1. Chap 6: World Agriculture

2. OUTLINE 1. U.S. and Soviet Agricultural Policies in recent past
2.  A Model of How subsidies work/don't work
3.  Von Thunen Model
The first sections will be for the students to read and review on their own. Study guide will be provided, the above two sections 5 and 6 will be discussed in class.

3. 1. U.S. Agricultural Policy
A. Historical Past, 17th thru 19th century
    
stable prices
family farms
limited market size
environment had a direct impact on price
drought
Versus bumper crop

4. B. Late 19th and 20th century: Review
1. Transportation transforms market access (Globalization Starts)
a. all markets become international
b. love/hate relationship with American railroads
the original "Bill Gates" and other robber barons: the Vanderbilts, Harrimans, Stanfords (as in Stanford U.) and Jay Gould

5. c. Chronic American farm labor shortages transform Agriculture
the cotton gin, McCormick Reaper, Combine....
Replace labor with capital and energy (industrialize agriculture)
d. farm is a "factory"
maintain minimum labor costs
maximum profits

6. 2. The "Good" War: WWI (The Benefits of Globalization for US Farmers)
American farmers make-up for European shortfalls
Get rich from destruction
World markets favor World war

7. 3. The Roaring 20s
disaster on the American Farm, the great depression starts early
supply too great,
solution close "factories" (i.e. family farms -- note the "peaking behavior on the graph").
 Number of farms hits a plateau during this period before the steep decline in the 1940s

8. 4. The Great Depression of the 30s
a. just when you thought things were bad
over supply couples with collapsing demand
international markets closed
plus environmental disastors (Dust Bowl)

9. 5. Recovery: New Deal years and the 1940s
American style "Socialism" (so this is family [farm] values)
-- Farm Subsidies Begin, more about this in the 50s
Also see model example later
b. Another "Good" War: WWII
c. The Marshall Plan

10. How subsidies work