AGEC 429 EXAM 2 | QUESTIONS AND ANSWERS | WITH 100% SOLVED SOLUTIONS.
Ag policy tends to be evolutionary, not revoluationary - (ANSWER)-once a program is adopted, it tends
to last a while with small changes to it
-farmers are good at resisting change to policy
-adjustments are often costly
-wealth is affected (capitalization)
-fear of the unknown
Settlement Period: 3 legs of the stool - (ANSWER)-Morril Act (1862): donated land to the several states
and territories which provided colleges for the benefit of agricultural and mechanical arts
-Hatch Act (1887): established ag experiment stations (research)
-Smith-Lever Act (1914): set up extension system to communicate new technologies from the USDA
directly to farmers
Ag called on during WW1 to increase production and after the farm economy became depressed -
(ANSWER)Capper-Volstead Act (1922): provided limited exemptions from anti-trust laws
Food and Nutritional assistance began in 1933 - (ANSWER)direct distribution of surplus food, school
lunches, and food stamps
Farm Credit Administration (June 1933) - (ANSWER)emergency and long-term credit programs
Agricultural Adjustment Act of 1933 - (ANSWER)"the foundation of farm policy" it is the root of most of
the current policies we have today
-declared unconstitutional but 1938 act fixed the legal problem
Agricultural Act of 1949 - (ANSWER)-last farm bill without and expiration date
-forces congress to act : bc it would be costly to the government if we went by this
-parity prices
-signed in by roosevelt
,AGEC 429 EXAM 2 | QUESTIONS AND ANSWERS | WITH 100% SOLVED SOLUTIONS.
-gave secretary of ag the authority to reduce acreage by voluntary agreements, enter into agreements
with processors to control prices paid to producers,
USDA could spend money to expand markets or remove surpluses
-financed by a processing tax
secretary wallace claimed it was "temporary"
Parity Prices - (ANSWER)the price which today gives a unit of the commodity the same purchasing power
as it had in 1910-1914
flexible price supports (1954-1970) - (ANSWER)(basically a price floor)
-Ag act of 1956 establish soil bank
-goal was to adjust supply by taking land out of production
-acreage reserve- short term
-conservation reserve-long term
coupled direct payments (1970-1996) - (ANSWER)-target price (income support)
-tied to price and production
partially decoupled direct payments (1996-2005) - (ANSWER)-capitalization of payments
-farmers got whether they planted or not
Early 1970s (Golden Years) - (ANSWER)Bad weather in U.S. and around the World
•Russians started buying grain
•Negative real interest rate
•Prices high "parity"
•Parity prices - that price which today gives a unit of the commodity the same purchasing power as it
had in 1910-1914
•73% increase in real net farm income 1970-73
•Land values rose 376% in the 1970s
, AGEC 429 EXAM 2 | QUESTIONS AND ANSWERS | WITH 100% SOLVED SOLUTIONS.
•Something Bad Had to Happen
1980s (bad years) - (ANSWER)-unstable farm prices caused unstable farm incomes
−Due to inelasticity of supply and demand
−Due to shifts in international demand
−Due to weather
−Due to fixity of ag resources
−Due to bad government policy decisions
-fed gov changed the way that they did bankruptcies at this time because it was so bad
What is a Farm Bill? - (ANSWER)Legislation developed by the agricultural committees of the House and
Senate that, when passed into law, authorizes the USDA to initiate(and/or maintain) and manage a wide
range of programs and program provisions for a specified period of time
-tells USDA what to do, how to do it, who to do it for, and how long
-each bill has varying length with an end date
96 Bill - (ANSWER)complete disaster, so it was replaced on time
49 act vs 18 act - (ANSWER)49 act was 11 pages long, 18 act was somewhere around 700 pages, takes a
lot more pages than what it used to, to say, "we're going to help farmers"
When the farm bill is passed - (ANSWER)its not uncommon for the farm bill to be passed after the fiscal
year has ended for that bill
-only 2 have been passed before
-midwest (breadbasket of the US) doesn't start planting until around May, so they try to have it passed
before people start planting
Prior to 2014 Farm bill - (ANSWER)no bill had started in one congress and needed to be reintroduced to
