Economic Analysis of Agricultural Subsidies: Effects on Farmers and Markets

Abstract

This paper examines the economic impact of agricultural subsidies on both farmers and markets. Agricultural subsidies, designed to support farm income and stabilize food prices, have far-reaching implications for agricultural production, market dynamics, and farmer welfare. This study utilizes a comprehensive review of existing literature, economic models, and empirical data to assess how subsidies influence agricultural output, market prices, and the distribution of economic benefits among farmers. The analysis reveals that while subsidies can provide immediate financial relief to farmers, they may also distort market mechanisms, lead to inefficiencies, and have unintended consequences on both local and global scales. This paper provides policy recommendations aimed at enhancing the effectiveness of agricultural subsidies and mitigating potential adverse effects.