Date of Submission


Date of Award


Institute Name (Publisher)

Indian Statistical Institute

Document Type

Doctoral Thesis

Degree Name

Doctor of Philosophy

Subject Name

Quantitative Economics


Economic Research Unit (ERU-Kolkata)


Sarkar, Abhirup (ERU-Kolkata; ISI)

Abstract (Summary of the Work)

Ever since the inception of the World Trade Organization free trade in agricultural goods has been difficult to implement. The developed countries, who are otherwise active proponents of free trade, seem reluctant to remove the subsidies from the agricultural sector, making way for unfair competition against the poor developing nations. The Common Agricultural Program (CAP) spending of around ¿58 bn each year in the European countries as agricultural subsidy has always been subject to controversy.The U.S. Department of Agriculture (USDA) has also devised a variety of programs to supplement the farmers’ income, support commodity market price and manage supply. The main bone of contention in Doha round was an increase in overall subsidy doled out to the multi billionaire producers 1 in the rich countries, even after promising a cut in the subsidy level at the previous round in Uruguay (Human Development Report, 2005). According to World Development Report, 2008, low-income countries tend to impose relatively high taxes on farmers in the export sector as an important source of fiscal revenue, while developed countries tend to heavily subsidize farmers. These differences often create a policy bias against the poor in both domestic and international markets. However, in 2006, United Nations Development Program (UNDP) has urged the developing countries to emphasize on food security and thereby save the farmers of these countries from competing with the agriculture subsidies in the developed world.It is often questioned as to why would the 2% or 3% of the populations involved in farming in developed countries keep getting protection. The answer may lie in the asset values of land. Many of the farmers found it profitable to buy land when agriculture was heavily protected, even when agricultural land was highly priced. Now if the protection is removed, then those who are still in agriculture will be affected. Those who are no longer engaged in agriculture will be gaining while the ones owning protected assets will lose. So effectively, those who leave agriculture they gain with the removal of protection, and the losers would be the ones remaining in agriculture, with more recent purchases of land and other associated assets.However, the European countries cite a completely different reason in defense of their agricultural subsidy. They say that if the export subsidies 2 are removed then the Sub Saharan nations (which are the net importers of food) will lose as food price will go up. This philanthropic stance of the developed nations, however, fail to explain why their domestic agricultural markets are protected from cheaper supply from less developed nations. Indeed, to meet philanthropic goal, a direct aid would have been a better solution.Curiously enough, the developing countries also subsidize their agriculture sector. WTO has given these countries some concessions suggesting that they will have to remove agricultural subsidy eventually through phase-wise reduction, while for the advanced countries it is suggested to remove all agricultural support. Therefore, the question is, why are countries inclined to protect their agricultural sectors?


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Creative Commons Attribution 4.0 International License
This work is licensed under a Creative Commons Attribution 4.0 International License.


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