CHAP9_Presentation - Government Price Intervention The milk...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 9 1 Government Price Intervention The milk subsidy: Obama, yes; McCain, no– Wisc. State Journal, Oct 23, 08 • Just weeks before the tight 2004 presidential election, incumbent Bush came to Eau Claire to announce his support for a dairy subsidy that favors Wisconsin farmers but is costly to taxpayers . At that event, the state's largest farm lobby endorsed Bush for re-election. But this year, McCain, doesn't support the Milk Income Loss Contract program because of its effect on an already strained budget. The Milk Income Loss Contract is a price support subsidy that kicks in if the price of milk falls below a certain point. The program is weighted in favor of smaller dairy farms like those in Wisconsin and has delivered $511 million to farmers since Dec 2001—more than twice as much as any other state. • Obama supported the dairy subsidy as part of the 2008 Farm Bill passed in May because it provides a safety net for farmers. McCain opposed it because of its cost to taxpayers and because farm subsidies at home can make it more difficult to get a level playing field for U.S. farmers' goods in foreign markets. • It was a real coup for dairy farmers to get this in place, but, for taxpayers it's going to be more costly. A taxonomy of price determination 1. Market based price determination –perfect competition –imperfect competition (monopoly, oligopoly, chapter 3) 2. Negotiation 3. Auction (chapter 11, last lecture) 4. Administered prices (influenced by governmental price policies) –tariff, quota, subsidy, tax –A: price support, B: deficiency payments, C: supply control Government Price Intervention Objectives: 1. Discuss why governments have price intervention policies for agricultural sector 2. Examine specific policies used for agriculture in the U.S. 3. Provide economic framework to study impacts of policy
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chapter 9 2 Reasons for govt intervention in agriculture 1. Reduce price instability 2. Support price and enhance farm income 3. Preserve small “family” farms, promote self- sufficiency in food production Obama for 1-3 (4).Hold down consumer costs and increase food &
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/20/2009 for the course AEM 4150 taught by Professor Kaiser,h.m. during the Fall '07 term at Cornell University (Engineering School).

Page1 / 7

CHAP9_Presentation - Government Price Intervention The milk...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online