produced by giving financial incentives to farmers who planted more than 5 million tons annually, even though they could only sell their surplus at below-market prices due to high import taxes on rice from other nations.
Tariffs are levies or tariffs placed on imports
They can be used to defend indigenous industries like manufacturing and agriculture from international competition. The protection of domestic agriculture against the entry of foreign goods that would drive down the prices for American farmers and ranchers may also necessitate the use of tariffs. Tariffs support the maintenance of a level playing field for all domestic producers in this way. It is crucial to keep in mind, though, that tariffs do not always bring about prosperity; they may often damage the economy by increasing the cost of goods created within a country's borders for consumers in other nations.