The swine industry is not a separately established “special program” within the agricultural subsidy systems of either the European Union or the United States, but the governments in both regions have, in fact, channeled substantial funds to family farms involved in swine production through various channels. Understanding the specific forms these funds take is only the first step; what warrants deeper examination is why governments are willing to continue subsidizing a private commercial sector—a decision intertwined with the logic of public health governance, efforts to remedy the government’s own policy failures, the sharing of market risks, and political considerations aimed at preserving rural social structures.
I. How Substantial Are the Subsidies? A Few Illustrative Figures
First, let’s look at the scale of the EU’s spending. The Common Agricultural Policy (CAP) is the largest single policy area in the history of the EU. At its peak in the 1980s, it accounted for more than 73% of the EU’s total budget. Even after more than four decades of continuous cuts, the CAP still accounted for 24.6% of the EU’s total annual budget in 2023—in other words, nearly one euro out of every four euros spent by the EU still goes toward agricultural policy. In absolute terms, the total CAP budget for the 2023–2027 period amounts to 386.6 billion euros, averaging between 53.4 billion and 59.0 billion euros annually. In 2023 alone, the CAP disbursed 38.16 billion euros in direct payments to farmers, plus 12.95 billion euros in rural development funds, bringing the total inflow into the agricultural system to over 51 billion euros. This represents only the CAP’s “regular expenditures” and does not include the national aid funds separately approved by member states to address African swine fever. Although the swine industry is not listed as a separate subsidy category, precisely because the vast majority of CAP funds cover the entire crop and livestock production chain—with layered subsidies for feed grains and animal products—pig farmers are, in fact, implicit beneficiaries of this massive pool of funds.
Now let’s look at the scale of U.S. support. Unlike the EU’s “steady, long-term” subsidy model, U.S. support for pig farmers exhibits a “pulse-like” pattern characterized by “minimal support during normal times and a surge during crises.” The Multiannual Trade Mitigation Program (MFP) for 2018–2019 disbursed a cumulative total of $23 billion, with $8.576 billion paid out in 2018 and a further $14.4 billion in 2019. This benefited approximately 644,000 agricultural operations, with each receiving an average of more than $22,000 in direct cash—a figure that approaches the annual net income of many U.S. family farms. The swine and dairy sectors accounted for about 4% of this massive sum, which still amounts to nearly $1 billion in absolute terms. Yet this is merely the “temporary bill” the government paid to offset the tariff war it initiated, and does not include compensation for disease culls or insurance premium subsidies that were routinely provided during the same period. An even more stark contrast emerges when comparing specific categories: During the COVID-19 pandemic in 2020, the U.S. Department of Agriculture (USDA) provided approximately $1.2 billion to swine farmers through various direct payments, subsidies, and relief programs, while mushroom growers received only $7.5 million in subsidies during the same period—meaning that for every $1 in subsidies allocated to the mushroom industry, approximately $160 was allocated to the swine industry. This clearly illustrates the high priority given to the swine industry within the U.S. agricultural subsidy system.
To put it in a vivid analogy: the EU’s support for the pig farming industry is more like a river that flows year-round—under the CAP framework, a pool of hundreds of billions of euros is continuously and steadily channeled to sustain the entire farming supply chain; In contrast, U.S. support for pig farmers is more like an intermittent flood—barely noticeable under normal circumstances, but when external shocks such as trade wars, epidemics, or disease outbreaks strike, the federal government injects tens of billions or even hundreds of billions of dollars in cash within a very short period of time. The scale of this support is equally staggering, though the triggers and the pace of funding are entirely different.
II. A Detailed Analysis of the Motivation Behind Subsidies
1. Public Health and Biosecurity: Compensation as a Means to Buy “Cooperation”
This is the most direct form of subsidy provided to pig farmers in Europe and the United States, yet its economic essence is often overlooked. When pig herds are infected with diseases requiring mandatory culling—such as African swine fever or classical swine fever—EU member states and the U.S. Animal and Plant Health Inspection Service (APHIS) pay compensation to farmers. On the surface, this may appear to be a benevolent act where “the government cleans up after farmers,” but the true logic behind the policy design is a transaction: the government uses financial compensation to secure farmers’ timely reporting of outbreaks and their active cooperation with culling operations. There is a clear consensus in academic circles on this point: if compensation is insufficient or delayed, farmers—acting out of economic rationality—will tend to conceal outbreaks, sell diseased pigs at a discount on the black market, or even illegally dispose of dead pig carcasses. These behaviors are precisely the primary routes for the cross-regional spread of disease. In other words, culling compensation is essentially an investment in a public good: the government is not compensating for the loss of “pigs” as private assets, but rather purchasing the societal benefit of earlier disease detection and faster interruption of transmission chains. This also explains why the European Union has established a dedicated state aid program for ASF to fund upgrades to biosecurity facilities—preventive investments are more cost-effective than post-outbreak culling compensation, yet both serve the same public health objective.
