Title: Problems of Agriculture - Market Failure - Economics Help
Headings: Problems of Agriculture – Market Failure
Problems of Agriculture – Market Failure
Types of market failure in agriculture
Volatile Prices in Agriculture
2. Low income for farmers
3. Environmental costs of intensive farming
4. Positive externalities of farming
5. Monopsony
Government intervention in agriculture
Problems of government intervention in agriculture
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Content: This means farmers may see their profit margins squeezed by the big supermarkets who have substantial buying power. If farmers don’t sell to the big supermarkets they can’t sell their products; this is why it puts them in a difficult position. Government intervention in agriculture
Buffer stocks – to help stabilise prices though having minimum and maximum prices
Minimum prices – to guarantee farmers basic income by subsidising food prices. However, minimum prices may encourage oversupply and lead to wasted food production. Subsidies for farmers who follow more environmentally friendly methods. Tariffs on imports. This increases the domestic price of agricultural produce, but leads to lower trade. Problems of government intervention in agriculture
Cost of subsidising agriculture in the developed world It is estimated support to agricultural producers in advanced countries was $245 billion in 2000, five times total development assistance. In the members of OECD as a whole, a third of farm income came from government mandated support in 2000. (