Surplus Disposal and Supply Control

Abstract

This article presents a simple model showing the relationship which exists between the surplus disposal program and a program of voluntary supply control of agricultural products. Disposal of surpluses raises problems of their valuation and costs. Production control presents other cost considerations. Values of and actions by the committees of the U.S. Congress which control the farm price and surplus export programs hold the key to the entire complex. It is doubtful that the two programs can be successfully wedded to the satisfaction of those who are interested in minimizing costs, because the existential nature of a surplus disposal program predisposes the relevant Congressional committees to rationalize an expanded production. The authors feel that food-aid-for-economic-development possibly should be pushed more than in the past; but even here the values held by Congress, and not the opinions of economists, will prevail. SOME TIME ago Willard Cochrane proposed a marriage of foreign surplus disposal and domestic supply control for agricultural commodities.' Since that time, Cochrane has had many opportunities to convince the parties involved that matrimony would be in their respective interests. Also, there has been a great amount of activity and a volume of literature on both subjects.2 This article treats the terms and prospects for a marriage between these phenomena without delving into the conditions under which the parties can live happily ever after. First to be presented is the analytical model for the marriage conditions; then some implications for the politics of the surplus export disposal programs. The practical implications may be read without the algebra, but the confrontation between the phenomena contained in the model is necessary for sound analysis and conclusions.