China, India and Indonesia were among the countries that wanted a clause in the agreement to protect their farmers in the event of a drop in world market prices.
The Doha round talks were seven years in the making and are now at a standstill after the US opposed the proposal.
But Swedish trade minister Ewa Björling says they had come further than ever before and everything is not lost if the talks continue on from this point.
Björling was to fly out to Geneva to join talks on Wednesday but canceled the trip. She says that despite the knock back Sweden will continue to work towards free world trade. But it is hard when 153 states must come together on such a large agreement.
The head of the WTO Pascal Lamy said 85 percent of the deal was done before the dispute began.
The Swedish trade minister admits it would have been fantastic to reach a global free trade agreement in the light of the current world market, but this has tragically not been the case.