Weigh US’s market access push against farm aid gap
The US policy support for its farmers spans the entire agricultural value chain. In contrast, India’s is fragmented and often ends up disadvantaging farmers
When soybean prices fall in the US, the government immediately compensates the price fall. In India, soybean prices have trailed the minimum support price (MSP) for 18 months, but there is no relief in sight. Indian farmers not only have to fend for themselves but are also expected to keep growing the crop despite the distress. So, if the US wants the Indian soybean market to open up, how fair is that?
The US policy support for its farmers spans the entire agricultural value chain. In contrast, India’s is fragmented and often ends up disadvantaging farmers. The Organisation for Economic Co-operation and Development (OECD)’s 2024 report shows that while US farmers earned about 1% above global prices and received substantial direct support, Indian farmers received prices 25% below the global levels and got far lower financial aid. In 2023, while the average Indian farmers received $366 as annual direct support from the government, the average American farmer got $17,100 from her government.
In the US, farmers receive subsidised credit and crop insurance that covers yield and revenue losses from natural disasters and market fluctuations. There are subsidies to promote irrigation efficiency and climate-smart technologies. At the crop marketing stage, key American safety net programmes include price loss coverage (PLC) that gets triggered when market prices fall below a fixed reference price; and agricultural risk coverage (ARC) that provides payment when a farmer’s actual revenue falls below a benchmark that is based on county-level data. Farmers must choose either PLC or ARC for each crop — they can’t receive both. American farmers prefer PLC when prices crash and ARC during moderate price drops or low yields.
Beyond production, US farmers also benefit from marketing assistance loans that stabilise income post-harvest. At the trade stage, programmes such as the market access program (MAP) and foreign market development (FMD) help them expand into global markets. The government also leverages trade policy tools — tariffs, export promotion, and sanitary/phytosanitary standards — to secure fair terms for agri-exports.
How are Indian farmers supported by the government? Our farm support is heavily focused on subsidies and direct transfers, aiming to lower input costs and supplement incomes. The majority of this support goes to input subsidies — on fertilisers, electricity, irrigation, and seeds — to reduce the cost of cultivation.
The government also provides MSPs, primarily for rice and wheat, with procurement handled by agencies such as the Food Corporation of India (FCI). It gives direct income transfers under PM-Kisan and crop insurance and credit subsidies through Pradhan Mantri Fasal Bima Yojana (PMFBY).
While these measures ease financial pressure, their reach and effectiveness vary widely across regions and crops. Also, market-related policies often undermine these benefits. Frequent export bans, stockholding limits, and price controls push farm-gate prices below global levels. Although MSPs are announced for many crops, actual procurement is limited to a few and concentrated in select states. As a result, most farmers sell at lower rates in the open market. This implicit taxation in India through market policy offsets much of the gain from subsidies and income transfers, weakening the overall effectiveness of State support.
The producer support estimate (PSE) is a way to measure how much help farmers get from government policies. Along with the consumer support estimate (CSE), it shows how different countries support their farmers and consumers. The OECD tracks this for 54 countries, including India, the US, Brazil, and others. PSE includes two main types of support:
Budget support covers all the money the government gives directly to farmers — such as input subsidies or payments under schemes such as PM-Kisan. The more money farmers get from these programmes, the higher the PSE.
Market price support (MPS) shows how much more (or less) farmers are paid compared to global market prices. For example, if the international price of wheat is higher than India’s price because of an export ban, Indian farmers are effectively getting less than they could — this counts as negative support.
In simple terms, a high PSE means farmers are getting more help. A negative PSE means they are earning less because of policies like price controls, export restrictions or because of structural inefficiencies. A comparison of PSEs helps assess how countries treat their farmers and guide discussions on fair trade and better farm policies. In 2023, US support to its farmers was worth $35 billion.
The same year, Indian policies were such that its farming community were implicitly taxed — meaning they received significantly lower prices due to government-imposed market restrictions and other structural issues — resulting in an aggregate negative MPS of $58 billion. The trend of taxation is consistent since last two decades for India. In case of US, the values have averaged about $38 billion in the last 10 years.
The US’s 1.9 million farmers versus India’s 146 million puts the disparity in perspective. In 2022, the average American farmer earned a net income of roughly $62,000 while the average annual income of an Indian farmer was approximately $1,976 (2022 rupee-dollar rates). The Trump administration argues that India imposes high tariffs on US agri-exports (almonds, dairy, etc) limiting American farmers’ access to the Indian market. It insists reciprocal tariffs are the answer to arm-twist India into lowering its barriers to US agri-produce.
Indian farmers are overwhelmingly poor, number many multiples of the American farmer population, have much smaller landholdings, and face a policy environment that often suppresses farm-level prices. The American farmer’s fight for greater market access is the Indian farmer’s fight for her livelihood and survival. India has little option other than retaining the policy space to protect its farmers and transition to an open market at a pace matching its economic realities — principles that have long underpinned the World Trade Organization framework and UN declarations on hunger.
Shweta Saini is an agriculture economist and CEO, Arcus Policy Research, and T Nandakumar is former secretary, agriculture, GOI. The views expressed are personal