The role of productivity growth and farmers’ income protection policies in the decline of relative farm prices in the United States |
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Authors: | Dragan Miljkovic Hyun J. Jin Rodney Paul |
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Affiliation: | aDepartment of Agribusiness and Applied Economics, 221G Morrill Hall, North Dakota State University, Fargo, ND 58105-5636, USA;bDepartment of Industrial Economics, Chung-Ang University, South Korea;cCollege of Business, Department of Finance, St. Bonaventure University, NY, USA |
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Abstract: | The paper emphasizes three interrelated questions about the decline in relative farm to non-farm prices in the United States since 1973: (1) Is it unusual, (2) What caused it, and (3) Is it likely to continue? We find that based on historical and international evidence this phenomenon may be considered unusual. Separating farm price and income support in 1973 and growing relative productivity in agriculture have been the major contributors to changing the trend of the relative farm goods inflation. This trend is likely to continue based on predicted steady growth of relative agricultural productivity and continuation of direct payments and other forms of farm income support policies. |
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Keywords: | Relative farm prices Farm income protection Productivity growth |
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