demanded, a surplus exists.

Economists estimate that the high-income areas of the world, including the United States, Europe, and Japan,

spend roughly $1 billion per day in supporting their farmers. If the government is willing to purchase the

excess supply (or to provide payments for others to purchase it), then farmers will benefit from the price floor,

but taxpayers and consumers of food will pay the costs. Agricultural economists and policy makers have

offered numerous proposals for reducing farm subsidies. In many countries, however, political support for

subsidies for farmers remains strong. This is either because the population views this as supporting the

traditional rural way of life or because of industry's lobbying power of the agro-business.
74 3 • Demand and Supply
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