Agriculture Reference
In-Depth Information
soybeans have become the dominant agricultural crops in
the United States. People really like meat, especially from
corn-finished cattle, and a corn/soybean ration is a great food
for chickens and pigs. Our love for meat, not subsidies, could
be the answer.
Or technological innovations in corn and soybeans might
have been more pronounced for these two crops than other
foods, making it cheaper to raise them. Fortunately, a simple
thought experiment can clarify the role of subsidies versus
technology. Imagine a world where there are no productivity
gains in corn but large subsidies are given. As corn produc-
tion expands in response to subsidies, the new acres will be
less productive than acres already in production. After all,
wouldn't farms utilize the best land first? If this is the case,
then the average productivity of agriculture would be falling
(average yields would be falling) as corn acreage expands.
Then imagine another world where there are no subsidies
but there are substantial productivity gains. This is a case
where agriculture becomes more productive as corn acreage
expands. In reality, subsidies and technological innovation
have occurred simultaneously, but which one has the greater
effect? This can be answered by studying whether productiv-
ity has fallen or risen in the last seventy years.
Figure 6.1 depicts corn production and yields from the
1920s to the present. Both corn production and corn produc-
tivity have been rising steadily, in tandem, over time. This rise
in production isn't from farming more acres, but getting more
out of each acre. Similar trends have taken place for almost
all of agriculture, but productivity gains have been especially
remarkable for corn.
Agricultural economists have long studied the relationship
between farm policy and farm production, and they generally
find the subsidies (we define subsidies here as any program
that delivers monetary benefits to farmers, even if indirectly
through import restrictions) have very little effect. Looking
back over the last century, the late Bruce Gardner, one of the
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