AGEC 429 EXAM 2 QUESTIONS AND
ANSWERS 100% PASS 2026/2027
Ag policy tends to be evolutionary, not revoluationary - ANS -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 - ANS -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 - ANS Capper-Volstead Act (1922): provided limited exemptions from anti-trust
laws
Food and Nutritional assistance began in 1933 - ANS direct distribution of surplus food,
school lunches, and food stamps
@2026 ALLRIGHTS RESERVED 1
,Farm Credit Administration (June 1933) - ANS emergency and long-term credit programs
Agricultural Adjustment Act of 1933 - ANS "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 - ANS -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
-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 - ANS 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) - ANS (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) - ANS -target price (income support)
@2026 ALLRIGHTS RESERVED 2
, -tied to price and production
partially decoupled direct payments (1996-2005) - ANS -capitalization of payments
-farmers got whether they planted or not
Early 1970s (Golden Years) - ANS 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
•Something Bad Had to Happen
1980s (bad years) - ANS -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? - ANS 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
@2026 ALLRIGHTS RESERVED 3
ANSWERS 100% PASS 2026/2027
Ag policy tends to be evolutionary, not revoluationary - ANS -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 - ANS -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 - ANS Capper-Volstead Act (1922): provided limited exemptions from anti-trust
laws
Food and Nutritional assistance began in 1933 - ANS direct distribution of surplus food,
school lunches, and food stamps
@2026 ALLRIGHTS RESERVED 1
,Farm Credit Administration (June 1933) - ANS emergency and long-term credit programs
Agricultural Adjustment Act of 1933 - ANS "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 - ANS -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
-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 - ANS 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) - ANS (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) - ANS -target price (income support)
@2026 ALLRIGHTS RESERVED 2
, -tied to price and production
partially decoupled direct payments (1996-2005) - ANS -capitalization of payments
-farmers got whether they planted or not
Early 1970s (Golden Years) - ANS 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
•Something Bad Had to Happen
1980s (bad years) - ANS -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? - ANS 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
@2026 ALLRIGHTS RESERVED 3
