ARE120%20LN02~2008

ARE120%20LN02~2008 - ARE 120 Julian Alston Spring 2008...

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ARE 120 Spring 2008 Julian Alston April 8, 2008 Lecture 2 PERSPECTIVES ON U.S. AGRICULTURAL POLICY Outline: Recap Last Time 1. Introduction: The Policy Setting 1.1 Overview 1.2 Rationales for government intervention 1.3 Forms of intervention 1.4 Consequences of alternative policies 1.5 Illustrative Example 2. Perspectives on U.S. Agricultural Policy 2.1 Policy Problems 2.2 Potted History 2.3 Contemporary Policies Housekeeping : Reading: Review 100A notes; chapters 1-4 Agricultural Policy Reform in an Historical Context” ( ARE Update article by Dan Sumner) Homework: Homework #1 due Thursday, April 10, 2008, 10:30 am Handout: Agricultural Policy Reform in an Historical Context” USDA-Outlook Tables
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1 2. PERSPECTIVES ON U.S. AGRICULTURAL POLICY 2.1 Policy Problems of Food and Agriculture In chapter 1, Knutson discusses, Forces of Policy Change in context of issues, including Instability Globalization Technology Food Safety Environment Industrialization of Agriculture These buzzwords relate to various policy “issues” or “problems” THE WORLD FOOD PROBLEM hunger and malnutrition (i.e., low incomes) role of international trade future production capacity THE CONSUMER FOOD PROBLEM nutrition price food safety THE RURAL DEVELOPMENT PROBLEM decline in rural communities infrastructure, health, and education selective outmigration of youth poverty farm labor (especially related to migrants) THE FARM AND RESOURCE PROBLEM instability (variability); price and income risk; policy risk excess capacity (low income to resource owners); adjustment problems structure of agriculture (farm numbers and farm sizes) resource scarcity (competing uses for land and water) environmental externalities The idea is that there are multiple perspectives on agriculture. Policies related to a narrow set of objectives (e.g., resource conservation) have implications for the whole set of problems.
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2 2.2 Potted History of U.S. Agricultural Policy POLICY CHANGE Policy Inertia: * once adopted, policies tend to persist * significant policy changes occur infrequently (mainly in response to perceived crises) Changes in Policies Have Been Associated With: * food shortages (or the threat thereof) (1900-1920, 1970s, 1990s?, 2008? ) * financial crises: low prices, incomes, high debt, or business failures in agriculture (1920s, early 1930s, 1980s) * natural disasters (dust bowl of the 1930s -- conservation programs; global warming, 2008? ) * export market slumps and surplus stocks (1950s, 1980s -- land retirement schemes and export promotion) * publicity about hunger and malnutrition (food subsidy programs in the 1960s) * high government costs (1990s, 2008? )
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3 CHRONOLOGY (See Chapter 7, pp. 86-89) 19th Century Little direct government involvement in agriculture (or elsewhere in the economy) prior to the 20th century. Late 19th century policies established
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ARE120%20LN02~2008 - ARE 120 Julian Alston Spring 2008...

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