A VARIABLE PRICE SUPPORT FARM PROGRAM: A TRANSITION TOOL TO A FREE MARKET
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This paper analyzes a variable price support program (VPS) as an alternative to the current farm income support program. The VPS program can control U.S. agricultural production while protecting income of small farmers. The VPS is designed to alter farm level production decisions by reducing commodity support prices for each additional unit of production produced. This will serve to discourage excess aggregate production. The VPS program can be a mechanism to stabilize income of efficient small farms during the transition from the current farm programs to a free market environment. An illustrative study is used to target government program benefits to various farm-size groups.