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12 J. Consumer Pol'y 1 (1989)

handle is hein.journals/jrncpy12 and id is 1 raw text is: Noel D. Uri Target Prices, Market Prices, and Economic Efficiency in Agriculture in the United States ABSTRACT. This paper looks at one aspect of current United States agricultural policy. This concerns the attempt by the federal government to support commodity prices and income of farmers. This is accomplished through the deficiency payments program. Unfortunately, the program is inherently economically inefficient. More- over, alternatives (short of eliminating the program altogether and not replacing it) also are not economically efficient. The United States has a long and sometimes tempestuous history of struggling to find an acceptable compromise of farm, consumer, and taxpayer interests in formulating agricultural policy (Gardner, 1981, 1987; Tweeten, 1977). The most recent incarnation of agricultural policy is in the Food Security Act of 1985. Under the aegis of this act, the U.S. Secretary of Agriculture administers the various agricul- tural programs of the United States. These programs (some of which date back to 1933 and beyond) relate to agricultural commodities (e.g., dairy products, wheat and feed grains, cotton, and rice), food stamps, conservation, research programs, agricultural trade, and so forth (Glasser, 1986). A key program in the 1985 Act is the provision of price and income support for farmers through deficiency payments. The objec- tive in supporting income is ostensibly to reduce the uncertainty associated with farming (both in terms of commodity prices and income) and hence maintain a stable agricultural base for the U.S. economy. Specifically, by reducing the fluctuations in net farm income it has been suggested that it will be possible to reach the objective of helping farmers to maintain themselves as free, inde- pendent business people, control their means of production, make their own decisions and benefit from their own labor and manage- ment abilities while at the same time maintaining an adequate supply of high quality food at reasonable prices (Rasmussen, 1985, p. 3). This is necessary, it is argued, because farmers are an economi- cally hard-pressed group which is the result of their relatively Journal of Consumer Policy 12: 1-17, 1989. © 1989 Kluwer Academic Publishers. Printed in the Netherlands.

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