U.S. Policy for Agricultural Adjustment

Domestic and international factors may combine to stimulate change in US agricultural policies and reductions in the costs of support. This would create additional pressures for economic adjustment in the sector. Current U.S. agricultural policies are not oriented to facilitating such adjustment. A trade adjustment program for agriculture, recently included as part of U.S. trade legislation, continues the traditional focus on income support. We discuss the reorientation of existing agricultural policies to facilitate economic adjustment resulting from the reform of domestic agricultural and trade policies. We focus on measures to address three key areas: 1. asset value reductions; 2. human capital issues; and 3. persistent poverty. Estimates of costs suggest that after an initial period, during which compensation for reductions in asset values would be made, the ongoing costs of an active adjustment policy for agriculture would be substantially lower than existing programs