DOMESTIC AGRICULTURE SUBSIDIES

WTO classifies domestic agriculture subsides into three categories: green , blue and amber.

A.  GREEN   BOX   SUBSIDIES

  • Subsidies that don’t disrupt trade balance OR only cause minimum damage to trade balance.
  • E.g. agriculture research-development, extension services, farmer training programs,domestic food aid , public food security stocks pest-disease control program, flood/drought relief money paid to farmers ,income guarantee and security programmes etc.
  • WTO Limit: nothing. Governments can give as much as they want.

B.  AMBER   BOX   SUBSIDIES

  • Subsidies that disturb trade balance like, subsidies on fertilizers, seeds, power and irrigation.
  • They distort trade balance because they encourage excessive  production,therefore given country’s product becomes cheaper than others, in the international market.

C.  BLUE   BOX   SUBSIDIES

  • Amber type Subsidies that aim to limit production.
  • The Blue box subsidies aim to limit production by imposing production quotas or requiring farmers to set aside part of their land.
  • Subsidies that don’t increase with production. For example subsidies linked with acreage or number of animals.
  • Very few countries use blue box- Iceland, Norway, Slovenia etc.
  •  Any support that would normally be in the amber box, is placed in the blue box if the support also requires farmers to limit their production.