1 Benefit - Cost Economics of the FAIR Act * Bruce

The Agricultural Market Transition Act (AMTA) title of the 1996 FAIR Act is a novel departure in farm policy. Its fixed payments, no acreage set-asides, and avoidance of CCC commodity stockpiles provide a possible means of transition to a market-based agriculture that would not require governmental intervention to prop up the agricultural economy. Some now argue that the FAIR Act has failed, on the grounds that the federal government has spent too much, while at the same time this spending is not effectively targeted at situations and people where help is most needed. This paper lays out my assessment of the welfare economics of AMTA and two related elements of recent farm commodity policy, the marketing loan program and federal crop insurance.