And this is why futures markets make sense. If a (food) insurance seller wants to hedge their risk, they could purchase futures, driving up the price of those futures; and a way to arbitrage an increase in price between today's price and a future price is to store it (i.e. your buffer). For example, the first forward contracts on the Chicago Board of Trade, the oldest futures exchange, were food contracts. But none of these mechanisms have a necessary requirement for governmental policy intervention, save perhaps collective purchasing of insurance.
Thank you, barrkel. I have been thinking hard at your response, and I don't think I can offer a complete comment on it. I think these market mechanisms solve part of the problem, and at least do better than the current policies of USDA. However, your proposal is far from perfect and has it's own set of problems. For one, your average granny on social security is unlikely to buy any futures; and the people who does is likely to come and profiteer on her. Still, that is better than starving to death.
I have read Pollan's Omnivore Dilemma, and found his description of New Deal agriculture policies very interesting. I encourage you to have a look and compare those with the ones in effect today.