2. Correcting market distortions caused by government policies themselves
The U.S. Market Facilitation Program (MFP) is the most textbook example of this motivation. The 2018 U.S.-China trade friction was not the result of a spontaneous market failure, but rather occurred after the U.S. government proactively initiated a tariff war, prompting China to impose retaliatory tariffs on U.S. agricultural products such as pork and soybeans, which directly depressed sales prices for domestic pig farmers. The rationale behind the creation of the MFP was not that “agriculture inherently requires subsidies,” but rather that “the government should cover the economic losses caused by its own trade policy decisions”—a classic example of internalizing policy responsibility. An analysis by the International Agricultural Trade Policy Institute (IATP) also directly points out that the MFP was originally designed to compensate farmers for “income losses resulting from government trade decisions.” However, such programs often lack a long-term institutional foundation and are prone to being reinstated or shelved following changes in the political cycle, exhibiting a strong sense of temporariness and instrumental nature. Similarly, although the SMHPP implemented during the 2020 COVID-19 pandemic ostensibly addressed natural market shocks, the sharp decline in slaughterhouse capacity and supply chain disruptions during the pandemic were largely directly related to the government’s lockdown policies to contain the outbreak; therefore, it also carried implications of “internalizing policy externalities.”
3. Income Stability and Risk Management: Addressing Structural Market Failures
Agricultural production inherently faces structural challenges such as significant price volatility, long production cycles, and information asymmetry. These represent the most classic—and most controversial—economic justifications for agricultural subsidies. A research report by the International Monetary Fund (IMF) systematically outlines these motivations: subsidies are often used to alleviate the information and risk challenges faced by farmers, with specific objectives including stabilizing prices, improving farmers’ returns on investment, promoting rural economic development, and maintaining industry competitiveness. The U.S. Livestock Risk Protection (LRP) program is a direct product of this logic—the federal government provides premium subsidies (covering up to 30% or more) for swine and cattle producers to purchase insurance against price declines. Essentially, this is not a direct cash transfer but rather a subsidy for the cost of using risk management tools, encouraging farmers to address price volatility through market-based mechanisms rather than ex post relief. The theoretical basis for such subsidies is relatively sound, as they seek to correct the problems of adverse selection and moral hazard inherent in the insurance market itself, rather than merely transferring income.
It is worth noting, however, that the economics community takes a fairly cautious stance regarding the very effectiveness of subsidies in “truly stabilizing incomes and promoting rural development.” The entry on agricultural subsidies in the Econlib Encyclopedia explicitly points out that, although supporters repeatedly defend the subsidies by citing “helping low-income farmers,” “increasing returns on agricultural investment,” “ “support rural development,” and “ensure national food security,” economists have yet to empirically confirm that these effects actually occur; on the contrary, a large body of research has observed that subsidies tend to be capitalized into land prices (benefiting landowners rather than farmers) and flow more heavily to large-scale producers who already enjoy economies of scale, with the actual effects on income distribution often running counter to the policy’s original intent.
4. Preserving Family Farms and Rural Social Structures: Political and Social Objectives
Beyond purely economic reasons, the existence of subsidies also carries strong political and social imperatives—namely, preserving the “family farm” as a form of agricultural organization, as well as the underlying rural community structure. The EU’s Common Agricultural Policy (CAP) is the most explicit in this regard: a series of tools—including redistributive payments, simplified schemes for small farms, and caps on payments to large beneficiaries—are designed to prevent subsidies from becoming overly concentrated in large, corporate-style farms, while prioritizing small and medium-sized family farms. Official EU documents repeatedly emphasize the concept of “agricultural multifunctionality”—agriculture is not merely an industry for producing food but also fulfills social functions such as preserving the rural landscape, preventing population outflow, and maintaining traditional rural lifestyles. These functions are considered worthy of taxpayer funding, even if they do not fully meet the standards of market efficiency. Empirical studies in post-communist countries such as the Czech Republic echo this point: subsidies are far more significant to small-scale farms than to large-scale ones, constituting a major component of their assets. Rural communities seek to maintain social networks by shortening supply chains and strengthening direct ties with consumers, and subsidies are the key financial tool underpinning the survival of these networks.
