http://badgerherald.com/news/2013/10/17/organic-farmers-see-effects-lost-federal-subsidy/
In this article, instead of the government imposing a tax on farmers, they remove the tax decreasing the supply of local organic foods.
Instead of subsidies for producing agricultural goods, the government imposed a subsidy for inspection and certification. Although I am not sure what this subsidy actually does, I think it helps farmers pay for the inspections that is required by law to ensure that all farms are following all the set regulations. Even though the subsidy is not set on increasing production, it still increases the supply because farmers have more money to spend because the inspection and certification is paid for.
Removing the subsidy obviously causes a decrease in quantity supplied by the suppliers who were given this subsidy. They will have less money to spend on their own respective agricultural good therefore decreasing the yearly yield of the farm.
In this article, instead of the government imposing a tax on farmers, they remove the tax decreasing the supply of local organic foods.
Instead of subsidies for producing agricultural goods, the government imposed a subsidy for inspection and certification. Although I am not sure what this subsidy actually does, I think it helps farmers pay for the inspections that is required by law to ensure that all farms are following all the set regulations. Even though the subsidy is not set on increasing production, it still increases the supply because farmers have more money to spend because the inspection and certification is paid for.
Removing the subsidy obviously causes a decrease in quantity supplied by the suppliers who were given this subsidy. They will have less money to spend on their own respective agricultural good therefore decreasing the yearly yield of the farm.
In this diagram, it shows that supply decreases because the subsidy was removed. This causes the price of local agricultural products to increase and quantity to decrease. Elasticity is not shown in this graph but both demand and supply are inelastic because agricultural products are a necessity and agricultural products are seasonal products and can only be harvested once a year.
All this means that people will see less local agricultural products. To compensate for the decrease of local agricultural products and to bring the equilibrium back to normal, the government will have to import some from other states or even other countries.