The US agricultural policies

The US agricultural policies provide minimal and steady prices for agricultural products. The price support frequently results in huge surpluses of agricultural products, which authorities are compelled to buy and to keep prices from sharp fall. Agricultural price support, alongside with other policies inducing farmers to keep their land idle have also brought contributed in the prices paid by the American consumers to subsidize the farmers.
The American government agricultural policy supporting crop prices and farmers incomes has
resulted in federal costs of more than 85 billions dollars in 1981-86 years. There is a complex of price support policies used by the government to benefit agricultural firms. The simplest of the programs is a price floor similar to the one discussed above for wages. Such a program has been used for many years to bolster the incomes of dairy farmers However, the impact of this type of price floor is somewhat different from the minimum wage program discussed above. In the case of an effective minimum wage the surplus of workers seeking work are not employed. However, in the case of an effective price floor established for dairy products such as milk, the government actually purchases the surplus and in that way uses taxpayers money to help increase the income of mill: producers When the price floor is above the equilibrium price of milk consumers also foot the bill to assist dairy farmers by paying higher prices for milk. Because milk is not storable for long periods, the surplus milk is usually converted to powder, cheese, or butter before being stored.

In recent years government purchases of surplus milk have amounted to about 10% of total production. During the early 1980s the federal government spent over $2 billion annually to purchase surplus milk. To help reduce the program in 1986 the government purchased dairy herds of farmers who agreed to stay out of the milk business for 5 years The dairy cows purchased through this program were then slaughtered The price support floors for milk were also reduced in 1986. However, the new program is not expected to eliminate the surplus.