Transcript Agricultural Price and Income Policies

Agricultural Price and Income
Policies
Agricultural price and income policies are
designed to respond to farm problems in the
United States.
Farm Problems
Overcapacity
 Instability of Farm Prices
 Poverty

Price and Income Stabilizing
Programs

Two-Price Plans
– Different price elasticities of demand in
the domestic and foreign markets are
exploited to increase total revenue to
agricultural producers

Land Retirement Programs
– Production controls are used to
constrain the annual production levels of
those crops that are in excess supply
Price and Income Stabilizing
Programs

Direct Payment Programs
– A market-oriented approach designed
to reduce government purchases
Target Price
Price set by government for selected
commodities. This price is achieved by
supplementing the market price with a
deficiency payment.
Loan Rate
The price per unit (bushel, bale, pound, etc.)
at which the government will provide loans
to farmers to enable them to hold their crops
for later sales.
Nonrecourse Loan
An amount of money equal to support price
times the quantity offered as collateral lent
by the Commodity Credit Corporation
(CCC).