Agricultural Adjustment Act Law and Legal Definition

The Agricultural Adjustment Act (Act) restricts agricultural production in New Deal. New Deal is a series of economic programs passed by U.S. Congress. The Act is considered to be the first modern U.S. farm bill. The Act created a new agency called the agricultural adjustment administration to oversee the distribution of agriculture subsidies. The Act established and maintained balance between production and consumption of agricultural commodities. The Act also reestablished prices to farmers at a level that gave agricultural commodities a purchasing power with respect to articles that farmers buy.

In Butler v. United States, 130 S. Ct. 777 (U.S. 2009), the court held that the Act was unconstitutional for levying tax on the processors only to have it paid back to the farmers. However, the Agricultural Adjustment Act of 1938 remedied these shortcomings.