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A Billion Dollars a Day: The Economics and Politics of Agricultural Subsidies


Why do Europe, the United States, and some key Asian countries spend, in aggregate, a billion dollars a day on various agricultural price supports, when much of this money ends up in the hands of large agribusiness? In a lively, non-technical, and up-to-date account, this book addresses the core questions that surround the issues of agricultural subsidies.

Peterson provides a detailed examination of subsidy histories and the current policies of the United States, various European countries, Australia and New Zealand, and Korea and Japan. Also included is a discussion of how these policies affect developing countries—examining, in particular, their impact on many African farmers.

With the growing crisis in world food supply, Peterson’s thorough examination of global agricultural price supports sheds light on the inefficiencies and waste that result and suggests how to better manage these highly sensitive political programmes.

E. Wesley F. Peterson is a Professor of Agricultural Economics at the University of Nebraska-Lincoln. He holds a BA in Anthropology from the University of California-Berkeley, a Masters in Public Affairs from Princeton University and a PhD in Agricultural Economics from Michigan State University. He was a Faculty Member at a French agribusiness institute and at Texas A&M University before moving to Nebraska. His research and teaching interests are in the areas of international agricultural trade, agricultural policy, and agricultural development in low-income countries. He is the author of The Political Economy of Agricultural, Natural Resource, and Environmental Policy Analysis (Iowa State University Press, Ames, IA 2001) and has authored and co-authored numerous journal articles and other publications.
List of Tables and Figures.


List of Abbreviations.


Chapter 1: Introduction: The Problem of Agricultural Subsidies.


Western Agricultural Subsidies.

Organization of the Book.

Chapter 2: The Economics of Government Intervention.


The Invisible Hand.

Market Failures.

Violation of the Basic Conditions: Imperfect Competition, Information and Risk.

Public Goods and Externalities.

Income Distribution, Poverty and Inequality.


Appendix 2-1: The Theory of the Invisible Hand.

Appendix 2-2: The Prisoners’ Dilemma.

Chapter 3: The Structure of the World Food System.


Historical Perspectives.

The World Food System.

Agribusiness, Government and Science.


Appendix 3-1: Country and Commodity Classifications used in Statistical Tables.

Chapter 4: Global Institutions and the World Trade Organization.


The World Trade Organization.

Agriculture in the WTO.

Trade and Development.

Appendix 4-1: Comparative Advantage.

Chapter 5: The Nature and Scope of Agricultural Subsidies in High-Income Countries.


Agricultural Policy Objectives and Tools.

Agricultural Subsidies in OECD Countries.

Effects of OECD Agricultural Subsidies.


Chapter 6: U.S. Agricultural Policy: How Not to Save the Family Farm.


Historical Overview of U.S. Farm Policy.

The Impacts of U.S. Farm Subsidies.

The Politics of U.S. Agricultural Policy.

Appendix 6-1: ERS Farm Typology.

Chapter 7: Agricultural Policy in the European Union: Europe’s Sacred Cows.


Agricultural Policy in the European Union.

The Impact of the Common Agricultural Policy.

Appendix 7-1: Green Currencies and the Re-Nationalization of the CAP.

Chapter 8: Agricultural Policy on the Pacific Rim: Non-Trade Concerns Versus Comparative Advantage.


Japan and Korea.

Australia and New Zealand.


Chapter 9: Agricultural Policy in Developing Countries: Cheap Food.


The Developing World.

Agricultural Policy in Developing Countries.

The Impacts of Agricultural and Trade Policy Reforms.


Appendix 9-1: Country Lists.

Chapter 10: Conclusion: Whither Agricultural Policy?.