Political Economy of Agriculture and other topics

Political Economy of Agriculture and other topics

DEVP 233

 

Agriculture is perceived to be a competitive industry, but in reality it has been regulated for years.

 

First we will speak about the history of US agriculture, which has been a major topic of agricultural policy research because the US moved from a developing country in the 17th/18th century to a developed country in the 20th century.

 

History of US Agriculture

The settlement of the United States and the evolution of US agriculture are unique case studies in economic development. Of course, studying this process doesn’t mean that we condone the takeover of existing civilizations by settlers nor the practices they employed. What we are interested in is the history of agriculture and agricultural policies and the lessons we can draw.

 

We will discuss agricultural policies in the US beginning around 1620 when settlers from Europe established new agricultural policies and systems. The discussion draws much from Cochrane (1979). Currently, when we speak about agricultural policies we mostly speak about price supports, subsidies, and environmental regulations and payments, but agricultural policies evolved from land and settlement policies to farm support policies to landscape and environmental quality policies.

 

We can distinguish between several stages in US agricultural development process:

  1. Search for appropriate farming technologies – 1620-1740,
  2. Establishment of viable production modes – 1740-1810.
  3. The westward movement – 1812-1900.
  4. The intensification of farming practices – 1900 – present.

 

The early periods – 1620-1920

 

In the 1600s, groups of aspiring settlers migrated from Europe to find their luck in the new world. They brought some farm animals, seeds, and equipment, and some know-how, and started settling. But not many made it; the weather and soil conditions were not accommodating and many perished. We really only read about the success stories though. From the beginning they adapted to the local conditions, even borrowed practices and crops from Native Americans, and established some modes of operation that became successful. They established several modes of operation. In the New England states, they produced grains, apples, and livestock. Some farmers started growing maize and others tobacco. In the Southern states, farmers grew tobacco, cotton, sugar cane, among other crops.

 

But the mode of operation in the two regions differed. While the north attracted many migrants from Europe, who established relatively small farms and villages, in the South the dominant form was the plantation, which relied on slave labor. We must recall that the popular mode of settlements in South America, which attracted a relatively small number of European settlers, was also the plantation model. Brazil was a major importer of slaves in the production of sugar cane. The earlier slaves in the US arrived to South Carolina for the production of sugar cane, but once the demand for cotton took off the South transitioned to it. The division between the North and the South resulted in a continuous conflict that led to the civil war.

 

While the early settlements were established on the East Coast, during the 1800s, the government had an interest in populating further west. After the Louisiana Purchase, the US government controlled nearly the entirety of what we recognize as the continental US today. While some people moved west and occupied land with no official rights (i.e. ‘squatters’), in order to attract people to move en masse, the government established a system of homesteading whereby a family was granted the rights to a parcel of land in a designated area of the west. The basic idea was that first arrivals ensured rights, but these rights were only held up when families occupied the land. This system later on applied to water rights, where it is called the prior appropriation system based on the principle of ‘first in time, first in right’ as well as ‘use it or lose it.’ As we will see later, these systems of land and resource allocation proved effective early on, but later became sources of inefficiency.

 

The government played a crucial role in the settlement process because it owned much of the new land. It used its ownership to direct the settlement process. One approach was giving land rights through homesteading. But another approach was to use land sales to finance develop of public goods. The government wasn’t able to collect taxes, but it held many assets that it could provide the public. It used land grants to incentivize the construction of the railroads, and the railroad companies owned a mile of land to each side of the tracks. Until this day, the Southern Pacific company is one of the biggest landowners in California. In each municipality, the government granted land to build schools and finance them through land sales. The establishment of rural schools was one of the major achievements of the US. Later on, land grants were used to finance universities, and every state has a land grant system. 

 

I believe that one of the reasons that US citizens expect much from the government, but don’t like to pay taxes, is that for much of its early history, the government acquired assets with little or no payment and used or sold them to provide essential services. One has to admit, though, that the investments made by the government have been effective and yielded fruits. In the beginning of the 20th century, the government realized that it needed to now raise taxes to continue, and expand, the services it provides. This led to the establishment of various forms of taxation, including the Internal Revenue Service.

 

The major rural ideology of the US, based on the reality of the North, was that family farms should be the main form of farming and that agriculture should be a competitive sector consisting of independent farmers not peasants. This ideology is called the Jeffersonian Vision, after the renowned slave-owner Thomas Jefferson. Within this ideology, the role of the government is to provide education, information and technologies. Nobel Laureate Theodore Schultz, the father of the idea of human capital, emphasized the difference between peasant and farmer (Schultz 1975). Peasants are traditional farmers who learn practices from their parents. Traditional agriculture has been in equilibrium, where yields and methods changed little, and therefore imitation was the best form of acquiring practices. A farmer lives in a dynamic environment, requiring adjustment to changes in economic conditions or technology.

