2.2   Farm Policies and the Development of NAE Agriculture
Farm policies have played a major role in the transformation of the agricultural sectors in Western countries during the last six decades and clearly contributed to the rapid adop­tion of new technologies and to dramatic increases in output and productivity. The agricultural legislation and policies of most Western countries during the past fifty years have had two underlying themes. One is to provide farm families with incomes equivalent to those in other segments of society; the second is to ensure an adequate and safe food supply for all the people in the country. To these ends a complex combina­tion of measures has been produced, which at one end of the spectrum has attempted to keep small-scale farmers on the land and at the other has encouraged the consolidation of holdings into efficient mechanized units. Quotas and tariffs barriers have been used to protect local production from foreign competition. Price supports, production subsidies and supply controls have all been used to raise minimum family incomes while meeting some government budget constraints (Stanton, 1985).

2.2.1 US farm policy: A legacy of the Great Depression
The US farm policies implemented after WWII were de­signed and tried during the Great Depression. As part of the Great Depression, falling prices of agricultural products gripped all the rural areas, prompting the federal govern­ment to intervene into agricultural markets to support farm­ers' incomes, stabilize prices and guarantee cheap food to low income populations (Dmitri et al., 2005). The most im­portant instruments were production controls and govern­ment loans.
     Beginning with Franklin Roosevelt's New Deal in 1933, the solution to rapidly falling farm incomes was primar­ily price supports, achieved through dramatic reductions in supply. Supply controls for staple commodities included payments for reduced planting and government storage of market-depressing surpluses when prices fell below a prede­termined level. For perishable commodities, supply control worked through a system of marketing orders that provided negative incentives for producing beyond specified levels. In these farm programs were the seeds of later food programs, including food stamps, commodity foods and school lunch programs. The combination of price supports and supply management functioned as the general outline of Federal farm policy from 1933 until the present and continues to figure in current debates, although the mechanisms and rela­tive weights of the policies' components were modified by successive farm legislation. In some years, notably during World War II and postwar reconstruction and again during the early 1970s and mid-1990s, global supplies tightened sharply, sending demand and prices soaring above farm price supports and rendering acreage reduction programs unnecessary. But for most of the period, repeated cycles of above-average production and/or reduced global demand put downward pressure on prices, keeping the programs popular and well funded. Continued public support for di­rect intervention after World War II arose for different rea­sons. The low prices and consequent low farm incomes of the 1920s and early 1930s resulted from surpluses created

by sharply reduced global and domestic demand, beginning with Europe's return to normal production after World War I and followed by the international economic depression of the 1930s. In contrast, surpluses following World War II re­sulted from rapidly increasing productivity, exacerbated by continuing high price supports that kept production above demand.
     The apparent success of production controls and price supports in raising and maintaining farm incomes by the mid-1930s, made a continuation of these policies publicly acceptable. Nonetheless, intense debate between proponents of high price supports and those who believed farm prices should be allowed to fluctuate according to market demand continued from the mid-1950s to the mid-1960s. The de­bate was set in the context of large surpluses, low prices and efforts led by the Eisenhower administration to return the US economy and government bureaucracy to pre-New Deal, pre-World War II structures. Out of the debate—be­tween advocates of very high price supports and mandatory production controls and those who wished to end direct government market intervention—came a compromise for farm policy. The Food and Agriculture Act of 1965 made most production controls voluntary and set price supports in relation to world market prices, abandoning the "parity" levels intended to support farm income at levels comparable to the high levels achieved during the 1910s. A system of di­rect income support ("deficiency") payments compensated farmers for lower support prices. Some exports programs aimed at concessional prices and food aid programs (PL 480) were implemented during the 1950s and 1960s in ad­dition to programs already in place to promote exportations in order to deal with a part of excess output.
     The debate over price supports and supply control re­curred with enough intensity to divert the direction of policy in the mid-1980s. The new setting was the farm financial cri­sis and its aftermath, along with efforts by the Reagan presi­dency to place the American farm economy on a free-mar­ket footing. This time, with steadily increasing government stocks of program commodities and Federal budget deficits at record levels, the argument against continuing expensive government support of the farm economy gained support. At the same time, the farm crisis began to undermine some of the farm sector's confidence that domestic price supports and production controls were a very effective way to secure US farm income in a global economy. Supported US prices reduced international marketing opportunities and increas­ing global supplies undercut domestic production control ef­forts. Farm legislation passed in 1985 and 1990 maintained the traditional combination of price supports, supply con­trols and income support payments, but introduced changes that moved farmers toward greater market orientation i.e., lower price supports, greater planting flexibility and more attention to developing export opportunities for farm prod­ucts. In the 1985 Farm Bill, environmental cross compliance measures were also introduced in order to address specific issues such as soil erosion and conservation of humid areas. This Farm Bill also reintroduced direct subsidies to farm exports: Export Enhancement Program (EEP) and Targeted Export Assistance (TEA).
     The stable economic development provided by farm programs in conjunction with rapid technological devel-