Managing extreme price variability has long been a major priority of US agricultural policy. Various policy instruments have been implemented through the last fifty years, ranging from government direct intervention in planting decisions to crop insurance. The transition to “market-driven” mechanisms, has also meant an apparent shift from price stability to farm income stability. An analysis of a “what if” scenario, indicates that if during the 1998-2010 period the stabilization instruments prevailing through 1996 would have been in effect, prices would have been higher during the low price years and slightly lower during the high price years years resulting in a lower level of government costs. As follow-up to this work a methodology to analyze the impacts of a global food reserve will be discussed.
Dr. Daniel De La Torre Ugarte is a professor in the Department of Agricultural and Resource Economics and Co-Director of the Agricultural Policy Analysis Center, University of Tennessee Institute of Agriculture.