Farm Bills: Early History

The first U.S. Farm Bill, titled the Agricultural Adjustment Act of 1933, was created by President Roosevelt as part of the New Deal and responded to several Great Depression crises. Following World War I, high and largely speculative agricultural commodity prices encouraged farmers to increase crop production while new farm technology, such as tractors and synthetic fertilizers, were also increasing yields per acre. Farm incomes in the United States had therefore been declining through the 1920s in response to rising agricultural supply and by 1929 had plummeted lower than their costs of production. In response, the Agricultural Adjustment Act of 1933 mandated acreage reduction programs to stop overproduction of major commodity crops and diminish the volatility of agricultural commodity markets. Initially, farmers received government payments to destroy crops and livestock to reduce surpluses. In subsequent Farm Bills, farmers were instead paid to fallow parcels of land. The 1933 Act also introduced price supports for specific crops, including cotton, corn, and wheat. Through this program, the government determined a floor price for a certain crop. If the market price fell below this, the government made loans available to farmers, which could be paid back when prices were high and defaulted on if prices remained low. In the case of default, the grain was collected by the government as collateral and stored until prices rose, a program dubbed the “Ever-Normal Granary.”