Agricultural Adjustment Act of 1938


 * This is an article about the "Agricultural Adjustment Act of 1938". For the act by the same name in 1933, see Agricultural Adjustment Act.

The Agricultural Adjustment Act of 1938 (P.L. 75-430) was legislation in the United States that was enacted as an alternative and replacement for the farm subsidy policies, in previous New Deal farm legislation (Agricultural Adjustment Act of 1933), that had been found unconstitutional. It also responded to the success of the Soil Conservation and Domestic Allotment Act passed in 1935.

Legislative history
During the first session of the 75th United States Congress an extension of the soil conservation plan was given consideration. Through the summer of 1937 hearings of farm leaders were conducted in various states; but the second session adjourned while the farm bill was still in the hands of a conference committee. In his message of January 3, 1938, President Franklin D. Roosevelt emphasized the work of the conference committee and hoped that a "sound, consistent measure" would be adopted. After some debate in Congress the President, on February 16, signed the measure providing "for the conservation of national soil resources." The Soil Conservation Act was to be continued as a permanent farm policy; and to promote the program, national land allotments were to be fixed at a point "to give production sufficient for domestic consumption, for exports, and for reserve supplies." To give farmers an incentive to operate within the allotments, payments were to be made by the Government. In order that "an adequate and balanced flow of agricultural commodities" might be maintained, the statute established an ever-normal granary program through a system of nonrecourse loans. "Four research laboratories are to be established at Peoria, Illinois, in the New Orleans area, in the Philadelphia area, and in the San Francisco area, to study farm needs. And if two thirds of the farmers participating in the program agreed, marketing quotas in tobacco, corn, wheat, cotton, and rice might be fixed by the Secretary of Agriculture.

Provisions
The act was the first to make price support mandatory for corn, cotton, and wheat to help maintain a sufficient supply in low production periods along with marketing quotas to keep supply in line with market demand. It established permissive supports for butter, dates, figs, hops, turpentine, rosin, pecans, prunes, raisins, barley, rye, grain sorghum, wool, winter cover-crop seeds, mohair, peanuts, and tobacco for the 1938-40 period. Also, Title V of the Act established the Federal Crop Insurance Corporation. The 1938 Act is considered part of permanent law for commodity programs and farm income support (along with the Commodity Credit Corporation (CCC) Charter Act and the Agricultural Act of 1949). Provisions of this law are often superseded by more current legislation (such as the 2002 farm bill (P.L. 101-171)). However, if the current legislation expires and new legislation is not enacted, the law reverts back to the permanent provisions of the 1938 Act.