If during the term of the loan the market price rises above the support price farmers repay the loans with interest and sell the grain in the market. And a common system of price supports took the place of the former national systems.
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Other articles where price support is discussed.
Price support economics. It is the support of certain price levels at or above market values by the government. A price support scheme can also be an agreement set in order by the gov. The united states currently uses a hybrid approach to price supports that also involves loans.
In economics a price support may be either a subsidy a production quota or a price control each with the intended effect of keeping the market price of a good higher than the competitive equilibrium level. Price support in economics topic from longman dictionary of contemporary english price support ˈprice supˌport noun uncountable pe a system in which the government keeps the price of a product at a particular level by giving the producer money or buying the product itself examples from the corpus price support a switch from price support to income support comes dear. The support price is called the loan rate the ccc accepts the grain as collateral for the loan.
In fact a price support can be defined such that it s not binding under normal economic conditions and only kicks in when demand is weaker than normal and would otherwise drive prices down and create insurmountable losses for producers. Development of a common agricultural policy. At harvest the ccc gives grain farmers nine month loans equal to their production times the support price.
In the case of a price control a price support is the minimum legal price a seller may charge typically placed above equilibrium.
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