Throughout much of the post-World War II period, agricultural
policy in the U.S. and European Union (EU) has focused on supporting
farm income primarily through price supports. Both countries supported
commodity prices through purchase and storage of surplus commodities.
The U.S. relied more on producer loans secured by commodities and
acreage controls, while the EU relied more on export subsidies
to dispose of surpluses. Both the U.S. and the EU have significantly
changed their commodity policies in the past decade. While their
policies have evolved in similar directions in some respects, important
differences remain.
Both the U.S. and the EU have reduced their
reliance on price support for several commodities for the same
reasons: to improve
their competitiveness, reduce burdensome stocks associated
with high support prices, and rein in rising costs of operating
commodity
programs. Both countries now make greater use of income support
through payments to producers.
Lower support prices and government purchases have reduced the
need for surplus disposal, including export subsidies. Since 1995,
U.S. use of export subsidies has been limited essentially to dairy
products and poultry. The EU continues to use export subsidies for
many price-supported commodities, although World
Trade Organization (WTO) obligations have required the EU to
reduce subsidy levels.
Despite
similarities in policy changes, EU and U.S. policies differ.
The EU maintains a higher overall support level to its farm sector
and relies more on price support than does the United States.
Although
some EU support prices have been reduced, higher tariffs contribute
to market price support by preventing the entry of lower priced
imports.
Both U.S. and EU agricultural policies will continue
to respond to domestic needs, the international environment,
and obligations
under trade agreements. In addition, public pressure on broader
issues, including environmental protection, rural development,
and food safety, is increasingly shaping agricultural
policy.
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