However, this rationale has also faced sharp criticism regarding the actual policy outcomes. Some analysts point out that agricultural subsidies often receive a level of support within the political system that is disproportionate to their economic scale. The root cause lies in the fact that agricultural regions hold disproportionate political weight in representative parliamentary systems—take the U.S. Senate, for example, where agriculture-dominated, sparsely populated states have the same number of Senate seats as densely populated urban states. This gives agricultural lobby groups political influence far exceeding their actual share of the overall economy. A policy report by Chatham House also notes that although public policy discourse emphasizes “correcting market failures” and “providing rural public goods,” once subsidy programs are established, they are extremely difficult to cut or reform. Political-economic factors—namely, the organized lobbying capacity of industry associations and the path dependence of vested interests—often better explain the long-term persistence of subsidies than arguments based on efficiency alone.
III. Conclusion
Overall, the level of subsidies provided by Europe and the United States to family farms engaged in pig farming is quite staggering—the European Union provides a regular annual cash flow of hundreds of billions of euros to cover the entire production chain, while the United States injects tens of billions to hundreds of billions of dollars in cash each time, triggered by crises such as trade wars and pandemics. The motivations underpinning these capital flows can be summarized as four parallel and intertwined lines of reasoning: public health governance requires governments to use economic compensation to secure the early detection of outbreaks and cooperation in response; when government decisions on trade or disease control policies cause market distortions, temporary relief measures are needed to internalize responsibility; the inherent price volatility and information asymmetry in agricultural production have given rise to risk management tools, such as insurance subsidies; and the political and social demands to preserve family farms as a form of production organization and rural social structure provide a basis of legitimacy for subsidies that transcends purely economic efficiency calculations. These four lines of reasoning often operate simultaneously in specific programs, and the realities of political economy also tell us that once a certain type of subsidy program is established, its continued existence often outlasts the justifications that led to its initial creation.
Disclaimer: Some of the information in this article is sourced from the internet. Sources have been clearly indicated, and copyright belongs to the original authors. The content is provided for readers’ reference only. If the rights of the original authors have been infringed, please contact us promptly via comment so we may remove the content!
I. How Substantial Are the Subsidies? A Few Illustrative Figures
First, let’s look at the scale of the EU’s spending. The Common Agricultural Policy (CAP) is the largest single policy area in the history of the EU. At its peak in the 1980s, it accounted for more than 73% of the EU’s total budget. Even after more than four decades of continuous cuts, the CAP still accounted for 24.6% of the EU’s total annual budget in 2023—in other words, nearly one euro out of every four euros spent by the EU still goes toward agricultural policy. In absolute terms, the total CAP budget for the 2023–2027 period amounts to 386.6 billion euros, averaging between 53.4 billion and 59.0 billion euros annually. In 2023 alone, the CAP disbursed 38.16 billion euros in direct payments to farmers, plus 12.95 billion euros in rural development funds, bringing the total inflow into the agricultural system to over 51 billion euros. This represents only the CAP’s “regular expenditures” and does not include the national aid funds separately approved by member states to address African swine fever. Although the swine industry is not listed as a separate subsidy category, precisely because the vast majority of CAP funds cover the entire crop and livestock production chain—with layered subsidies for feed grains and animal products—pig farmers are, in fact, implicit beneficiaries of this massive pool of funds.
Now let’s look at the scale of U.S. support. Unlike the EU’s “steady, long-term” subsidy model, U.S. support for pig farmers exhibits a “pulse-like” pattern characterized by “minimal support during normal times and a surge during crises.” The Multiannual Trade Mitigation Program (MFP) for 2018–2019 disbursed a cumulative total of $23 billion, with $8.576 billion paid out in 2018 and a further $14.4 billion in 2019. This benefited approximately 644,000 agricultural operations, with each receiving an average of more than $22,000 in direct cash—a figure that approaches the annual net income of many U.S. family farms. The swine and dairy sectors accounted for about 4% of this massive sum, which still amounts to nearly $1 billion in absolute terms. Yet this is merely the “temporary bill” the government paid to offset the tariff war it initiated, and does not include compensation for disease culls or insurance premium subsidies that were routinely provided during the same period. An even more stark contrast emerges when comparing specific categories: During the COVID-19 pandemic in 2020, the U.S. Department of Agriculture (USDA) provided approximately $1.2 billion to swine farmers through various direct payments, subsidies, and relief programs, while mushroom growers received only $7.5 million in subsidies during the same period—meaning that for every $1 in subsidies allocated to the mushroom industry, approximately $160 was allocated to the swine industry. This clearly illustrates the high priority given to the swine industry within the U.S. agricultural subsidy system.
