FARE 1300 Chapter 21: Direct Subsidies and Elimination of Urban Bias
18 Apr 2016
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Chapter 21 direct subsidies and elimination of urban bias receive. Increasing food production is almost certainly a necessity in solving world food problems. This influences the farmer to produce more, moving up the supply curve. Non-distortionary is the typical type of subsidy in united states today. It does not change depending of the food, amount of acres or amount produced: non-distortionary subsidies can influence a farmer"s decision to quit or retire; low income is compensated through the subsidy. Also, it becomes easier for a farmer to obtain loans and therefor put investments into equipment and technological advances. Elimination of urban bias (page 336: many developing countries have adopted policies that reduce food prices in the economy as a whole. This lower price can be a disincentive to produce because they"re producing at the world market price minus the tax. Farm prices are forced below the international market and farmers pay more for their inputs.
