Ag Policy, Lecture 7 Knutson 6th Edition, Chapters 2

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Ag Policy, Lecture 7 Knutson 6th Edition,
Chapters 2 7

• Exam I Review
• Farm Issues/Problems
• Farm Program Goals
• Farm Program Options

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What is the Farm Problem?

• Why spend 10 to 20 billion/year?
• What is the justification?
• There is no automobile program
• There is no steel industry program

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What is the Farm Problem?
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Issues Problems related to Food and Agriculture

• Issues/Problems
• Broad vs. Specific
• Symptoms
• Viewed through (facts, values, myths)
• Problems and Goals are rarely discussed fully

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Issues Problems related to Food and Agriculture

• 3 broad categories of Issues/Problems
• Declining farm numbers/farm financial health
• Abundant, Cheap Food
• Agricultural Externalities

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What are the Facts, Values, Myths?

• 3 broad categories of Issues/Problems
• Declining farm numbers/farm financial health
• Abundant, Cheap Food
• Agricultural Externalities

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What is a Farm?

• Farm defined as 1,000 ag sales/year
• In 2002, 2.1 million farms
• 160,000 farms had sales gt 250,000
• (7.5 had 77 of sales)
• 162,000 farms with sales 100,000-250,000
• (7.6 had 12 of sales)
• 1.8 million farms had sales lt 100,000
• (85 had 11 of sales)
• Corporate vs. family farm?
• Does it matter?

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Who are Farmers?

• Of 831,000 who think they are farmers
• 48 (395,000) are field crop and dairy
• These are the primary recipients of traditional
  farm program benefits
• 52 are beef, hog, poultry, fruit and vegetable
• Push to extend program benefit to the 52
• Strong resistance in 2002 from crop interests
• 175,000 commercial farms
• Net income 100,000 in 99

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Issues Problems related to Food and Agriculture

• The more specific problem, Instability of Prices
  and Incomes has been the most common pressure
  creating U.S. Farm Policies and Programs

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Farm Program Goals

• Expand farm production
• Support and stabilize farm prices and incomes
• Expanding ag. exports
• Adjustment of farm production to market needs
• Resource conservation and preservation
• Family farm survival
• Multifunctionality
• Add to this
• Food Prices
• Food Security
• Government Costs
• Rural Development Issues

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Farm Program Options

• Free Market
• Price Supports
• Price guarantees
• Government purchase programs
• Supply Controls
• Land retirement
• Acreage reduction
• Acreage Allotments Quotas
• Direct Payments
• Crop Insurance
• Buyouts

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Lecture 7, Wrap up

• What is the Farm Problem?
• What are the options?
• Next Class
• Ag program History (chapter 7)