a subsequent congress
Ag policy tends to be evolutionary, not revoluationary - (ANSWER)-once a program is adopted, it tends
to last a while with small changes to it
-farmers are good at resisting change to policy
-adjustments are often costly
-wealth is affected (capitalization)
-fear of the unknown
Settlement Period: 3 legs of the stool - (ANSWER)-Morril Act (1862): donated land to the several states
and territories which provided colleges for the benefit of agricultural and mechanical arts
-Hatch Act (1887): established ag experiment stations (research)
-Smith-Lever Act (1914): set up extension system to communicate new technologies from the USDA
directly to farmers
Ag called on during WW1 to increase production and after the farm economy became depressed -
(ANSWER)Capper-Volstead Act (1922): provided limited exemptions from anti-trust laws
Food and Nutritional assistance began in 1933 - (ANSWER)direct distribution of surplus food, school
lunches, and food stamps
Farm Credit Administration (June 1933) - (ANSWER)emergency and long-term credit programs
Agricultural Adjustment Act of 1933 - (ANSWER)"the foundation of farm policy" it is the root of most of
the current policies we have today
-declared unconstitutional but 1938 act fixed the legal problem
Agricultural Act of 1949 - (ANSWER)-last farm bill without and expiration date
-forces congress to act : bc it would be costly to the government if we went by this
-parity prices
-signed in by roosevelt
,AGEC 429 EXAM 2 | QUESTIONS AND ANSWERS | WITH 100% SOLVED SOLUTIONS.
-gave secretary of ag the authority to reduce acreage by voluntary agreements, enter into agreements
with processors to control prices paid to producers,
USDA could spend money to expand markets or remove surpluses
-financed by a processing tax
secretary wallace claimed it was "temporary"
Parity Prices - (ANSWER)the price which today gives a unit of the commodity the same purchasing power
as it had in 1910-1914
flexible price supports (1954-1970) - (ANSWER)(basically a price floor)
-Ag act of 1956 establish soil bank
-goal was to adjust supply by taking land out of production
-acreage reserve- short term
-conservation reserve-long term
coupled direct payments (1970-1996) - (ANSWER)-target price (income support)
-tied to price and production
partially decoupled direct payments (1996-2005) - (ANSWER)-capitalization of payments
-farmers got whether they planted or not
Early 1970s (Golden Years) - (ANSWER)Bad weather in U.S. and around the World
•Russians started buying grain
•Negative real interest rate
•Prices high "parity"
•Parity prices - that price which today gives a unit of the commodity the same purchasing power as it
had in 1910-1914
•73% increase in real net farm income 1970-73
•Land values rose 376% in the 1970s
, AGEC 429 EXAM 2 | QUESTIONS AND ANSWERS | WITH 100% SOLVED SOLUTIONS.
•Something Bad Had to Happen
1980s (bad years) - (ANSWER)-unstable farm prices caused unstable farm incomes
−Due to inelasticity of supply and demand
−Due to shifts in international demand
−Due to weather
−Due to fixity of ag resources
−Due to bad government policy decisions
-fed gov changed the way that they did bankruptcies at this time because it was so bad
What is a Farm Bill? - (ANSWER)Legislation developed by the agricultural committees of the House and
Senate that, when passed into law, authorizes the USDA to initiate(and/or maintain) and manage a wide
range of programs and program provisions for a specified period of time
-tells USDA what to do, how to do it, who to do it for, and how long
-each bill has varying length with an end date
96 Bill - (ANSWER)complete disaster, so it was replaced on time
49 act vs 18 act - (ANSWER)49 act was 11 pages long, 18 act was somewhere around 700 pages, takes a
lot more pages than what it used to, to say, "we're going to help farmers"
When the farm bill is passed - (ANSWER)its not uncommon for the farm bill to be passed after the fiscal
year has ended for that bill
-only 2 have been passed before
-midwest (breadbasket of the US) doesn't start planting until around May, so they try to have it passed
before people start planting
Prior to 2014 Farm bill - (ANSWER)no bill had started in one congress and needed to be reintroduced to
a subsequent congress
