In the early history of the U.S., agriculture dominated the U.S. economy. Today, only about 3% of the American labor force works on farms. One reason for this change is the tremendous productivity gains achieved by farmers. These gains have put downward pressure on prices and have made it difficutly for farmers, especially smaller farmers, to earn normal profits.

The main economic event that led to government involvement in the farm economy was the Great Depression of the 1930s. As you would guess, the purpose of these programs was to cut down on the volatility of farm prices, that is, to stabilize prices, as well as to assist farmers in earning a decent living. To achieve the latter purpose requires some form of price support system to offset the tendency of prices to decline as a result of increases in supply.

Note the author?s discussion of parity price on pp. 694-695. Whenever an index is used, a base period must be chosen. This presents a challenge: how do we know which year (or years) to pick as the base period? Presumably, a "normal" year or period should be chosen, but what is normal? There is a certain amount of subjectivity involved in choosing the normal year.

Your author provides a good summary of the application of various price support programs on the bottom of pp. 695 and 696.