United States Government Policy: Agriculture and Farmers
Government Policy towards Agriculture and Farmer's Price Supports
There are a number of similar economic problems that are faced by the farmers globally. These problems include acquisition of land, modification of farm production to price variations and maintenance of foreign markets (Wilcox & Cochrane, 1960).
During World War I and even after its conclusion, farmers in United States were asked over to increase crop production. This caused a drop in yield prices in the 1920s. Congress endorsed the Agricultural Marketing Act of 1929 to get this problem resolved and settled. Under this Act, Federal Farm Board was established with a sumptuous amount of $500 million. This Board was given the task to purchase crops and alleviate grain and cotton prices. This decision of stabilizing the prices persuaded the farmers to produce even more crops. The whole process stimulated further government subvention as more production plummeted prices again ("Ten Worst Government Programs," 2004).
The main purpose of farm subsidies is to make food prices constant and steady. On the other hand, farming becomes highly harmonic and frequently unbeneficial as no profits could be earned. As subsidized American crops are a tough competition for the farmers in other parts of the world, the bucolic poverty deteriorates in those countries accordingly. Farmers were remunerated for growing crops under the legislation of 1929. However, it resulted in a number of problems. To overcome those problems, U.S. President Franklin Delano Roosevelt introduced the Agricultural Adjustment Act of 1933 under his "New Deal." The farmers were paid for not growing crops ("Ten Worst Government Programs," 2004). An amount of $100 million was, for instance, given to farmers in 1933 alone who agreed to destroy their cotton crops (Trueman, 2011).
It was during the period of Great Depression that this new U.S. agricultural policy was introduced. The unsteadiness observed in the commodity markets was the major reason that created problems for agriculture. This instability caused insecure farm profits. The overwhelming and devastating effects of the depression forced the U.S. government to introduce major commodity programs. They began the process by bringing in the Agricultural Adjustment Act of 1933. It can be rightfully said that the endorsement of this Act marked the beginning of a new revolution in the agricultural policy of United States. Main articles of trade in this policy included wheat, rice, corn, peanuts, milk, cotton and tobacco. This Act has been said to play a critical role in the re-stabilization and alleviation of America's rural segment (Domhoff, 1996). Later, another scheme of price supports was introduced for various commodities under the Agricultural Act of 1937 ("Ten Worst Government Programs," 2004).
Under the Agriculture Adjustment Act of 1933, a government agency renowned as Agriculture Adjustment Administration (AAA) was founded in the Department of Agriculture. It was the part of the New Deal Program that was promised to the American people by the then President, Franklin Delano Roosevelt (The Columbia Encyclopedia, 2009). Agricultural Adjustment Administration was established to restructure industry and agriculture. To achieve the goal of revitalizing the economy and financial system of the country, public funds were used extensively by the government of United States (The Columbia Encyclopedia, 2009).
AAA was made powerful by the Agricultural Adjustment Act of 1938. It was authorized to grant loans to farmers on staple crop yields in the years of excellent production. Farmers were also given allowance to store the surplus crop. AAA had the authority to release this stored surplus produce in years of small yield. In order to meet up war needs during World War II, AAA considered and concentrated to raise food production. It was given the name of Agricultural Adjustment Agency in 1942. Later in 1945, the Production and Marketing Administration took over its job and functions (The Columbia Encyclopedia, 2009).
When farmers are economically supported through government-subsidized price-support programs, this aid is known as agricultural subsidies.
The main reason of designing agricultural subsidies is the augmentation of farm income. This is done with the implementation of two things:
by elevating the continuing prices level above free-market levels by granting farmers with direct reimbursements (The Columbia Encyclopedia, 2009)
2.1. U.S. Assistance Programs
It was in 1920s that the federal government in the United States started supporting agriculture unswervingly. We already know that farmers were asked to increase crop yields during World War I and after its end. As sharp declination of prices was the result of this oversupply, The Agricultural Credits Act was introduced in 1923 to resolve the issue. However, it failed. An Agricultural Marketing Act was signed by President Hoover in 1929 that resulted in the creation of Federal Farm Board. Unfortunately, the Farm Board also failed to accommodate farming and stabilize prices (The Columbia Encyclopedia, 2009)
2.2. 1930 -- 1940
The agriculture Adjustment Act of 1933 was an endeavor to manage and cope with farm prices. The target was to be achieved by plummeting and organizing of major commodities. Another agency known as Commodity Credit Corporation was founded in 1933 to grant loans to famers on agricultural harvests. However, only those farmers were provided with the loans that contracted to control their farm productions (The Columbia Encyclopedia, 2009). Significant parts of the Agricultural Adjustment Act of 1933 were declared as unconstitutional and unacceptable by the Supreme Court in 1936. However, without any delay, Congress took up the Soil Conservation and Domestic Allotment Act. Under this Act, staple crops were replaced by soil-building crops and the farmers who adopted this conservation policy were paid and benefitted accordingly (The Columbia Encyclopedia, 2009). The Agriculture Act of 1937 was introduced under which 100 different commodities have been supported by the CCC (The Columbia Encyclopedia, 2009).
2.3. 1940 -- 1950
During the period 1941-1948, price-support programs encouraged agricultural production. Surpluses were consumed rapidly as the World War II had its prevailing impacts during those years. 1948 saw a declination in the price-support levels for a number of agricultural commodities. The War had distraught the agriculture in both Europe and Asia. However, by 1949, both continents recovered their agriculture considerably and American farm products were rejected notably. Yet, there was a commendable increase in the crop production in the United States simultaneously which resulted in a fall in prices and accumulation of surpluses (The Columbia Encyclopedia, 2009).
2.4. 1950 -- 1960
The federal government in the United States introduced Agricultural Act of 1954 that provided more flexible price supports. This Act was passed with the intention of transforming its approach to market intercession. However, the government failed to implement most of the sanctions of 1954 Act (Antle, 1988). In 1956, a Soil Bank Program was also introduced with the aim of increasing yields per acre (The Columbia Encyclopedia, 2009).
2.5. 1960 -- 1970
United States has shifted its agricultural policy since 1960s. It has adopted severance of market involvement and income support. In 1965, the American government introduced the Food and Agricultural Act which contained modifications of its agricultural policy. It was allowed that price supports can pursue shifts in conditions of the market more directly. Farmers were granted direct payments along with acreage control (Antle, 1988).
2.6. 1970 -- 1990
In 1977, a food bill was passed that made the cost of production as a basis of target prices. It also affected the bills passed in 1981 and 1985 (Antle, 1988). The mentioned policies ended for the most part in the 1990s due to the fact that they did not provide positive results for the betterment of agriculture in United States.
In my opinion, there are a number of things that are wrong with United States Agricultural Policy. It was in the years of Great Depression that U.S. Agricultural Policy was originated. It was the existence of overabundant human…