Can Depression-Era Program Save America’s Slipping Agriculture Industry?

American farmers are catching a break right now as the federal government is sendign more money their way, thanks to a Depression-era food buying program that was originally designed to combat oversupply and low prices.

So is it like an agricultural bail out?

Yes, as a matter of fact, it is a lot like that. The federal government has already issued $313 million over the past 11 months on a decree in Section 32 of the Agricultural Act of 1935. This measure allows for the secretary of agriculture to purchase food produced domestically in order to balance out the supply and demand ratio.

You may have heard that food prices are dropping right now? Well, with this program in effect, these prices may not last much longer.   Last year, this effort fluxed an additional $306.3 million to help keep the agricultural industry afloat. It is also, though, the largest sum of money spent on this program, in a fiscal year, since the middle of the recession: $319.5 million, in 2009.

“It’s not typical but we’re having some issues in a lot of the commodity markets,” explains Mykel Taylor, who is a professor in farm management at Kansas State University. “Everybody is cycling down from big record incomes and now they’re sitting on big supplies.”

But not everyone is convinced that the way to save farmer livelihood is through taxpayer dollars.

“Dairy markets are inherently volatile,” describes American Farm Bureau Federation director of market intelligence, John Newton. “There’s a lot of uncertainty and very high inventory levels. Reducing inventory levels could create an emotional response in the markets.”

With that volatility in mind, perhaps, industry experts note that the purchase of 11 million pounds of cheese would only alleviate less than one percent of the 1.25 billion pounds of surplus in storage right now. However, these very same industry experts remain optimistic that the phasing out of even the slightest amount would help to encourage higher prices among the commodity markets.

Newton goes on to say, “Agricultural incomes are at a low point right now, and for the USDA to try to step in and try to do something is not necessarily out of the norm. They have these funds available to them every fiscal year to do something if they so choose to.”

About the Author

William Newman
William is an Internet professional with five years of experience in research, academic writing, content writing, market research, qualitative research and customer support management.

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