It's a big sector that helps support prices at a good level for farmers.
This has angered Saudi Arabia and other Persian Gulf countries that take the pain for supporting prices.
They may also now be able to cut export subsidies, although the scope for this has been limited by their decision not to cut support prices for cereals.
Farmers in the country's breadbasket are offered minimum support prices for wheat and rice which have been rising sharply over the past few years.
"Election-driven policies, such as slower fuel price calibration with international parity and higher minimum support prices for crops, could weaken the fiscal repair program or stall the reserve bank's efforts to tame inflation".
In the 1960s the support prices for the major export commodities, except tobacco, were established at levels near or slightly below world prices to permit market forces to manage the distribution of supplies between domestic and foreign markets.
"It was put as a poison pill to get Congress to pass a farm bill by scaring lawmakers with the prospect of higher support prices for milk and other agriculture products.
The United States ban on Canadian cattle limited supplies and helped support prices for American beef producers after mad cow disease was found in Washington State a year ago, eroding exports of the meat.
That larger electricity market reform (EMR) is dragging on, with details still unpublished on electricity support prices for everything from gas, nuclear, coal with carbon capture and storage, as well as renewables.
These policy interventions are provided in various forms: tax concessions to producers of inputs and products, subsidies on prices of inputs or food, support prices for producers at relatively high levels, protective tariffs or other international trade barriers.
If a new farm bill is not in place, government-supported prices for milk would be about four times higher than current law and about twice as high as current market prices, Mr. Zulauf said.
