Experiences with Recent Price Stabilization Programs for Agriculture
The stabilization of farm prices and incomes has been a goal of all farm legislation dating back to the establishment of the Farm Board in 1929. After the Farm Board concept failed in the wake of the great crash of 1929, price stabilization turned more and more toward price supports with prices set above market equilibrium. To absorb the differential quantities that arose, loan and storage programs were established for major commodities. Stocks of accumulated grain were used in times of war or world grain production shortfalls to even out the flow of food to consumers
A Simulation Analysis of a Reserve Stock Management Policy for Feed Grains and Wheat
During the last three years agriculture has exhibited characteristics that parallel those of a manic depressive. The livestock sector was flying high during 1973 and in the depths of despair in 1974. The crop sector was elevated from two decades of despondent but stable economic health to a state of price elation in 1973 and 1974. Over the last couple of years consumers, who enjoyed excellent food budget health for years, have slipped into a state of belligerent depression. Each group views the future with anxious dismay. Livestock producers fear that the feed prices will remain high, crop producers fear they will not. Neither livestock nor crop producers have a sound basis for making short or longer term production plans.
Some Economic Aspects of Agricultural Regulation and Stabilization
OT LONG AGO it seemed widely agreed that the policy problem facing U. S. agriculture contained two major parts. One was the income problem of poverty-ridden, non-commerical, small farmers and low-income rural people who depend on agricultural employment. The other part was the price and income problem of commercial farmers who supply the bulk of the nation's output of food and fiber. Perhaps the most prestigious statement of this two-part view was contained in the 1967 report of the National Advisory Commission on Food and Fiber [14]. There seemed to be virtually complete agreement that no amount of tinkering with commodity programs and prices could fix rural poverty problems in general or the income problems of too-small farmers in particular. Thus, the success or failure of traditional farm policy really hinged upon its ability to deal with commercial farm price, production, and income problems. Most observers in the middle 1960s would have added that the success of commercial farm policy also should be gauged by how well the requirements of foreign markets and the needs of domestic consumers are met. The National Commission on Food and Fiber was unanimous in its support of a "market-oriented" pricing structure for most commodities affected by agricultural programs. But it was sharply divided on the issue of publicly-held commodity inventories for price or market stabilization purposes. It is fair to say that the Commission members, and most farm policy interests, wanted some stability as well as support for farm incomes and were willing to sanction farm price supports and direct payments to achieve it. The disagreement was between the majority who favored seeking market price stabilization via public inventory management and the minority who did not. It is to the quest for market stability in agriculture that this paper is directed. In this discussion, stabilization as a policy goal will refer to conscious public efforts to decrease or regulate the fluctuation of prices, market volume, or income around long run, open market trends. Questions of net subsidization or net taxation of agriculture are not emphasized here. This may 'be something of an artificial distinction in any real policy context, but it is analytically helpful to ad pt it. First, some discussion of market stabilization in its current policy context is presented. Then some rough empirical measures of the chang s in stability are advanced. Finally, an analytical picture of market stabilization via reserve stocks and export regulation is developed.