 

After the start of the Industrial Revolution, and the massive expansion of global trade, the importance of adapting to change increased. Schultz distinguished between two types of human capital – worker ability, which is the physical ability to conduct tasks, and allocative ability, which is the ability to make business and management choices. He also used the term ‘the ability to deal with disequilibrium’ to describe allocative ability. Allocative ability requires literacy and numeracy, and rural schools were introduced to produce farmers with allocative ability. Moreover, the thinkers behind the idea of family farms recognized that individual farms cannot develop new technologies to address changing agricultural realities and therefore they later introduced the land grant universities with their experiment stations that developed new agricultural practices and later on cooperative extensive that transferred knowledge to farmers. The land grant colleges were established by the Morrill Act of 1862. They were established during the Civil War where the North wanted to institutionalize its way of thinking. Agricultural experimentation stations were established by the Hatch Act of 1887 and cooperative extension through the Smith-Lever Act of 1914. The US Department of Agriculture was established in 1862 and one of its major roles was to provide price information to farmers to assure competitive and fair trade.

 

The idea of a competitive farm sector that is augmented by collective actions prevailed throughout the history of US agriculture. Farmers established the farm bureau, an organization that aimed to represent them politically, and have the market muscle to obtain better terms of insurance and other products to farmers. There has been a continuous tradition of agricultural cooperatives that were established to negotiate terms of trade between farmers and buyers.  Because buyers tended to have monopolistic power, there was a need for countervailing power, and it was provided by farm cooperatives and legislation that allowed farmers to collaborate in controlling supply.

 

The 20th century

Throughout the 19th century, agriculture expanded by moving westward. Production per acre changed little, even though US agriculture acquired the capacity to adapt production systems to varying conditions. The US is a large country and adapting wheat, corn, cotton, and other products to various regions required significant efforts and innovation (Olmstead 2008). But towards the end of the century, it became clear that expansion of US agricultural production would require intensification, namely increased yield per acre. The 20th century indeed has seen significant intensification as a result of breakthroughs like the introduction of nitrogen fertilizer, modern breeding, pest control, etc. Some of these technologies were commercialized by the private sector, but their use was adapted to various locations by cooperative extension and experimental stations. While agricultural prices fluctuated reflecting changes in market conditions, they reached a peak during the first world war. During the war, the US was a food supplier for much of the world and agricultural land use peaked between 1918 and 1925.

 

Figure 1: Area of corn harvested and production, US 1866-2010, indexed to 1866=1

 

As Figure 1 demonstrates, agricultural production in the US increased proportionally to acreage until the 1930s, and since then has risen almost 5-fold while acreage harvested declined. As Figure 2 shows, crop acreage peaked around 1929 at 359.2 million acres, declined significantly during the recession, rebounded almost to its peak during the war, and then declined steadily to about 273 million acres in 1969. Since then, crop acreage has stabilized around 310 million acres. Of course, agricultural land includes cropland as well as rangeland and woodland. In total, agricultural land is about 900 million acres.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2: USDA Land in Farms, Land Use: 1850-1969

 

Figure 3 – Land use, Source: US Census of Agriculture 2012

 

Figure 4 depicts the prices of agricultural commodities for the last 100 years. Inflation-adjusted prices reached their peak during the last years of the first world war, declined drastically during the Great Depression (1929-1932), peaked again during the second world war, declined afterwards, but peaked briefly in 1973-1974 due both to the Russian wheat deal[1] and the oil embargo. In 1972, the US government sold Russia a large volume of grains (about 10 million tons) in subsidized prices not realizing that inventories were limited and the net effect was a drastic increase in prices. President Nixon imposed price controls on foods as well as restricted exports in response. The government also established a more systematic monitoring process of grain inventories. Prices then declined until around 2005 and have since risen as a result of the introduction of biofuels, but are declining again.

 

Figure 4: Major crop commodity prices in US, 1912-2014

 

The overall trends in the 20th century were declining prices and reduction in acreage. Declining prices, resulting in declining farm income, was a dominating factor in US agriculture policy. Thus many policies sought to stabilize prices, assure income, and restrict acreage.

 

Cochrane (1979) and Schultz (1964) developed a framework to analyze the major features of modern agriculture. They include:

  1. High rate of innovation.
  2. Many small firms.
  3. Homogenous product.
  4. Competitive markets.
  5. Inelastic demand.
  6. Use of natural resources.
  7. Environmental and health side effects.
  8. Lack of mobility of inputs.
  9. Credit imperfection.

 

These assumptions lead to what people have called the ‘farm problem.’ This problem has several dimensions.

