Objectives of an Agricultural Price Support Policy

Abstract

WVHMLE there is nothing unusual about the practice of giving spe9ial price assistance to particularly needy producers in times of emergency, the provision of agricultural price support as a matter of general policy is a comparatively recent development. Despite this fact the circumstances surrounding the adoption of the policy have indicated a consfderable variation in objectives. The diversity of aims can perhaps best be shown by a few specific examples. The agricultural price support provided in the United Kingdom during the past decade or more was designed to achieve several purposes. It was supposed to bring about a very definite improvement in the net income and purchasing pover position of farmers generally. It was intended to act as a stimulant to production so that the country could become, agriculturally, more selfsufficient and foreign exchange could be conserved. In addition there was the hope that, by increasing the profitability of farming, it would make it financially possible to take advantage of the latest technological developments and thereby increase productive efficiency. All these results were expected to flow from guaranteed prices based on costs and announced well in advance of production. In the various countries where dual price plans have been or still are in operation, the central aim has been to raise the average level of farm prices. As proof, one need only recall that, in most instances, the programmes have I)een officially and continuously called price-raising plans. It has been common practice to refer to them as ways of making the tariff effective for agriculture. In connection with the price-supporting measures employed in the United States it is probably correct to say that, while the general aim has always been higher prices, the special ends in view have varied somewhat in the light of changing circumstances. At the depth of the depression in the thirties the chief interest was in eliminating at least part of the price-depressing effects incident to the depression, in trying to obtain a reasonably acceptable price in spite of the lack of an effective demand. To a considerable extent the support given to prices was looked upon as emergency relief. The guaranteed prices provided from the start of the war were specifically designed to produce an expansion of production to meet the special war requirements. Over the longer period the fact that the degree of price support has been related to the concept of parity is conclusive evidence that the securing of price relationships more favourable to agriculture has been a basic objective. Of almost equal importance, however, judging by the emphasis placed upon it in the price support literature, is the achievement of more stable as distinct from higher