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Abstract
The development strategies for Chile have been oriented toward
a greater commercial openness. Chile and the United States signed a Free
Trade Agreement (FTA) that has triggered controversies between producers
directed to the internal market due to the production and export subsidies
that this country carries out. This study analyzed the effect of subsidies
granted by the United States to wheat (Tritricum aestivum) and corn (Zea
mays) growers (Farm Bill 2002). For the study, Technical Standard sheet
were drawn up, from which were determined the direct production costs
and the gross margins. The variables used (market prices, subsidies, freight
costs and tariffs) and determining the average variable costs allowed us to
do a sensitivity analysis, thus establishing the minimum level of produc-tion that national farmers must achieve in order to maintain competitive-ness while a free trade is in force. The signing of a trade agreement could
provoke the eventual withdrawal of many Chilean producers from the busi-ness arena while at the same time, favoring consumers with lower prices
for the goods derived from these grains.