Key Problems of Using Subsidies Coupled with Agricultural Production

Abstract

Abstract Subsidies based on agricultural production are a common form of subsidies in many countries, both less developed (due to their economic difficulties in achieving a satisfactory level of food self-sufficiency) and highly developed. However, at the turn of the 20th and 21st centuries, this support was not so popular. It was only in the second decade that it began to be restored, which is sometimes referred to as recoupling. The COViD-19 pandemic and the Ukrainian–Russian war are undoubtedly two important circumstances that have increased interest in these subsidies. Therefore, it is important to identify theoretical and socio-political justifications for using these subsidies and the problems related to preparing schemes for determining their unit rates. After conducting the analysis, it turned out that the microeconomic theory rather provides arguments against the wide use of agricultural production subsidies. The justifications for pursuing a policy which refers to the difficulties in particular sectors of agriculture are also unconvincing. The calculation of unit payment rates is a challenge due to the lack of a solid methodology and sufficiently reliable source data.