These policy changes have shifted stock holdings from the public sector to the private hands of farmers and merchants. Outside of the emergency reserves, stocks are essentially at pipeline levels the level needed to satisfy the seasonal needs of domestic and export markets. Tighter stocks mean more price volatility. That is, in the absence of discretionary CCC stocks, prices can be expected to move over a wider range and be more responsive to actual and perceived changes in supply and demand and other market disruptions. Because of agriculture's dependence on a global market place, the actual or perceived changes in supply and demand or other market disruptions are not confined solely to the United States.
Exposure is a global reality.
The authors conclude that the 1996 Farm Bill has the net effect of increasing farmers' price and income risk exposure. Reaching this conclusion requires a balancing of opposing forces. Favoring greater stability, a number of farm program provisions that may, at times, have added to price and income volatility were eliminated by the 1996 Farm Bill. In addition, flexibility increases farmers' ability to adjust to expected price changes and, with globalization, shifts in U.S. production may have relatively less price effect than in the past. Favoring greater instability, tighter stocks suggest more price movement in response to changes in supply and demand.