Agricultural Income and Price Policies

1
Agricultural Income and Price Policies

• Chapter 11

2
Values of Farm People

• Farmers are good citizens
• Farming is not only business but way of life
• Farming should be a family enterprise
• The land should be owned by the person who tills
  it
• It is good two make two blades of grass grow
  where two grew before.
• Anyone who wants to farm should be free to do so.
• A farmer should be his/her own boss.

3
Values of Farm People

• Farming should be a family business
• Country living has many virtues
• Agriculture should provide adequate food and
  fiber at reasonable prices
• Society should assist farm youth in providing
  farming and other agribusiness opportunities
• A farmer should be his or her own boss
• Agriculture is vital to mankind and therefore
  should receive priority in national goals

4
Policy Concepts

• Family Farms
• Parity
• Equality of Bargaining Power

5
Farm Problems

• Overcapacity
• Instability of Farm Prices
• Poverty

6
Farm Programs

• Two Price Plans

7
Two Price Plans
US Market
Foreign Market
Price
Price
D
D
Quantity
Quantity
8
Farm Programs

• Two Price Plans
• Land Retirement

9
Land Retirement
S1
Price
S
D
Quantity
10
Farm Programs

• Two Price Plans
• Land Retirement
• Direct Payment Programs

11
Direct Payments
S1
Price
S
Target Price P1
A
Equilibrium Price P0
B
New Equilibrium Price P2
D
Q0
Q1
Quantity
12
Farm Programs

• Two Price Plans
• Land Retirement
• Direct Payment Programs
• Farmer-Owned Reserves
• Conservation Reserves
• The Fair Act of 1996

13
Alternative Farm Programs

• Demand Expansion

14
Demand Expansion
Quantity of Other Goods
The Food Stamp Program
U2
U1
Quantity of Food
15
Alternative Farm Programs

• Demand Expansion
• Free Market
• Land Retirement
• Market Quotas