U.S. agricultural policy and price supports during the Great Depression

U.S. Agricultural Policy

Agriculture and Farmer

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).

2. 1920-1930

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)

3. Conclusion

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 labor and resources that caused disequilibrium in the agriculture of America. Despite of supporting prices to deal with excess labor at that time, I think it was more appropriate for the American government to smoothen their relocation out of the agricultural sector (Antle, 1988).

Farmers' incomes are dominated by the income not obtained from the farm. Price support programs are insufficient to get a solution for the farm problems. It is also not necessary that formulation of commodity price policies would help in the stabilization of farm incomes (Antle, 1988). The United States possesses an incredible natural endowment of soil and climate. However, the agricultural policy of the government has failed to take advantage of such an extraordinary natural gift. Instead, it has aided in the warping of production decisions (Antle, 1988).

I believe that United States needs to change its agricultural policy in order to progress. The agricultural policy should be supple and firm. It should be formulated for a certain time period. Also, it must be made sure that it does not disagree with ever-changing market conditions. Thus, it is necessary for protection of today's farmers that U.S. government deviates from its present agricultural policy (Antle, 1988).