Agricultural Adjustment Act

In 1933 a federal law from the New Deal era was put into place. This was the Agricultural Adjustment Act of 1933. The act reduced production by paying farmers subsidies to not plant on part of their land and to kill off excess livestock. This was to reduce any surplus in crops and to increase the market value of crops.

One of the task that the Roosevelt administration was given was to decrease the surpluses in milk, tobacco, wheat, field corn, rice, cotton, and hogs (Rasmussen 2.) This list expanded in the following two years, 1934 & 1935, to include potatoes, sugar cane, peanuts, grain sorghum, flax, sugar beets, barley, rye, and cattle. These products were focused on because: 1) Changes in prices of these commodities played a crucial role in deciding the prices for other important commodities. 2) These commodities were already running a surplus at the time. 3) They all required additional processing before the citizens could consume them (Rasmusen 2.)

On the 6th of January 1936 the Agricultural Adjustment Act was ruled Unconstitutional in United States v Butler. In the AAA of 1933 Farmers who reduced their crop size were paid proceeds from taxes imposed on the processors of farm products. The regulation of agriculture was deemed a state power (U.S. v. Butler)

Two years later on February 16, 1938, the Agricultural Adjustment Act was enacted. This was a replacement of the Farm Subsidiary Policy in the AAA 1933. The Act revised provisions to the previous AAA with the exception that the processors tax would no longer provide any funding. The Federal Government would now provide the funding for farming (Peters.)

Due to the success of the Soil Conservation and Domestic Allotment Act of 1936, the AAA of 1938 was enforced. The Soil Conservation and Domestic Allotment Act of 1936 paid farmers to reduce production of crops to “conserve soil” and to protect the land from further erosion. The AAA of 1938 gave mandatory price support for cotton, corn, and wheat. This would allow a proper maintenance of an adequate supply in low production periods. Marketing quotas were placed as well to maintain and keep the supply in line with demand.

Title V of the AAA of 1938 established the FCIC, Federal Crop Insurance Corporation. Which provided crop insurance protection. Farmers who were a part of the FCIC would get insurance on crops even if they were not maintained for that year. The CCC also followed this act. The Commodity Credit Corporation was enacted to “stabilize, support, and protect farm income prices” (CCC Charter Act of 1948.) The FCIC was allowed to sell, lend, make payments, buy, and engage in other activities for the purpose of stabilizing prices, assuring adequate supplies, increasing production, and facilitating marketing of agricultural goods.

“An Act to authorize the Secretary of Agriculture to stabilize prices of agricultural commodities; to amend section 22 of the Agricultural Adjustment Act, reenacted by the Agricultural Marketing Agreement Act of 1937; and for other purposes.” Was the long title for the Agricultural Act of 1948. The Agricultural Act of 1948 gave basic commodities mandatory price support at 90% parity. The parity would calculate the numbers from the previous 10 years price averages as well as the 1910-1914 base period. The AA of 1948 would amended provisions from the AAA of 1938 as well as marketing quotas and price support for tobacco, wheat, corn, and rice.

On October 31, 1949 the AAA was amended “to provide assistance to the states in the establishment, maintenance, operation, and expansion of school-lunch programs, and for other purposes.” Section 416(b) of the AAA of 1949 allowed use of the surplus goods. Due to this addition the surplus of food that the United States has can now be shipped or donated overseas to friendly nations or countries for their developmental aid. If agreed upon, certain Non Profit Organizations could get these as well.

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