Farm 'Counter-Cyclical Assistance' [Updated May 31, 2002]   [open pdf - 39KB]

"Congress has approved legislation (P.L. 107-171) reauthorizing major farm income and commodity price support programs through crop year 2007. This legislation includes new 'counter-cyclical assistance' programs for grains, cotton, oilseeds, peanuts, and milk. The intent of counter-cyclical assistance is to provide more government support when farm prices and/or incomes decline, and less support when they improve. In fact, farmers have, for many years, been eligible for various forms of counter-cyclical assistance. At issue has been the need for, and potential impacts of, another counter-cyclical program. This report will not be updated. […] Farming often is characterized as a 'cyclical' business with exaggerated price swings that are destabilizing. Farmers respond to high prices by boosting output. However, when prices drop, farmers are not quick to cut back production. They are more likely to operate at a loss and draw down resources. Contributing to the unstable nature of the farm economy are the weather, export demand, currency exchange rate fluctuations, and the farm support and export subsidy programs of foreign competitors. Typically, farmers do not view the eventual self-correcting character of commodity prices and production with the same equanimity as economists. In fact, U.S. producers of the major crops have asked for and received federal intervention -- including various forms of counter-cyclical assistance -- to support their commodity prices and incomes for nearly the past 70 years."

Report Number:
CRS Report for Congress, RS20913
Public Domain
Retrieved From:
National Agricultural Law Center: http://www.nationalaglawcenter.org/
Media Type:
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