Why Are Subsidies Necessary?
Subsidies help protect farm revenue. Crop yields are dependent on local weather and contribute to the fluctuating nature of the agricultural industry. Fluctuations in production levels and prices result in volatile revenue for the farmers. Price support and income guarantees can help smooth farmers’ income over time and ensure that farmers are not required to maintain a hefty float from year to year in order to maintain a consistent cashflow. In addition, agricultural subsidies provide food security by stabilizing food prices and sustaining minimum nutritional support to the poor at an affordable price.
