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Trade, Uncertainty And New Farm Programs

  • Tweeten, Luther G.
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    I have contended for some years that the principal economic problem facing commercial agriculture is instability (Tweeten 1989, p.30). Instability potentially threatens not only farmers' financial viability but also consumers' food security, given the desire for stable food consumption in the face of production destabilized by man and nature. Some observers expect instability to be a more pressing food security problem because of global farm policy liberalization (see Johnston and Schertz, p.24; for an alternative view see Collins and Glauber). Trade policy and farm commodity policy are inextricably linked. This paper recognizes that both types of policies are causes and cures for economic instability. The paper begins with an examination of the contribution of two key variables, yields and exports, to economic volatility in agriculture that could influence the need for commodity program stabilization policies. Trends in annual yield volatility give clues whether changing technology is affecting food system stability over time. The second section of the paper quantifies sources of food system variability in the United States. Emphasis is on the role of exports as a stabilizer or destabilizer of that system. Finally, the paper expands its scope to examine instability and public policy considerations within the new paradigm for American agriculture which I have outlined in another paper with Carl Zulauf (Tweeten and Zulauf). The concluding section raises serious concerns over consequences of political pressure for higher commodity loan rates and for crop and revenue insurance programs featuring larger public income transfers from taxpayers to farmers.

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    Paper provided by Ohio State University, Department of Agricultural, Environmental and Development Economics in its series Economics and Sociology Occasional Papers with number 28330.

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    Date of creation: 1999
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    Handle: RePEc:ags:ohsesp:28330
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    1. Makki, Shiva S. & Tweeten, Luther, 1994. "Agricultural trade negotiations as a strategic game," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 10(1), January.
    2. Makki, Shiva S. & Tweeten, Luther & Gleckler, James, 1994. "Agricultural trade negotiations as a strategic game," Agricultural Economics, Blackwell, vol. 10(1), pages 71-80, January.
    3. Shiva S. Makki & Luther G. Tweeten & Mario J. Miranda, 1996. "Wheat Storage and Trade in an Efficient Global Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 879-890.
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