 

The first dimension is that commodity farm prices tend to decline over time. The same may be true to aggregate income of agricultural commodities. Inelastic demand for agricultural commodities, competition, and technology change lead to reduced farm prices and farm income. In particular, adoption of new supply enhancing technologies by competitive industries benefited consumers but reduced the overall income of the agricultural sector due to inelastic demand. Two factors contribute to increased demand for agricultural products and therefore agricultural income. One is increased non-farm income domestically, but this effect is declining because agricultural commodities have low income elasticity in a country like the US. The second factor is increased global demand. Therefore periods of low supply overseas, for example during the wars, and opening of new markets like China and Russia tend to increase demand and prices.

 

The second dimension is instability of prices. Randomness in supply, and sometimes demand, due to changes in weather or economic conditions lead to fluctuating commodity prices. The third dimension is rural poverty. This is caused by the fact that agricultural assets, including human capital, are not mobile and cannot be easily reallocated to other uses. So reduction in farm prices leads to reduction in farm income and farm assets, and sometimes causes significant bankruptcies and crises. An additional dimension is the environmental side-effects of agriculture. Agricultural production may cause environmental and resource degradation. The great dustbowl of the 1930s was a wake-up call for the need for land stewardship. The publication of Silent Spring (Carson 1964) raised awareness of the need for pesticide management.

 

Several policies were developed to address the different dimensions of the farm problem. To address the problems of low income, the government established a series of supply control policies. In the 1950s price support policies served to increase supply and resulted in a high level of inventory, and the excess supply reduced prices even further. One solution to the excess supply problem was to send some of the excesses as foreign aid to countries that had food shortages but couldn’t afford importing food. An unintended consequence was low prices in these countries that impeded the growth of their own agriculture. Recognition of this problem set a limit on food aid, and now the aim is to use it when it is justified. Another policy was deficiency payments, where government allocated to farmers a certain quantity target (called payment yield), and based on this target were assured a price. So if the market price was below the target, they would receive a payment. This approach aimed to control supply, but still average prices increased, risk declined, and thus supply increased. To deal with this problem, governments established set aside requirements where farmers were supposed to divert a certain percentage of their land to conservation or fallowing in order to qualify for deficiency payments. The establishment of some base yield and acreage that were entitled to deficiency payments were aimed to protect income, rather than price.

 

To address instabilities in agricultural policies, the government developed inventory policies, which can be viewed as a break from supply control, but still considered as direct intervention policies. The government established a price floor and ceiling – if the actual price was below the floor, the farmers were able to keep their crop in inventory while receiving a loan at the floor level. If the actual price went above the ceiling, the farmers were required to sell and pay the loan. In many cases, the government covered or subsidized the debt service on the loan. The idea behind this scheme was to keep the price within a range. Of course there were periods when prices stayed low and inventory increased too much – indeed there was one year (1983) when the government established a Payment-in-Kind program (paid farmers not to grow certain crops and instead sold crops from inventory and paid farmers based on their production quota).

 

Another approach to deal with instability is crop insurance that insures yields, and later revenue insurance that insures revenue. Farmers pay a premium and are assured a minimum level of income based on yield or revenue targets. The premium paid is based on several alternative levels of coverage. The program is subsidized heavily, so the premiums paid do not cover expected payments. The government also covers administrative costs of this program. In addition to insurance, government has disaster assistance programs in cases of catastrophes. Most of the government programs applied to major commodities, like corn, wheat, and cotton. There are also programs for peanuts and others for dairy. Specialty crops, like vegetables, grown in specific states are not part of the major USDA programs, even though they were recently covered by crop insurance programs. But for these crops, growers may organize together and vote on product quality standards enforceable through a marketing order.

 

Agricultural policies include several environmental regulations. The initial set aside program has become the payment for ecosystem services programs. The most notable is the Conservation Reserve Program where farmers are paid to modify their production activities towards actions that provide ecological benefits. These benefits can be reduction of soil erosion, wind erosion, protection of native plants, etc. Because farmers are subject to credit constraints, government instituted credit products provided by the Farm Credit Administration.

 

One of the major problems, especially in California, was labor shortages. The government developed programs to recruit cheap, international labor. One such program was the Bracero Program, where farm workers were recruited from Mexico to work in the US at very cheap costs. The program was abolished in 1963 and afterwards farm workers unionized while migrants continued to enter the US, now illegally, and work in farms at a higher rate than during Bracero. Farmers were active in supporting policies to reduce immigration restrictions and allow illegal workers to become citizens. During the 1980s, the Simpson-Mazzoli bill provided citizenship to a large number of previously illegal immigrants, legalized some illegal seasonal agriculture workers, and required only self-reporting of worker status by employers. To comply with some of the regulations, many farm owners used labor contractors to hire their seasonal workers.

