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Ag Policy, Lecture 12 Knutson, 6 th Edition Chapter 5

Ag Policy, Lecture 12 Knutson, 6 th Edition Chapter 5. Trade Impacts Review. Loan Rates Above Total Demand. Marketing Loan. Non-Recourse Loan. $. S. $. S. P 1. P 1. TD. TD. DD. DD. q 1. q 1. Q/yr. Q/yr. Loan Rates Above Total Demand. Marketing Loan. Non-Recourse Loan. $. S.

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Ag Policy, Lecture 12 Knutson, 6 th Edition Chapter 5

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  1. Ag Policy, Lecture 12Knutson, 6th Edition Chapter 5 • Trade Impacts • Review

  2. Loan Rates Above Total Demand • Marketing Loan • Non-Recourse Loan $ S $ S P1 P1 TD TD DD DD q1 q1 Q/yr Q/yr

  3. Loan Rates Above Total Demand • Marketing Loan • Non-Recourse Loan $ S $ S LR MP=LR P1 P1 TD TD DD DD q1 qp2 q1 qp2 Q/yr Q/yr

  4. Loan Rates Above Total Demand • Marketing Loan • Non-Recourse Loan $ S $ S LR MP=LR P1 P1 MP=WP TD TD DD DD qd2 q1 qp2 qd2 q1 qp2 Q/yr Q/yr CCC stocks Domestic Demand Domestic Demand Export Demand No Exports No Stocks

  5. Loan Rates above trade equilibrium • Marketing Loan • Non-Recourse Loan $ S $ S LR MP=LR MP=WP TD TD D D qdd qed qp Q/yr qdd qed qp Q/yr Domestic Demand Export Demand Export Demand CCC stocks Domestic Demand

  6. Loan Rate Below International Equilibrium • Set below competitive equilibrium • Does it matter? $ S MP=WP TD LR D qdd qp Q/yr Domestic Demand Export Demand

  7. Lecture 12, Wrap up • Price support impact on trade • Next Class, Test • Farm Problems/Issues/Goals/History • Policy History • Price Supports (Gov Purchase & Non-Recourse Loan) • Marketing Loans • Production Controls (Acreage Reduction, Quotas, Allotments) • Dairy • Supply & Demand for Trade • Price Support and Marketing Loan Impact on Trade

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