Agriculture Reference
In-Depth Information
contracting continues to expand, as described
earlier, changing the nature of relationships
between market participants. For example, pro-
duction contracts (and other vertical integration
tools) create an agency relationship. The agent
(producer) is expected to behave in concert with
the objectives of the principals (buyers) so that
these objectives can be optimally attained. This
creates a situation in which 'the manager's task
now involves selecting the boundaries of the
firm (defined by contractual and asset control
relationships) along with the more traditional
tasks' (Barry
et al
., 1992). In other words, US
agricultural producers must decide the extent to
which they are going to blend their firm with
others in a supply chain voluntarily.
Program, laws limiting agricultural pollution,
and local ordinances recognizing and protecting
the amenities provided by a rural landscape.
A number of environmental protection and/or
conservation programmes have been introduced
in farm bills since Congress defined 'sustainable
agriculture' in 1990. The examples listed here
demonstrate the wide range of issues addressed
and approaches used by government.
'Multifunctionality' is the label being used
for the new theme in agricultural policy debates.
The term refers to the existence of multiple com-
modity and non-commodity outputs that are
jointly produced by agriculture (Randall, 2002).
Cahill (2001) noted that 'food security, food
safety, animal welfare, cultural and historic her-
itage values, environmental quality, landscape,
biodiversity and rural development are just
some of the outputs claimed to belong to the
multifunctionality of the agricultural sector'.
Proponents argue that government intervention
is needed because markets do not exist for all of
these outputs, especially the non-commodity. If
economists and producers can work with policy
makers to establish markets for all of the outputs
of agriculture, and those markets can establish
values for each output, the long-run economic
viability of agriculture is sure to change for the
better (Paarlberg
et al
., 2002; Randall, 2002;
Smith, 2006). For example, Bennett
et al
. (2004)
found Australian urban dwellers are willing to
pay some positive amount to maintain rural
populations because of the environmental stew-
ardship function performed by rural residents.
Blank (2008) suggests 'America needs to
shift the focus of policy from viewing “agricul-
ture as factory floor” to “agriculture as neigh-
bourhood.” This change is needed because the
farm factory is not always profitable, and taking
the “neighbourhood” view helps us realize that
agriculture affects everyone.' With this new
view, and a multifunctionality perspective, farm-
ers and ranchers can be seen as 'stewards of the
land' that are performing a public good that
should be valued because it is essential to achiev-
ing a sustainable future. Many farmers already
view themselves as a steward in a limited sense.
Also, Chouinard
et al
. (2008) found that some
agricultural producers are willing to sacrifice
some profit to engage in stewardly farm prac-
tices. A broader notion of stewardship is based in
Blank's (2008) call for a new policy perspective.
A Modest Proposal
Economists can help advance progress toward
the goal of a sustainable agriculture by becom-
ing more active in the pursuit of the piece of the
goal's definition, which has received almost no
attention thus far. The fifth bulleted point in
Congress's definition of sustainable agriculture
asserts that agriculture affects 'the quality of life
for farmers and society as a whole' yet 'quality of
life' attributes have largely been ignored by
economists. Although the help of other social
scientists is needed to identify and define what
those attributes might be (both negative exter-
nalities and positive amenities), economists can
contribute by applying their understanding of
markets. Specifically, the most likely answer to
the question of how economic viability can be
established for a sustainable agriculture is that
government policies can assist markets in estab-
lishing the value of 'quality of life' attributes,
and the assistance of economists will be needed
for that to happen.
Quality of life attributes, such as agricul-
ture's effects on health issues and environmen-
tal quality, do not yet have values determined in
markets. This 'market failure' justifies govern-
ment intervention. Such interventions are
beginning to happen in Europe and it is being
discussed by some US agricultural groups as a
new approach to agricultural policy. Examples
of indirect attempts to recognize agriculture's
contributions to, and effects on, the quality of
life in the USA include the Conservation Reserve
