Agricultural markets have often been the recipients of tariff protection. This involves
- Tariffs on cheaper imports
- Quotes on imports
- Government subsidies to domestic farmers
Reasons for Agricultural Protection
- Farmers have lower incomes than the rest of the population and don’t tend to benefit from economic growth (low income elasticity of demand for food)
- Farmers often a Powerful political lobby
- Farming plays an important role in rural areas.
Problems of Agricultural Protection
- Foreign Farmers are worse off (often in developing countries) because they cannot export to EU
- Higher Food Prices
- Cost to Government
- Leads to dead weight Economic loss
- Retaliation affects our exporters.