Food consumption subsidy programs as a means of agricultural surplus disposal for the European Community

Summary Three different methods are analysed here by which food consumption can be increased - a food stamp program, a price subsidy and cash or income transfers. With regard to the demand enhancement potential, only a price subsidy and a food stamp program are to be considered as adequate instruments for a structural surplus disposal policy. The requirements which have to be met for the successful application of these instruments are discussed. From the viewpoint of consumer-sovereignty a price subsidy is preferable. The cost efficiency of a price subsidy can be improved by concentrating on specific foods and on consumer groups with a relatively high price elasticity of demand. In applying these methods to situations within the European Community, calculations have been made concerning the increase of consumption and the fiscal cost of a ‘Milk stamp program ’and a price-subsidy for milk in the Federal Republic of Germany.