Agricultural Policy Schemes: Price and Support Systems in Agricultural Policy

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Agricultural support is a very important element in agricultural policy in many countries. Agricultural support is basically an instrument to meet the overall objectives of the agricultural policy—objectives set by society. There are a great number of instruments and ways of intervention in agricultural policy and they have different functions and impacts.

Market price support and deficiency payments are two very important instruments in agricultural policy; however, they belong to two different support regimes or support systems. Market price support operates in the so-called high price system and is financed by consumers, while deficiency payments operate in the so-called low price system and are financed by taxpayers.

In the high price system, support is given mainly by means of import regulations, etc., which ensure a relatively high domestic price. In the low price system, support is given by means of direct support, while market prices are left undistorted at, or close to, world market level.

The two different support systems have very different implications for agricultural production, financing, markets, and other aspects; still, there is an income transfer to agriculture in both systems.

During the last decades, the composition of agricultural support has changed significantly. Market price support has decreased, and direct support has increased.
Original languageEnglish
Title of host publicationEncyclopedia of Dairy Sciences
EditorsP. L. H. McSweeney, J. P. McNamara
Number of pages11
PublisherAcademic Press
Publication date2022
ISBN (Print)978-0-12-818767-8
Publication statusPublished - 2022

ID: 284411150