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Instructor’s Manual

to accompany

AGRICULTURAL AND FOOD POLICY

Sixth Edition

Ronald D. Knutson

Barry L. Flinchbaugh

Joe L. Outlaw

Steven L. Klose

Upper Saddle River, New Jersey

Columbus, Ohio

______

Copyright © 2007 by Pearson Education, Inc., Upper Saddle River, New Jersey 07458.

Pearson Prentice Hall. All rights reserved. Printed in the United States of America. This publication is protected by Copyright and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. For information regarding permission(s), write to: Rights and Permissions Department.

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Prentice Hall® is a registered trademark of Pearson Education, Inc.

Instructors of classes using Knutson, Penn, Flinchbaugh, & Outlaw, Agricultural and Food Policy, Sixth Edition, may reproduce material from the instructor’s manual for classroom use.

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ISBN 0-13-171874-6

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Instructor’s Manual

For

Agricultural and Food Policy, 6th Edition

The reaction to the major downsizing and simplifying of the 5th edition led to a very mixed reaction on the part of the users and potential users of this book. Those who teach students with a wide array of background in economics reacted favorably with the nonmajor student reaction being particularly positive. Those who teach mainly agricultural economics or economics majors were very negative. The major concern appeared to be with the lack of graphics.

Since the consumer is king, we have tried to respond to both the positive and negative perspectives. First, Professor Joe Outlaw was added as an author. Joe is the codirector of the Agriculture and Food Policy Center (AFPC) at Texas A&M University. As a teacher of the undergraduate course that contains mainly majors but includes some nonmajors, Joe uses graphics and was a critic of the 5th edition and was the undeserved brunt of considerable criticism at various meetings around the country. He suggested that as a compromise position between the two extreme positions we try adding an appendix at the end of two chapters. Therefore, chapter 5 (World Trade Organization) has an appendix covering the use of two country trade model to analyze barriers to trade and chapter 6 applies graphics to the analysis of domestic farm policy. These are the chapters that contained nearly all of the graphics in the 4th edition. As appendices, professors can choose whether assign them as study material or not. We are interested in the reaction this compromise strategy.

As a result of this change in strategy, chapter 2 has been changed from an economics chapter to new content that discusses the rationale for agriculture and food policy, which has been a topic for considerable discussion and debate., The concluding chapter 12 has been changed to look to the future of agriculture and food policy by stressing its impacts on the various stakeholders. The remainder of the chapters has essentially the same subject matter focus, although substantial effort has been put into updating the content for the writing of the next farm bill, which we assumed in the book would be 2007.

Change is one of the hallmarks of today’s world and certainly of agriculture and food sector. At the last moment prior to printing, Joe pointed out that we had failed to consider the impacts of the changed energy situation and agriculture’s role in satisfying our thirst for energy. This was long before President George W. Bush’s 2006 State of the Union address where he accented our overdependence on oil and called for a stronger renewable energy program. Regardless of the policy initiatives in this area, which will be many, high energy prices are making the production of energy from agriculture highly profitable. The consequences for agriculture and its policies are highly significant; much more so than is reflected in our last minutes additions to the book on energy as a force driving policy, and as an agricultural resource. To help cope with the renewable energy developments this study guide will suggest additional readings that professors may want to assign students and some homework assignments relevant to this topic.

Speaking of homework, it is always difficult to get a significant share of the students to focus on reading and studying except for a day or two before an exam, or worse yet the evening before! I used much hated weekly quizzes (they were appreciated by the better students but not by the grader). An alternative is to assign weekly homework that requires reading and, perhaps, using the Internet. It was intended that there be some questions at the end of each chapter in the book that could be used as homework, in addition to getting students to read and think about the content of the chapter and related topics. We ran out of time. To compensate, each of the chapters in this study guide includes some thought provoking question that might be used to develop a homework assignment or simply as a handout with the indication that the students should not be surprised if one or more of these questions appear on the an exam. The essay questions could be used in the same manner.

This manual provides a combination of true-false, multiple-choice, and essay questions. Philosophy on examination varies widely between professors. The easy way out is to use a combination of true-false and multiple-choice questions. Essay questions are hell to grade. Yet, the essay approach fosters thinking that prepares students for the real world. In the real world choices are seldom of a true-false, multiple-choice nature and students do not get enough practice writing.

In their many years of teaching, the authors have found that policy is much more meaningful when complemented by a discussion of current events, developments, and proposals for policy change. These topics can be picked up from the many policy newsletters that come across a professor’s desk, from the Internet, from CNN or better from Fox News. They can be enriched with a discussion of the economics of the proposal, which is often missed in news reporting or advocacy discussions. Better yet you can have them correct the bad economic reasoning of Dobbs on CCN. Just this morning I heard a commentator (guess who) suggest that the United States could get all the energy we could use from ethanol—a ridiculous assertion that agriculture students need to be able to analyze in terms of its feasibility and impacts.


Chapter 1

Farm and food policy is being constantly debated because of the changing conditions and events that influence policies and the programs. In addition to introducing the nature of policy and government programs, chapter 1 explains the forces affecting policy that result in changes in the nature of the debate and often the policies and programs used to implement them. The authors believe that students need to be sensitized to the useful distinction between policy (as guiding principles) and programs (that implement policy). It is suggested the professor complement the chapter with examples from current events by identifying and discussing the forces of change that gave rise to it as a policy issue and are likely to influence the nature of the policy debate and its eventual resolution.

