ABSTRACT
Far over one-half century the primary goal of U.S. agricultural policy has been to enhance and stabilize farm prices and income, Much of this policy has been directed towards the grains sector. The findings fraa two research studies offer insights into the stabilization of alternative feed grain policies.
Edelman and ifertin used a stochastic model of the U.S. com and soybean markets to analyze alternative com programs. Policies which raised loan rates and target prices reduced price and incase instability but sharply increased treasury outlays and stock levels.
Dixit and Martin estimated an econometric model of the U.S. coarse grains sector with endogenous policy variables, i.e., loan rates, effective support prices, acreage set-aside, and government-influenced stocks. Major production shocks which affect U.S. export demand had three- to five-year effects on both tte market and policy variables.
The current debate on feed grain polity alternatives has focused primarily cn price and income levels and government budget outlays and ignored stability considerations. While lower support prices can reduce gpvemnent budget outlays, such policies can result in greater price and incaae instability in the feed grain sector.
