Ag Policy, Lecture 7 Knutson 6 th Edition, Chapters 2 & 7 Exam I Review Farm Issues/Problems Farm Program Goals Farm Program Options

What is the Farm Problem? Why spend $10 to $20 billion/year? What is the justification? There is no automobile program There is no steel industry program 08

What is the Farm Problem? Policy Decision Elections Politics Programs Issue/Problem Facts Values Myths

Issues & Problems related to Food and Agriculture Issues/Problems –Broad vs. Specific –Symptoms –Viewed through (facts, values, & myths) –Problems and Goals are rarely discussed fully

Issues & Problems related to Food and Agriculture 3 broad categories of Issues/Problems –Declining farm numbers/farm financial health –Abundant, Cheap Food –Agricultural Externalities

What are the Facts, Values, & Myths? 3 broad categories of Issues/Problems –Declining farm numbers/farm financial health –Abundant, Cheap Food –Agricultural Externalities

What is a Farm? Farm defined as $1,000 ag sales/year –In 2002, 2.1 million farms –160,000+ farms had sales > $250,000 (7.5% had 77% of sales) –162,000 farms with sales $100,000-$250,000 (7.6% had 12% of sales) –1.8 million farms had sales < $100,000 (85% had 11% of sales) Corporate vs. family farm? –Does it matter?

Who are Farmers? Of 831,000+ who think they are farmers –48% (395,000) are field crop and dairy These are the primary recipients of traditional farm program benefits –52% are beef, hog, poultry, fruit and vegetable Push to extend program benefit to the 52% –Strong resistance in 2002 from crop interests 175,000 commercial farms –Net income $100,000 in ’99

Issues & Problems related to Food and Agriculture The more specific problem, Instability of Prices and Incomes has been the most common pressure creating U.S. Farm Policies and Programs

Farm Program Goals Expand farm production Support and stabilize farm prices and incomes Expanding ag. exports Adjustment of farm production to market needs Resource conservation and preservation Family farm survival Multifunctionality Add to this –Food Prices –Food Security –Government Costs –Rural Development Issues

Farm Program Options Free Market Price Supports –Price guarantees –Government purchase programs Supply Controls –Land retirement –Acreage reduction –Acreage Allotments & Quotas Direct Payments Crop Insurance Buyouts

What is the Farm Problem? What are the options? Next Class –Ag program History (chapter 7) Lecture 7, Wrap up