Agricultural Subsidies Remain a Staple in the Industrial World

Grant Potter | Feb 28, 2014

In 2012, the most recent year with data, agricultural subsidies totaled an estimated $486 billion in the top 21 food-producing countries in the world.1 These countries—the members of the Organisation for Economic Co-operation and Development (OECD) and seven other countries (Brazil, China, Indonesia, Kazakhstan, Russia, South Africa, and Ukraine)—are responsible for almost 80 percent of global agricultural value added in the world.2 OECD countries alone spent $258.6 billion in subsidies to support farming in their respective countries in 2012.3

OECD subsidies grew rapidly between 2001 and 2004, rising from $216 billion to over $280 billion.4 Since then, the dollar amount received by OECD farmers has stayed roughly static at between $240 billion and $280 billion.5 (See Figure 1.) But from 2001 to 2012 the amount spent on these subsidies as a percentage of the total value of agriculture produced in the OECD declined steadily from 32 percent to 19 percent.6 This means that for every dollar’s worth of agriculture earned by OECD farms in 2012, 19¢ came from some kind of government subsidy policy.7

Agricultural Subsidies Figure 1

Agricultural subsidies are not equally distributed around the globe. In fact, Asia spends more than the rest of the world combined.8(See Figure 2.) China pays farmers an unparalleled $165 billion.9 Significant subsidies are also provided by Japan ($65 billion), Indonesia ($28 billion), and South Korea ($20 billion).10 Europe also contributes a great deal to agricultural subsidies due in large part to the Common Agricultural Policy (CAP) of the European Union (EU).  At over $50 billion, CAP subsidies accounted for roughly 44 percent of the entire budget of the EU in 2011.11 And this figure does not even include EU price supports, in which governments keep domestic crop prices artificially high to give farmers a further incentive at the expense of the consumer. Including these price supports, the EU spent over $106 billion on agricultural subsidies in total.12 North America provides almost $45 billion in subsidies, with the United States spending just over $30 billion and Canada and Mexico spending $7.5 billion and $7 billion respectively.13 Of the countries studied by the OECD, 94 percent of subsidies were spent by Asia, Europe, and North America—leaving only 6 percent for the rest of the world.14

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