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Agricultural Price and Income Policies Agricultural price and income policies are designed to respond to farm problems in the United States. Farm Problems Overcapacity Instability of Farm Prices Poverty Price and Income Stabilizing Programs Two-Price Plans – Different price elasticities of demand in the domestic and foreign markets are exploited to increase total revenue to agricultural producers Land Retirement Programs – Production controls are used to constrain the annual production levels of those crops that are in excess supply Price and Income Stabilizing Programs Direct Payment Programs – A market-oriented approach designed to reduce government purchases Target Price Price set by government for selected commodities. This price is achieved by supplementing the market price with a deficiency payment. Loan Rate The price per unit (bushel, bale, pound, etc.) at which the government will provide loans to farmers to enable them to hold their crops for later sales. Nonrecourse Loan An amount of money equal to support price times the quantity offered as collateral lent by the Commodity Credit Corporation (CCC).