To put it in a vivid analogy: the EU’s support for the pig farming industry is more like a river that flows year-round—under the CAP framework, a pool of hundreds of billions of euros is continuously and steadily channeled to sustain the entire farming supply chain; In contrast, U.S. support for pig farmers is more like an intermittent flood—barely noticeable under normal circumstances, but when external shocks such as trade wars, epidemics, or disease outbreaks strike, the federal government injects tens of billions or even hundreds of billions of dollars in cash within a very short period of time. The scale of this support is equally staggering, though the triggers and the pace of funding are entirely different.
II. A Detailed Analysis of the Motivation Behind Subsidies
1. Public Health and Biosecurity: Compensation as a Means to Buy “Cooperation”
This is the most direct form of subsidy provided to pig farmers in Europe and the United States, yet its economic essence is often overlooked. When pig herds are infected with diseases requiring mandatory culling—such as African swine fever or classical swine fever—EU member states and the U.S. Animal and Plant Health Inspection Service (APHIS) pay compensation to farmers. On the surface, this may appear to be a benevolent act where “the government cleans up after farmers,” but the true logic behind the policy design is a transaction: the government uses financial compensation to secure farmers’ timely reporting of outbreaks and their active cooperation with culling operations. There is a clear consensus in academic circles on this point: if compensation is insufficient or delayed, farmers—acting out of economic rationality—will tend to conceal outbreaks, sell diseased pigs at a discount on the black market, or even illegally dispose of dead pig carcasses. These behaviors are precisely the primary routes for the cross-regional spread of disease. In other words, culling compensation is essentially an investment in a public good: the government is not compensating for the loss of “pigs” as private assets, but rather purchasing the societal benefit of earlier disease detection and faster interruption of transmission chains. This also explains why the European Union has established a dedicated state aid program for ASF to fund upgrades to biosecurity facilities—preventive investments are more cost-effective than post-outbreak culling compensation, yet both serve the same public health objective.
2. Correcting market distortions caused by government policies themselves
The U.S. Market Facilitation Program (MFP) is the most textbook example of this motivation. The 2018 U.S.-China trade friction was not the result of a spontaneous market failure, but rather occurred after the U.S. government proactively initiated a tariff war, prompting China to impose retaliatory tariffs on U.S. agricultural products such as pork and soybeans, which directly depressed sales prices for domestic pig farmers. The rationale behind the creation of the MFP was not that “agriculture inherently requires subsidies,” but rather that “the government should cover the economic losses caused by its own trade policy decisions”—a classic example of internalizing policy responsibility. An analysis by the International Agricultural Trade Policy Institute (IATP) also directly points out that the MFP was originally designed to compensate farmers for “income losses resulting from government trade decisions.” However, such programs often lack a long-term institutional foundation and are prone to being reinstated or shelved following changes in the political cycle, exhibiting a strong sense of temporariness and instrumental nature. Similarly, although the SMHPP implemented during the 2020 COVID-19 pandemic ostensibly addressed natural market shocks, the sharp decline in slaughterhouse capacity and supply chain disruptions during the pandemic were largely directly related to the government’s lockdown policies to contain the outbreak; therefore, it also carried implications of “internalizing policy externalities.”
3. Income Stability and Risk Management: Addressing Structural Market Failures
Agricultural production inherently faces structural challenges such as significant price volatility, long production cycles, and information asymmetry. These represent the most classic—and most controversial—economic justifications for agricultural subsidies. A research report by the International Monetary Fund (IMF) systematically outlines these motivations: subsidies are often used to alleviate the information and risk challenges faced by farmers, with specific objectives including stabilizing prices, improving farmers’ returns on investment, promoting rural economic development, and maintaining industry competitiveness. The U.S. Livestock Risk Protection (LRP) program is a direct product of this logic—the federal government provides premium subsidies (covering up to 30% or more) for swine and cattle producers to purchase insurance against price declines. Essentially, this is not a direct cash transfer but rather a subsidy for the cost of using risk management tools, encouraging farmers to address price volatility through market-based mechanisms rather than ex post relief. The theoretical basis for such subsidies is relatively sound, as they seek to correct the problems of adverse selection and moral hazard inherent in the insurance market itself, rather than merely transferring income.
