It is in the best interests of all governments to formulate policies that are beneficial to farmers. A stable, reasonably-priced food supply and productive, well-paid farmers are two very important components of a stable society. However, the combination of cheap food for consumers and high market prices for farmers is very difficult to achieve. Some common policy tools include:- subsidies: a subsidy is money a government pays to farmers to guaranty that they receive a certain price for their crops.
- production limits: some governments pay farmers NOT to grow certain crops, or even to leave some land unused (fallow). The goal of this policy is to reduce supply and keep prices relatively high.
- tariffs on competing foreign crops: government often impose tariffs, or taxes, on imported crops, which makes the cost of imports much higher to the consumer.
- agricultural research: governments often finance agricultural research to investigate promoting better-yielding crop varieties, eliminate diseases, fight pests, improve processing methods, etc.
