MCCONNELL CHAPTER 20 AGRICULTURE ECONOMICS

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Parity

The idea that year after year a specific output of farm product should enable a farmer to acquire a constant amount of nonagriculture goods and services.

Price Supports

Government guaranteed to pay farmers a minimum price for certain farm products. These prices were artificially high.

Agribusiness

The set of economic and political relationships that organize food production for commercial purposes. It includes activities ranging from seed production, to retailing, to consumption of agricultural products.

Freedom To Farm Act

*maintained subsidies for milk, peanuts, sugar cane, cotton
*reduced subsidies for corn, wheat, rice w 7 yr phase out
*remove acreage & crop restrictions

Parity Ratio

(price of farm goods/price of non farm goods). This is the ratio of the price of farm products to the price of non-farm products. This ratio has been declining since world war 1. A declining parity price ratio implies that farmers are faring relatively worse than other sectors of the economy over time, and serves as the justification for government assistance to farmers such as agricultural price supports (price floors) and/or subsidies to farmers.

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