Price floors are sometimes called “price supports,” because they support a price by preventing it from falling

below a certain level. Around the world, many countries have passed laws to create agricultural price supports.

Farm prices and thus farm incomes fluctuate, sometimes widely. Even if, on average, farm incomes are

adequate, some years they can be quite low. The purpose of price supports is to prevent these swings.

The most common way price supports work is that the government enters the market and buys up the product,

adding to demand to keep prices higher than they otherwise would be. According to the Common Agricultural

Policy reform effective in 2019, the European Union (EU) will spend about 58 billion euros per year, or 65.5

billion dollars per year (with the December 2021 exchange rate), or roughly 36% of the EU budget, on price

supports for Europe’s farmers.
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