What Are The Crop Restrictions In The Economy?

In response to falling incomes, farmers have often lobbied the federal government for economic assistance. Over the years, governments at home and abroad have taken many steps to help farmers. They have raised prices through price supports; they have curbed imports through tariffs and quotas, and they have sometimes simply sent checks to farmers who agreed not to produce on their land.
The paradox of the bumper harvest has an interesting application here. Many governments attempt to help farmers by reducing their production. If the department of agriculture requires every farmer to reduce the amount of production, the effect is shifting of the supply curve up and to the left. Because food demands are inelastic, crop restrictions not only raise the price of crops but also tend to raise farmers, total revenue and earnings. Just as bumper harvests hurt farmers, crop restrictions tend to raise farm incomes. Of course, consumers are hurt by the crop restrictions and higher prices, just as they would be if a flood or drought created a scarcity of food.
Production restrictions are typical of government market interference that raises the incomes of one group at the expense of others. The gain of farmers is actually less than the harm to consumers.