Governmental policy directly impacts on the trade that happens within a nation both in the merchandise that is locally produced and that which is imported from outside the country. In my opinion, import quotas, tariffs, and subsidies, have the largest impact on the global food service industry. In this short essay, I expound on the reasons as to why I think these three factors have the most significant impact on the food industry.
Import quotas are a kind of trade restrictions implemented by a government to protect domestic producers by setting a physical limit to the amount of goods of a specific kind that can be imported to a country within a specific interval of time. The net effect of import quotas, while intentionally protecting domestic producers in the food service industry, is to limit the variety and quantity of food services available to the consumers in the country. For example, some nations may put restrictions on the amount of dairy products that may be imported in the nation.
Consumers of these products and the associated services are therefore restricted to consuming almost entirely what is produced within the country, and this has serious implications on the affected sector. Another factor that would influence the distribution global flood service industry is tariff. Tariff is a duty usually imposed by the government on imported good; though may also apply to some export goods. Though this practice earns the government revenue, it may be used to protect local producers or misused as protectionism measure for political reasons.
When high tariffs are imposed on imported food products, this would discourage the importation of that particular product and thus decrease its supply. In addition, high import tariffs are usually passed down to the consumers inform of high prices. All these may lead to substantial shortage of food as a result of high demand and low supply. On the other hand, low import tariffs would mean increased food supply from outside countries to meet local deficits. Therefore tariffs directly impact on global food service industry, especially on food supply and prices.
Subsidies also impact on global flood service industry. Subsidies refer to financial assistant channeled towards an economic activity to boost its productivity. For instance, when the government subsidizes agricultural inputs products such as fertilizers and seeds to reach the farmers at lower prices, this would encourage farmers to carry out extensive farming. As a result, this would lead to increased agricultural products, which in turn would increase food supply in the market and lower the prices.
Therefore, consumers have ready and affordable access to food products. Governments may also directly subsidize food products with the aim of lowering prices in the market so that these products would be available to consumers at affordable prices. Moreover, financial subsides from world financial bodies such as IMF and World Bank channeled towards countries such as the developing countries have the capacity to increase agricultural productivity and thus increased food supply.