Agricultural Protection  

Agricultural markets have often been the recipients of tariff protection. This involves

  1. Tariffs on cheaper imports
  2. Quotes on imports
  3. 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

  1. Foreign Farmers are worse off (often in developing countries) because they cannot export to EU
  2. Higher Food Prices
  3. Cost to Government
  4. Leads to dead weight Economic loss
  5. Retaliation affects our exporters.

 

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