AGEC 429: AGRICULTURAL POLICY

LECTURE 3: THE AGRICULTURAL POLICY PROCESS

AGEC 429 Lecture #3THE AGRICULTURAL POLICY PROCESS

The policy process begins with groups and individuals with policy goals pressuring the government to intervene. The process includes two phases: (1) policy ___________________ and (2) policy __________________:

GROUPGOALS

INDIVIDUALGOALS

MOTIVATION FOR

GOVERNMENT INTERVENTION

GOVERNMENT POLICY GOALS

PROGRAM OBJECTIVES

POLICY INSTRUMENT SELECTION

GOVERNMENT POLICY ACTION

POLICY _____________

POLICY _______________

The underlying reasonor incentive

The philosophical or desiredintention (the “_____”)

The specific target of policy to achieve the goal (the “_____”)

The specific means selected toachieve the objective (the “_____”)

The actions required to meet the objectivesusing the policy instruments selected

THE POLICY FORMULATION PROCESS EXAMPLESThe Agricultural Policy Process

ENVIRON-FARMERS MENTALISTS

1. PEOPLE DON’T LIKETHINGS THE WAYTHEY ARE

2. PRESSURE FOR PUBLICACTION ARISES WHEN PEOPLE CANNOT BRING ABOUT CHANGETHEMSELVES

3. *GOALS OF POLICY AREBASED ON THESE PRESSURES

4. *PROGRAM OBJECTIVES DERIVE FROM THE POLICY GOALS

5. *PROGRAM MEANS ARE CHOSEN TO ACHIEVEOBJECTIVES

LOW INCOME POLLUTION

MANYPRODUCERS

MANYVICTIMS

“RAISE FARM INCOME: SAVE FAMILY FARM”

“PROTECT ENVIRON-MENT”

RAISE FARM PRICES

SHIFT COST OF POLLUTION TO POLLUTERS

ACREAGEREDUCTION

POLLUTION TAX

* COUNTERVAILING PRESSURES FROM OTHER GROUPS CANARISE AND PREVENT OR ALTER POLICY AND PROGRAM ACTION.

Some Typical Goals of Farmers

• Improved _________________

• Ownership of ______

• Progress, efficiency, and ___________ in agricultural production

• Education and _________

ARE THERE OTHERSYOU FEEL ARE IMPORTANT?

Some General AgriculturalIntervention Goals of Farm Groups

• Growth and development of the__________________

• ________ and income distribution

• Reasonable _________ forfarm output

• ______________ (of prices, income, supply, consumption)

• Economic __________

• Non-farm __________________

Some Non-Farm Goals of Agricultural Policy

• Ample supply of food at_________________

• Elimination of ________ and___________

• Maintain public health and reduce __________________

• Preservation of land and water for _______________________

Do you see any potential conflicts between thefarm and non-farm goals of agricultural policy?

FARM PROGRAM OBJECTIVESHAVE EVOLVED OVER TIME

Old Objectives New Objectives

EXAMPLES OF INSTRUMENTS OF GOVERNMENT INTERVENTION IN AGRICULTURE

• Non-recourse loans• Export subsidies• Demand expansion programs• Supply control• Direct payments• Marketing loans• Counter-cyclical payments• Crop Insurance

There are many others relating to protecting theenvironment, food safety and security, hunger

and nutrition, world trade, etc.

(We’ll learn more about these later!)

WHY IS AGRICULTURE CONSIDERED A SPECIAL CASE FOR INTERVENTION?

THE TRADITIONAL ARGUMENTS

1. Farmers are considered the “_________________.”

2. Agriculture is subject to inherent _____________.

3. Many non-farmers are associated with the _________.

4. Agriculture is a ____________ industry. There is a strong national security interest in protecting and promoting the agriculture sector.

5. Farm problems result from ____________ policies.

Farm income accounts for only 20% of farm household income

2015

THE CHANGING NATURE OFAGRICULTURAL POLICIES

• Policies change as world and market conditions change.

• Policy change is usually _____________ not__________________.

• Political _________________Belief in small, non-invasive government

• ____________________ Costs

• ___________________The process by which the benefits of government programs tend to be bid into the value of farm assets.

Constraints on GovernmentIntervention in Agriculture

• The Desire for ________________________Why is this a “constraint” on government intervention?

• _____________________We cannot do everything that everybody wants. So there is an “Opportunity Cost” of making choices. That cost is the value of what must be given up. Any decision that involves a choice between two or more options has an “opportunity cost.”

https://www.youtube.com/watch?v=uAZetMSJro4

http://www.youtube.com/watch?v=yNyaNMaiACI

http://www.youtube.com/watch?v=pES9C7fX_Co

https://vimeo.com/307566929

When we spend government revenue on agricultural programs, we give up what else we could have spent the money on like environmental programs, roads, medicaid, health care programs, etc.