Agricultural Commodity Programs

Agricultural commodity programs have taken several forms in the United States. They are usually programs to meet the problem of overproduction.

Historically, American farmers were faced with a new continent to farm. At the beginning of the republic, it took about four farmers to raise enough to feed one extra American. However, in the 1860s, several laws promoting agricultural expansion were passed. One was the Homestead Act of 1862, which gave land—a quarter-section (160 acres)—as a freehold grant to those willing to settle on it to farm or ranch it. After a few years of occupation, the land became the property of the settler. During the great expansion of the railroads following the Civil War, a checkerboard pattern of sections along the railroad was used to promote railroad expansion. One section (640 acres on 1 square mile) would belong to the railroad, and the opposite section to the government. Usually both sold some of their land to immigrants.

The Homestead Act, the use of public lands for financing railroad expansion, was matched with the Morrill Act of 1862, which was the authority for the creation of a number of land grant colleges in the last decades of the 1800s. From the investment in the agricultural and mechanical land grant colleges came many new scientific advances in agriculture. The result was a vast expansion of U.S. agriculture across the continent. However, it was really an overexpansion.

[Page 15]From 1900, people began to leave their farms for a more profitable life in the towns and cities. The problem was in making a living on a farm: With the improvements in agriculture available to farmers, crop yields continually increased; however, in bumper crop years, prices became depressed as an excess of cereal grains, cotton, or other agricultural products overwhelmed the markets. The depressed prices would drive people off the land and into bankruptcy.

In wartime, prices were high, but times like the 1920s were again years of overproduction. When the Great Depression arrived in 1929, there were cases of farmers burning their crops or slaughtering their herds to keep the surplus from the market. The strategy was outrageous to many because there were many people going hungry who could not afford to buy food.

The administration of President Franklin D. Roosevelt began to address the problem of farm surpluses with a program of acreage allotments. Farmers were given a fixed amount of land that they could farm for any one crop. If the allotment was for 200 acres of corn, no more could be planted or federal agricultural agents would see that the surplus was plowed under. Even if the overage was for personal consumption, the overage was illegal. However, the more the land was limited, the more intensely it was farmed, causing production to increase on smaller amounts of land.

World War II was a time during which agricultural production was encouraged to feed vast numbers of military personnel and the starving millions in war-torn areas. However, with the end of the war, the problem of agricultural surpluses returned. The federal government instituted a commodity program under which farmers were allowed to store their crop (commodity). If the price rose, the commodity could be sold at a profit; however, if the price remained static or declined, the farmer could sell the crop to the government at a commodity support price.

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