Domestic subsidies in many countries encourage production increases that result in considerable surpluses and lower prices on global markets, according to a new study released by the Canadian Agri-Food Policy Institute (CAPI), Canada.

The study also found these production increases fuel highly unsustainable production practices and the misallocation of natural resources.

The comprehensive study, “Understanding Agricultural Support,” was prepared by Agri-Food Economic Systems, Canada, with support from the Canadian Federation of Agriculture and Ontario Ministry of Agriculture, Food and Rural Affairs, both based in Canada. The report seeks a better understanding of the impacts of domestic income support programs in key markets and competitors in Canada's agriculture and agri-food sector.