Yes, the market, and especially the futures markets plays a big part.
But, here’s the governments control on all this, and there are two big components:
First, surpluses. The Farm Program is calculated to produce surpluses every year, and that’s usually easy to do, simply relax the controls a bit and the farmers will deliver enough grain to satisfy domestic use, exports, and extra grain in the bins throughout the year. The government even pays a subsidy to farmers to build storage, encouraging even more grain on hand.
That surplus hangs over the market like an evil specter, the storage subsidies are such that when certain trigger prices are reached, the grain goes on the market. That puts a ceiling on grain prices.
Those surpluses are a constant ogre for the farmer. Ask any farmer, even today, too large a (national) crop is one of the top five worries.
Second, the government controls how much land goes into production each year. You’ve heard the old gripe ‘yeah, those farmers......they get paid to NOT grow crops’. Well, there’s a lot of truth to that. Each spring the USDA builds the acreage allotments, and keeps refining them until the very last moment. Usually just a few weeks before planting the final revision comes out, the farmers scramble to adjust their own plans in light of the allotments and the crop is planted. Some ground may not get planted to anything.
In the 80’s the government was either brave, or desperate, depending on how you look at it, and put together a 10 year ‘set aside’ program to take cropland out of production for a 10 year period.
Another thing the program does is direct (through incentives and disincentives) what kind of crop is grown. Shortage of soybeans looming? Decrease the subsidies for planting corn, and maybe even throw in come sort of carrot for soybean acreage, such as a higher payment for set aside land if the corn/soybean acreage ration on that farm is just right. Presto! More soybeans, less corn harvested!
BUT guess what? BOTH crops have a large surplus. So, what to do? Exports, but, not too much, as we need to make sure we have enough. Enough, as defined by; crop price low enough to keep food prices down.
Now, the obvious thing is to say to the farmer, get out! Get out of that program that has all these restrictions. Farm without the government as controlling partner. At one time it was possible, but now, with nearly every farmer in the program, the resulting prices are so ‘tight’ and close to the cost of production that if the individual farmer has a short crop, and no government subsidy, he’s going to finish the year in the red.
With absolutely no hope of getting a high price for his next crop to make up this years red ink, and because the surpluses that are hanging over the market have been there for decades, and it’s unlikely they’ll go away(3 exceptions since 1960) he’s faced with what my father was finally faced with in the 60’s; enroll in the farm program, or declare bankruptcy. My father enrolled. Some chose bankruptcy. The lucky ones, like me, sell out.
I guess the farm program is one example pain amelioration. Another example is morphine. And morphine, like a government subsidy, is very addictive. After awhile, the addict gets no pleasure from the drug but he is still hooked because the withdrawal is very painful.
Someone had told me all these programs were being phased out. But I guess not.
So, you're saying that it's the government that forces the poor farmer to produce a surplus? That normally, the farmer would just plow enough land to feed himself and his family?