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Abstract

Mandatory restrictions on agricultural production continue to be advocated as an alternative policy for increasing farm income while reducing farm program costs. Although farm income might rise in the short run, such programs would be costly to consumers and possibly to the Federal Treasury. An export subsidy would be needed to maintain current agricultural export levels if a mandatory production control program were used to raise prices. The cost of such a subsidy could exceed savings from eliminating Government income support programs. The program would affect agribusinesses by reducing the need for farm supplies and by reducing the amount of product handled beyond the farm gate. More generally, programs that idle productive resources to maintain higher prices may lead to production inefficiencies and to capitalization of program benefits that are captured by current landowners.

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