Which policy is a common government intervention to support farmers when market price is low?

Which policy is a common government intervention to support farmers when market price is low?

• A. Subsidies to farmers to continue supplying foods at low cost while providing stable income
• B. Tariffs on agricultural imports
• C. Nationalization of farms
• D. Abolishing subsidies

Answer: (A)

When farmers face low market prices, governments commonly use subsidies to keep production viable and provide a stable income. Subsidies boost farmers’ revenue or reduce costs, helping them cover operating expenses and continue supplying food even when prices fall. This helps maintain farm capacity, protects livelihoods, and supports food security by preventing large cuts in output during price downturns. Tariffs on imports, while they can raise domestic prices, aren’t direct income support for farmers and can raise costs for consumers and provoke trade tensions. Nationalizing farms is an extreme, less-targeted approach and isn’t the typical tool for cushioning farmers against price swings. Abolishing subsidies would remove the very support that helps farmers endure low-price periods.

When farmers face low market prices, governments commonly use subsidies to keep production viable and provide a stable income. Subsidies boost farmers’ revenue or reduce costs, helping them cover operating expenses and continue supplying food even when prices fall. This helps maintain farm capacity, protects livelihoods, and supports food security by preventing large cuts in output during price downturns.

Tariffs on imports, while they can raise domestic prices, aren’t direct income support for farmers and can raise costs for consumers and provoke trade tensions. Nationalizing farms is an extreme, less-targeted approach and isn’t the typical tool for cushioning farmers against price swings. Abolishing subsidies would remove the very support that helps farmers endure low-price periods.