Agriculture: Do export subsidies work?

The recent deaths of collectors of subsidised flour bags and the wheat deliveries protected by armed guards prove the country’s unrest. This poses a huge question for economists, analysts and policymakers regarding extensive subsidies on wheat and other crops when they create such a crisis. Khalid Mahmood Khokhar, president of Pakistan Kissan Ittehad, in his press conference last week, demanded the government to declare an “agriculture emergency”. This clearly indicates that such support prices, subsidies and export promotion schemes for wheat have never worked in the country. Historically, developed countries give more farm subsidies as compared to developing countries. But after the Subsidies and Countervailing Measures (SCM) Agreement and Agreement on Agriculture by World Trade Organisation, the level of applied export subsidies has regularly decreased from $3.8 billion in 2003 to less than $100 million in 2019. Even the most developed and agrarian countries like Australia, Switzerland, the EU and the United States are following suit.