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A Proposed Allocative Mechanism for U.S. Food Aid
Author(s) -
Tweeten Luther G.
Publication year - 1966
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1236614
Subject(s) - allocative efficiency , mechanism (biology) , food aid , economics , business , microeconomics , food security , philosophy , epistemology , biology , agriculture , ecology
Abstract Selected data support the conclusion that on the average the United States has provided a proper balance of domestic farm production controls versus food exports to handle excess farm production capacity. The allocation has been much less than optimum at the margin, however, and strong tendencies exist to overdo food aid. A mechanism is proposed in this article that “adjusts” prices for institutional factors but harnesses the inherent equilibrating forces of the market. The method achieves an optimum balance between food and nonfood aid and between exports and production controls to handle excess U.S. farm production capacity. It is proposed that all our foreign aid be given as cash and that foreign aid recipients be permitted to purchase U.S. farm commodities at a discount. The discount as a percent of market value should be equal to the USDA cost of inducing farmers not to produce $1 of farm commodities.