Farm Subsidies, Duties, Quotas, and Tariffs: Brief History

Subsidies became the cornerstone of American agricultural policy in the 1930s. Net farm incomes had fallen drastically in the Great Depression, and the solution, according to President Franklin D. Roosevelt, was to limit production as a way to boost prices. In 1933 he signed the Agricultural Adjustment Act, setting production quotas and authorizing subsidies for farmers in return for reducing crop acreage. Although they were originally intended as a crisis measure, subsidies became locked in to American agricultural policy in the following decades and remain so today. Under commodity programs, farmers receive direct cash payments to make up the difference between the market price and a guaranteed price per bushel of commodity. Indirect subsidies also are provided, to limit production. While the Federal Agriculture Improvement and Reform Act of 1996 (the “Farm Bill”) intended to change the direction of agricultural policy by reducing subsidies, direct payments increased once more in the 2002 Farm Bill and were largely retained in the 2008 Farm Bill.