An Analysis of the 1964 Wheat Option
1969
Moszer, Max
Wheat farmers operate in a quasi free market in which guaranteed price minima are available upon satisfaction of governmental imposed preconditions. A method is developed with which farmers can evaluate the profitability of available alternatives. In general, there must be sufficient land so that the acreage of wheat relative to the allotment exceeds the ratio of the loan rate to the expected free market price. These break even criteria can be used by policy planners to evaluate proposed programs and to determine their efficacy before their implementation. Ideally, programs should be structured so that the most profitable alternative for the farmer is also the one that will achieve the policy goal. An analysis of statewide aggregate data confirms the theoretical conclusion, based on this methodology, that full participation without additional voluntary diversion was the most profitable alternative open to the wheat farmer in 1964.
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