Alternative Policy Options to Address Agricultural Instability
Chad E. Hart, Darnell B. Smith, William H. Meyers
March 1994 [94-BP 2]
The strongest justification for government involvement in agricultural commodity markets is the instability in U.S. food and agricultural markets that affects both consumers and producers through food supply and price volatility (Tweetin 1993). This instability comes from many sources, including weather conditions, domestic and foreign agricultural programs and policies, and other causes of price variability. All of these factors work to increase volatility in producer revenues and consumer food expenditures. Federal programs oriented towards reducing farm-level revenue instability--such as commodity programs, crop insurance, and disaster assistance--continue to be criticized, implying that these programs have not succeeded in achieving stated goals. In "Agricultural Policy Reform: A Proposal," Harrington and Doering (1993a) suggest an alternative to the current federal commodity program system. In a follow-up defense of the article, they exclaimed, "Let's get some more new ideas on the table!" It is evident that this challenge was answered before it was received.
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