Supply Management

Date: 21 Nov 2008 | posted in: agriculture | 0 Facebooktwitterredditmail

In the 1920’s, the farm cooperative marketing movement sought to organize commodity cooperatives that could control the supply of goods in an attempt to stabilize markets. But without an ability to control production, they failed. The idea of supply management has resurfaced every few decades since, most notably in the 1960’s and 1980’s.

In the early ’60’s, a supply management plan was proposed by Willard Cochrane under the Kennedy administration. Cochrane suggested a policy whereby farmers could approach the USDA to establish a program to set a fair price though strict production control. If a farmer committee approved the program, it would be sent to Congress, which could either accept or reject the plan (with no amendments allowed). The plan would then be implemented once 2/3 of farmers growing the commodity approved it. If the referendum was successful, the control plan became law and would be mandatory for all farmers. The litmus test for such a plan came in 1963 with a referendum on wheat supply management. However, none of the wheat states came in with enough votes to carry the plan. Fear of government intervention and the promise of new government support programs are widely cited as reasons for the proposal’s defeat. While farmers faced a threat of cuts in government support, days after Congress began working on new wheat support programs and voluntary acreage controls.

During the 1980’s farm crisis the idea of a supply management system for agriculture was proposed again, this time by Senator Tom Harkin (D-IA) and Rep. Bill Alexander (D-AK) in the 1985 Farm Policy Reform Act (S.1083).

References:

Cochrane, Willard W. 1959. “Some Further Reflections on Supply Control.” Journal of Farm Economics 61, No.4: 697-717.

More Information:

Farm Policy Reform Act

During the 1980's farm crisis the idea of a supply management system for agriculture was proposed by Senator Tom Harkin (D-IA) and Rep. Bill Alexander (D-AK). In 1985 they introduced the Farm Policy Reform Act(S.1083). Title I of the Act required the Secretary of Agriculture to conduct referendums (in 1985, 1989, 1993, and 1997) to determine by majority vote if a mandatory supply management program should be in effect for the succeeding four-year program period. If the referendum failed, the Secretary would determine the farm program for the succeeding four-year period.… Read More

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