Producer subsidy equivalents of US agriculture: Concepts, analysis and implications
2002
Khan, N.P. (NWFP Agricultural Univ., Peshawar (Pakistan). Dept. of Agricultural Economics)
Producer Subsidy Equivalent (PSEs) is applied to treasure government intervention in US agriculture: corn, soybean, wheat, .sorghum, rice and cotton across the six farming regions of Southeast, North Central, Central Plains, Southern Plains, Northern Plains and Delta. The PSEs analysis indicates heavy support to production of wheat, about 19 to 46 percent of their private revenue and 19 to 65 percent of their opportunity costs revenue,, followed by rice, cotton and sorghum while soybeans and corn production is heavily taxed, about 34 percent of their market revenue and 28 percent of their opportunity costs revenue. Market prices .support programs for agricultural productivity and macroeconomic policies are considered important policies causing positive and negative PSEs. :Since the aggregate net support to US agriculture is positive, US have to reduce is support to agriculture in compliance with trade liberalization agreement under WTO umbrella, US would benefit from the rise in world prices for corn and soybean as a result of the reduction of the support and decrease is production in other countries. However, US farmers may find it very expensive to produce & trade wheat, cotton, rice and sorghum when US government withdraws support from agriculture.
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