We'll first look at a few of the characteristics of the agricultural industry. There are many producers, all are price takes. There are also many consumers, all of which are also price takers. There is generally freedom of entry and exit into the industry. It's about as close to perfect competition as you could get in a realistic scenario. Governments need to intervene for many reasons:
- To reduce price fluctuations.
- Raise farm incomes.
- Protect rural communities.
- To encourage greater self-sufficiency.