Word: marketing
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Dates: during 1940-1949
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Agriculture is the only industry in which market prices are set by purely competitive mechanisms. But farmers have shown an appalling ignorance of classical economic theory by failing to "leave the industry" in depressed times. Ever since 1920, there have been more farmers in the country than farming needs. Some people argue that subsidy plans prolong this disequilibrium; others say that government regulation of farming is necessary to make the farmer's life tolerable and that the disquilibrium would never end anyway...
...storable goods, however, prices to the consumer under the new plan would be allowed to vary, according to supply and demand. If this market price falls below the government support price, the government will send the farmer a cheek for the difference...
...objection to this formula is that it will not respond to any major agricultural trend until five years have passed. The last ten years have been amazingly plush for agriculture, and market prices are likely to drop considerably in the future. Since the Brannan plan shifts the financial burden from the consumer to the Treasury, the immediate effect of the plan would be a large drain on the public funds. But any subsidy plan essentially involves a redistribution of income, and this becomes a question of how much income will shift from the tax-payer to the farmer...
...large-scale price support plan involves the problem of overproduction by farmers because the government is always giving them a good price. This problem is handled by marketing quotas, drawn up by the farmers themselves. A quota limits the amount of a commodity a farmer can market, if he wants to receive subsidy benefits. This method, in effect, gives the farmers monopoly powers. Under the Brannan plan, the quota system would be greatly expanded. This part of the plan has raised the howl of "government control" in Congress. The main argument against the quota system is that it is liable...
Congressional reaction to the Brannan plan indicates that it will probably not be adopted in this session and certainly will not be adopted without extensive modifications. The Administration looks for great political appeal in the plan--to the farmers with high support prices, and to labor with low market prices. Although at present the plan is largely the result of campaign promises, it contains some interesting possibilities for a long range agricultural plan...