Changing Economic Perspectives on the Farm Problem

Farming as a means of livelihood in the US has long been seen as in a recurrent state of crisis, with bankruptcy an ever-present threat and the necessity of continual governmental assistance to avert natural or economic disaster. The surprise that gradually revealed itself during the postwar decades is that, while the farm problem disappeared, the interventions did not, and indeed increased. Policy to support farmers, if it ever really was based on the existence of a chronic low-income problem in agriculture, no longer can claim that rationale. Three issues bear on the cause of a low-income problem among farmers: 1. the role of technological change in reducing the demand for farm inputs, particularly labor, 2. the extent to which the agricultural sector is characterized by specific factors other than land, and 3. the elasticity of export demand. Three other issues bear on agricultural policies: 1. the effect of commodity programs on farm incomes, 2. the overall net social benefits of farm policies, and 3. the explanation of governmental intervention in agricultural commodity markets.