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UK Farmers: Crisis Point?
The Fuel Crisis Re-Visited
In subsidising farmers' fuel, ('red diesel' as it is called) the government is accepting a massively reduced rate of tax. Red diesel costs only 24p per litre, compared with the 80p per litre that other diesel users pay. This subsidy costs £250 million a year. The graph illustrates this: the amount per unit of the subsidy is equivalent to the vertical distance between the
two supply curves. The total cost of the subsidy is indicated by the shaded area.
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