How does US subsidization of domestic agriculture affect global trade?

Answer 1

It's huge. And it's not JUST the US, but pretty much every advanced economy does this. The EU is EXTREMELY protectionist of it's agriculture sector.

The thing is, agriculture is one of the easiest things for developing economies to do competitively. Their low labor costs means they could produce foods that are difficult to farm using mechanical assistance. They probably couldn't compete with US wheat farmers and their automation, but berries which have to be picked by hand and many other produce could be a way for developing economies to get started in commerce and export. But artificially depressed prices from producer supports makes it harder for those developing economies.

These developing nations are very sensitive to things like this. The West's tendency to send food aid to developing nations often WRECKS those economies because the glut of 'free' food drives local farmers out of business....which then makes the local economy LESS able to provide food for their own people, and people starve....which induces the west to send MORE food aid in a vicious cycle.

A development economist I read an interview with once said that his number one bit of advice to the west on how to help developing nations is 'stop helping'. And the second would just be stopping subsidies and trade barriers so that these developing economies could compete with their one advantage - the low cost of labor.