@article{Wise:15590,
      recid = {15590},
      author = {Wise, Timothy A.},
      title = {The Paradox of Agricultural Subsidies: Measurement Issues,  Agricultural Dumping, and Policy Reform},
      address = {2004},
      number = {1434-2016-118850},
      series = {Working Paper No. 04-02},
      pages = {34},
      year = {2004},
      abstract = {World trade talks have foundered recently, in part due to  developing country demands that industrialized countries  reduce their large farm support programs to allow poor   farmers in the global South to compete more fairly.  Claiming that Northern farm subsidies amount to over $1  billion a day, and that the average European cow receives  more in subsidies than the nearly three billion people who  live on less than two dollars a day, Southern governments,  farmer groups, and international aid groups have demanded  steep cuts in Northern agricultural subsidies. This paper  examines the economic and policy aspects of the subsidy  debate. We begin with an examination of the most widely  used measure of agricultural support, the OECD's Producer  Support Estimate. We identify several important flaws in  its application and interpretation as a reliable subsidy  measure, highlighting the particular problems this can  cause in measuring the levels of farm support in developing  countries whose economies may not be fully integrated with  the world economy. We then review the results of economic  modeling of trade liberalization and subsidy reduction,  finding that overall such measures are unlikely to raise  producer prices to a sufficient degree to bring relief from  alleged agricultural dumping to Southern farmers by  bringing export prices above production costs. We briefly  examine one alternative explanation for low commodity  prices, the oligopolistic nature of agricultural trade.  We  conclude with an outline for policy reforms at the global  and national levels to address measurement flaws, raise  commodity prices, and reduce the undercutting of developing  country farmers by below-cost agricultural exports from the  North. Throughout, we draw on US-Mexico trade in maize as  an illustrative case study. We conclude that subsidy  reduction is unlikely to reduce economic pressures on  Mexican maize producers from below-cost US exports, nor are  such measures likely to improve the economic prospects for  similar small-scale farmers growing food primarily for  subsistence and the internal market. Instead, policy  reforms should focus on ending agricultural dumping,  reducing global commodity overproduction in key crops, and  reducing the market power of agribusiness conglomerates.},
      url = {http://ageconsearch.umn.edu/record/15590},
      doi = {https://doi.org/10.22004/ag.econ.15590},
}