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How did the Agricultural Adjustment Administration try to raise farm prices?
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Great Depression
Unemployed men standing in line outside a soup kitchen, Chicago.
The Agricultural Adjustment Administration (AAA) sought to raise farm prices during the Great Depression by reducing agricultural surpluses, thereby increasing the purchasing power of farmers to levels seen during the stable period of 1909–14.12
To achieve this, the AAA implemented several key strategies:
- Curtailing Production: The administration utilized a "domestic allotment" plan, which provided subsidies to farmers who voluntarily reduced their acreage or total production of basic commodities, such as wheat, corn, cotton, tobacco, rice, hogs, and milk.12
- Financial Support: The Commodity Credit Corporation was established to provide price-supporting loans and purchase specific commodities. Additionally, the AAA issued direct benefit payments to farmers to offset the income lost from reduced production.12
- Processing Taxes: To fund these subsidies, the government imposed a tax on processors—such as millers or slaughterhouses—calculated based on the difference between current market prices and the target "fair exchange value" of the goods.2