Study/homework questions

  1. Of the forces of change discussed in chapter 1, which is currently having the most impact and why?
  2. Of the forces of change discussed in chapter 1, which is likely to have the most impact in the next decade and why?
  3. Energy is a force of change that was hardly on the radar screen when the 6th edition of the book was written. It will be in the 7th edition and could be a new chapter. How is this force likely to affect agriculture in the next decade? Hint: Check RL32712 on the Congressional Research Service (CRS) website.
  4. What is the most important current policy of the Bush Administration and what effect is that policy having on agriculture?

True-False

  1. A quota on cheese imports is a government policy. (F, it is a program to implement a policy.)
  2. WTO is an international program that implements a freer trade policy. (T)
  3. Agricultural and food policy mainly involves a discussion of farm programs. (F, this is one of the topics, but it also includes discussion of resource policy, nutrition policy, international trade policy, and so forth.)
  4. Policy changes generally are incremental. (T)
  5. Understanding farm policy often requires consideration of foreign policy. (T)
  6. Instability is the traditional problem confronting agriculture. (T)
  7. Farm prices are unstable because the supply and demand for food is generally quite elastic. (F, instability results from a highly inelastic supply and demand for food.)
  8. Shifts in food supply and demand are generally accompanied by proportionately larger price changes. (T)
  9. Producers and consumers of agricultural commodities are very responsive to prices in the short run. (F)
  10. The supply of farm products is generally more stable that the demand. (F, demand is generally more stable than supply. The source of instability in export demand lies largely on the supply side.)
  11. The Uruguay Round was the first time that agriculture was fully included in GATT negotiations. (T)
  12. Globalization makes economies less dependent on one another. (F, globalization makes economies more interdependent and thus more dependent on one another.)
  13. In spite of globalization, effective U.S. policy can be made without consideration of the consequences for other countries. (F)
  14. A new world order has developed that is known as energy scarcity. (F)
  15. In the 2002 farm bill debate, little attention was given to the potential for violating the Uruguay Round WTO agriculture agreement. (F)
  16. Technological advances generally lead to lower farm prices. (T)
  17. Industrialization of agriculture refers to integration throughout the food chain and brings into question the survival of the family farm. (T)
  18. Chain supply management leads to question regarding the ability of family farms to survive. (T)
  19. Biotechnology is structurally neutral. (F)
  20. In recent years the U.S. has made substantial progress in ensuring the safety of the food supply. (F, while arguments to the contrary can be made, the number of food safety questions continues to increase, particularly following the events of 9/11.)
  21. The forces of change tend to undermine the independence of the family farm. (T)
  22. Recent experience with farm bills clearly indicates that farmers’ political influence is decreasing. (F)
  23. The Senate is more farmer friendly than the House. (T)
  24. The Senate is apportioned every 10 years according to population. (F)
  25. Unforeseen events are having more impact on agriculture today than in the past. (F)
  26. Many of today’s agricultural policy issues are simply recycled from the past with a different twist. (T)
  27. Obtaining the majority of the votes inevitably involves obtaining the support of more than one interest group. (T)

Multiple Choice

  1. Which of the following are government policies: (c)

a.  NAFTA

b.  Milk price support

c.  Preserving family farms

d.  Canadian Wheat Board

e.  a and c above

  1. Which of the following do not reflect the realities of instability in agriculture: (a)

a.  Moderate sized farms are the least affected because they are generally diversified.

b.  Instability has its roots in a highly inelastic supply and demand.

c.  Farm programs generally are designed to reduce instability.

d.  Instability results in net farm income being more volatile than gross income.

e.  The 1996 farm bill increased instability.

  1. The following are consequences of globalization: (b)

a.  Countries are less dependent on one another.

b.  U.S. trade policy decisions affect other countries.

c.  Farm programs become more effective.

d.  It is easier for a country to protect its producers from outside competition.

e.  a and c above.

  1. Following implementation of U.S. decisions in the 1970s to liberalize trade: (e)

a.  It was both economically and politically infeasible to turn back.

b.  It was politically infeasible but not economically infeasible to turn back.

c.  A new world order developed.

d.  The WTO negotiations for agriculture were separated from other goods and services.

e.  a and c above.

  1. Technological advances typically have the following consequences: (c)

a.  Higher profits for all farmers who adopt.

b.  Higher prices for farmers.

c.  Excess production capacity.

d.  Reduces the need for farm programs.

e.  a and d above.

  1. Biotechnology: (e)

a.  Reduces the need for farm programs.

b.  Benefits all farmers.

c.  Reduces the effects of globalization.

d.  Has reduced barriers to trade.

e.  Has contributed to lower farm prices.

  1. Environmental regulation: (d)

a.  Is a key aspect of food safety.

b.  Contributes to an industrialized agriculture.

c.  Deals with the conservation of resources.

d.  All of the above.

e.  None of the above.

  1. The independent family farm: (d)

a.  Is undermined by biotechnology.

b.  Is undermined by traceback regulations.

c.  Is undermined by chain supply management.

d.  All of the above.

e.  None of the above.

Essay

  1. Define policy, illustrate from a current example, and identify a program that implements it.
  2. What is the difference between a policy and a program?
  3. Define agricultural and food policy; illustrate from a current example, and identify a program that implements it.
  4. What are the main sources of instability in agriculture? (Correct answer must include a discussion of inelastic supply and demand.)
  5. In the 1970s the United States abandoned the agriculture isolationist policy that it had pursued from the 1930s through the 1960s.

a.  What force led to this abandonment?

b.  Why is it now impossible to turn back?

  1. Evaluate the following statements:

a.  Globalization makes countries more independent.

b.  Technology creates an agriculture treadmill that causes excess capacity and low farm prices.

c.  One of the key forces encouraging the industrialization of agriculture is globalization.