US Farm Subsidies & India Trade Talks: Key Issues Explained

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In 2023, the US had only 1.82 million family farms, far fewer than India’s 93.09 million agricultural households (2019 data). Despite their smaller numbers, US farmers, with a median household income of $97,984 (higher than the national median), receive substantial government support.
This is a key issue in US-India trade negotiations, as Washington pushes for greater market access for American agricultural products, arguing that India’s farm sector must open up.

Unlike India, the US does not subsidize farm inputs like fertilizer, electricity, or water, nor does it intervene through large-scale procurement and stocking.
Instead, government support is primarily provided through direct payments to farmers.

Price Loss Coverage (PLC)
- Farmers receive payments when the market price of a covered crop falls below the Effective Reference Price (ERP), similar to India’s Minimum Support Price (MSP).
- Unlike India’s MSP, which requires government procurement, US farmers are compensated directly for the price difference.
Agriculture Risk Coverage (ARC)
- This provides financial assistance when actual revenue from a crop falls below a guaranteed level based on county-specific yields and a five-year price average.
Dairy Margin Coverage (DMC)
- This program offers financial aid when the margin between farmgate milk prices and feed costs drops below a set threshold, ensuring stable farmer incomes.
These mechanisms help US farmers manage price fluctuations and revenue shortfalls, providing a more predictable income without direct market interventions.

The US farm sector receives substantial direct payments from the government, ranging from $9.3 billion to $45.6 billion in recent years.
These payments help farmers manage risks and income fluctuations.

Peak Assistance in 2020 – Farmers received $45.6 billion, including $31.4 billion in pandemic and disaster relief, making up 38% of their net cash income.
Projected Payments for 2025 – Estimated at $42.4 billion, largely driven by disaster assistance under the American Relief Act of 2025.
Total Aid (2019-2023) – The US Government Accountability Officereported that $161 billion was disbursed through 27 programs, with major allocations:
- Crop insurance: $53.6 billion
- COVID-19 aid: $30.9 billion
- Trade relief: $22.6 billion
- PLC/ARC/DMC payments: $16.8 billion
- Environmental conservation: $16.2 billion

India provides substantial support to its farmers through multiple subsidy programs, but the distribution and impact differ significantly from the US model.

India’s support is spread across 111 million farmers, while the US aids just 1.04 million.
Average annual federal payment:
- India (PM-Kisan): ₹6,000 ($69) per farmer
- US: ₹26.8 lakh ($30,782) per producer

US farmers, despite fewer in number, receive far greater direct financial assistance.
Opening India’s agricultural market to US produce could lead to unfair competition due to the disparity in government support.
World Trade Organization (WTO) rules allow “special and differential treatment” for developing nations, ensuring they are not forced into reciprocal trade concessions.

Whether the US will respect this WTO principle of non-reciprocity—allowing India to safeguard its farmers without equivalent market access for American produce—remains uncertain.