ABSTRACT

This chapter looks at the basis of agricultural policy to see if there are any economic arguments for government support of agriculture. Government support for agriculture has not always been argued in economic terms but has often been advocated for redistributional reasons. The chapter focuses on whether there were any substantial market failures or imperfections that may have justified government intervention. It addresses the fundamental problem faced by farmers. The chapter outlines some of the arguments that have been used to justify government intervention. It outlines the historical background to the implementation of agricultural policy in order to determine the degree to which private interest arguments were the basis of government support to agriculture, and then make an assessment of possible market failures and imperfections. In the face of a continuing decline in the agricultural sector's terms of trade even these measures appear to have only slowed rather than turned around the decline in farm income.