It is worth noting, however, that the economics community takes a fairly cautious stance regarding the very effectiveness of subsidies in “truly stabilizing incomes and promoting rural development.” The entry on agricultural subsidies in the Econlib Encyclopedia explicitly points out that, although supporters repeatedly defend the subsidies by citing “helping low-income farmers,” “increasing returns on agricultural investment,” “ “support rural development,” and “ensure national food security,” economists have yet to empirically confirm that these effects actually occur; on the contrary, a large body of research has observed that subsidies tend to be capitalized into land prices (benefiting landowners rather than farmers) and flow more heavily to large-scale producers who already enjoy economies of scale, with the actual effects on income distribution often running counter to the policy’s original intent.
4. Preserving Family Farms and Rural Social Structures: Political and Social Objectives
Beyond purely economic reasons, the existence of subsidies also carries strong political and social imperatives—namely, preserving the “family farm” as a form of agricultural organization, as well as the underlying rural community structure. The EU’s Common Agricultural Policy (CAP) is the most explicit in this regard: a series of tools—including redistributive payments, simplified schemes for small farms, and caps on payments to large beneficiaries—are designed to prevent subsidies from becoming overly concentrated in large, corporate-style farms, while prioritizing small and medium-sized family farms. Official EU documents repeatedly emphasize the concept of “agricultural multifunctionality”—agriculture is not merely an industry for producing food but also fulfills social functions such as preserving the rural landscape, preventing population outflow, and maintaining traditional rural lifestyles. These functions are considered worthy of taxpayer funding, even if they do not fully meet the standards of market efficiency. Empirical studies in post-communist countries such as the Czech Republic echo this point: subsidies are far more significant to small-scale farms than to large-scale ones, constituting a major component of their assets. Rural communities seek to maintain social networks by shortening supply chains and strengthening direct ties with consumers, and subsidies are the key financial tool underpinning the survival of these networks.
However, this rationale has also faced sharp criticism regarding the actual policy outcomes. Some analysts point out that agricultural subsidies often receive a level of support within the political system that is disproportionate to their economic scale. The root cause lies in the fact that agricultural regions hold disproportionate political weight in representative parliamentary systems—take the U.S. Senate, for example, where agriculture-dominated, sparsely populated states have the same number of Senate seats as densely populated urban states. This gives agricultural lobby groups political influence far exceeding their actual share of the overall economy. A policy report by Chatham House also notes that although public policy discourse emphasizes “correcting market failures” and “providing rural public goods,” once subsidy programs are established, they are extremely difficult to cut or reform. Political-economic factors—namely, the organized lobbying capacity of industry associations and the path dependence of vested interests—often better explain the long-term persistence of subsidies than arguments based on efficiency alone.
III. Conclusion
Overall, the level of subsidies provided by Europe and the United States to family farms engaged in pig farming is quite staggering—the European Union provides a regular annual cash flow of hundreds of billions of euros to cover the entire production chain, while the United States injects tens of billions to hundreds of billions of dollars in cash each time, triggered by crises such as trade wars and pandemics. The motivations underpinning these capital flows can be summarized as four parallel and intertwined lines of reasoning: public health governance requires governments to use economic compensation to secure the early detection of outbreaks and cooperation in response; when government decisions on trade or disease control policies cause market distortions, temporary relief measures are needed to internalize responsibility; the inherent price volatility and information asymmetry in agricultural production have given rise to risk management tools, such as insurance subsidies; and the political and social demands to preserve family farms as a form of production organization and rural social structure provide a basis of legitimacy for subsidies that transcends purely economic efficiency calculations. These four lines of reasoning often operate simultaneously in specific programs, and the realities of political economy also tell us that once a certain type of subsidy program is established, its continued existence often outlasts the justifications that led to its initial creation.
Disclaimer: Some of the information in this article is sourced from the internet. Sources have been clearly indicated, and copyright belongs to the original authors. The content is provided for readers’ reference only. If the rights of the original authors have been infringed, please contact us promptly via comment so we may remove the content!