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Defensible Farm Policy: Help Protect Farm Incomes during the Bad Times -- Agricultural Policy Analysis Center

[Article Summarized by Meridian Institute] The agricultural sector is different from other economic sectors, write Daryll E. Ray, the Director of the University of Tennessee’s Agricultural Policy Analysis Center (APAC), and Harwood D. Schaffer, a Research Assistant Professor at APAC. Society has a vested interest in the agricultural sector because food is necessary for human life and must be supplied in a timely manner. We can live with an extended disruption of most other products, but not food. Food consumption also does not react to economic signals in the same way as other products, as people in highly developed countries do not cut back much on the total amount of food they consume when prices increase. And, farmers tend to produce on all their acres whether prices are high or low. Farm policy, write Ray and Schaffer, was instituted to address this lack of price responsiveness on the part of both farmers and consumers. A defensible farm policy should be able to protect farmers from actual losses due to both crop failure and low prices. The trouble starts when a policy provides payments to farmers who have no actual losses and then fails to provide protection when prices are well below the cost of production. A defensible farm policy would also, in a time when budgets are tight, direct research dollars toward meeting the needs of those who do not have alternate sources of reliable information. Ray and Schaffer note that making public research available to farmers has always been an essential part of farm policy. And, finally, a defensible farm policy would need to ensure there is a balance of economic power between the producers and consumers on the one hand, and the marketers, processors and retailers on the other. They conclude: “In ensuring economic sustainability, a defensible farm policy provides farmers with the opportunity to wrestle a livelihood from the land. It should not guarantee them success, nor should it stack the deck the other way.”

Posted February 15th, 2013
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