 

Changes in perspectives on agriculture

Over time, the farm population declined, average income in agriculture increased, and farmers are not poorer than the rest of the population (Gardner 1992). In addition, international trade barriers have been reduced, allowing farmers access to more export markets, and farmers continue to develop differentiated products that enable higher income. In addition, the US was part of the World Trade Organization, which aimed to reduce barriers to trade, including decreased subsidies for agriculture. Deficiency payments were eliminated, but there was increased emphasis on crop insurance as well as green policies.

 

These new trends resulted in reduction of policies focused on direct intervention strategies but expansion of insurance programs that became the new carrier of subsidies, as well as continuation of environmental policies. With growing awareness of climate change, there is an effort to reduce agricultural greenhouse gas emissions and, at the same time, to use agriculture to sequester carbon. One of the challenges is to incorporate credits from carbon sequestration in the various carbon reduction policies and markets.

 

The concern about climate change, combined with concern over energy security, also led to the introduction of policies targeted at increasing the production of biofuels. Agricultural policies thus became meshed with energy policies. The introduction of biofuel policies was part of the growing emphasis on establishing the bioeconomy, which we will cover in more detail later on.

 

The analysis thus far ignores many aspects of agriculture, for instance food safety, nutrition, water quality regulations, and others. There are many other challenging issues in agriculture. To what extent should the government continue to support agricultural research? What is the role of intellectual property rights on seeds and genetic material? Furthermore, to understand agricultural policies better, one must consider political economy issues that will be discussed later on.

 

On the Nature of Agricultural Policy

Nobel laureate Theodore Schultz was an agricultural development economist who studied agricultural development. He distinguished between agricultural policy of developed and developing countries.

 

Developing countries: In many developing countries agriculture has been heavily taxed, and in many places, government imposed a ceiling on agricultural prices. Taxation, especially of exported goods, occurred because it was easy to monitor export of goods (e.g. cacao, bananas, coffee, etc), and farmers were less organized compared to industries or the masses in cities. Upper bounds on food commodities that were consumed domestically were introduced as a mechanism to assure cheap food for the masses. Of course, this type of policy discouraged production and at times led to shortages. This contributed to hunger problems and necessitated foreign aid. To achieve domestic food targets, sometimes governments impose quotas that need to be sold at a low price. In some instances, when farmers didn’t reach these quotas, food was confiscated. Schultz (1964) always advocated limiting this regulatory regime and taxation to instead allow for markets to determine price and supply – and indeed, there is a literature that reduction of restriction increases supply, with the best example being China.

 

Increase in agricultural productivity requires investment in research and development. In many countries, agriculture is bifurcated with a few large plantations, and many smallholders. Plantations may emphasize international commodities and may be linked to a global network of knowledge. Smallholders may depend on public research and extension. However, because governments in developing countries lack resources, they also are unable to sufficiently support extension and research. In many countries, the local universities and extension benefited significantly from the contribution of donors and the international research centers. Nevertheless, China, India, Mexico, and Brazil among others have developed powerful research institutes that work with the CGIAR centers to develop the Green Revolution varieties. Research capabilities in these countries have evolved significantly, and today they have a strong private sector that conducts research and introduces commercial products to agricultural producers. On the other hand, in African countries, and some Central American and South Asian countries, the private sector is weaker and are dependent on donors to generate physical and human capital for agriculture.

 

When agricultural commodity prices were capped and productivity was stagnating, government “contributed” to increase productivity by not regulating natural resources, like water, soil, or forest. In India, for example, hydroenergy was used to subsidize cheap electricity for pumping, which led to a severe problem of groundwater depletion. In many countries, deforestation has become a major contributor to increase production, for example expansion of palm oil in Indonesia. Thus, the political system has been such that future generations are paying for subsidizing current agricultural production. This doesn’t mean that we need to reduce agricultural production in developing countries, but rather invest in improving productivity while regulating externalities. Still, underinvestment in agriculture, in many cases, is a result of inability to enforce contracts and of excessive regulation and corruption.

 

Developed countries: While agriculture has been taxed in developing countries, it has been subsidized in many developed countries, as shown in the case of US agriculture. Agricultural lobbies have been strong, especially for major commodities grown in different regions. In the US Senate, each state has two representatives, and so agricultural states with low population (e.g. Wyoming, South Dakota, etc) use their power to obtain support for commodities grown. A more interesting coalition is between agricultural states and large urban states that has resulted in agricultural policies that include major food aid program (SNAP, WIC, etc) and agricultural support programs. In the last few years, most of the USDA budget has been used for food aid programs. Notice that not all commodities receive the same level of protection. Corn, wheat, and dairy, which are farmed throughout the country, and southern crops, like peanuts, tobacco and cotton, have benefited from federal support more than other crops. Fruits and vegetables, as well as livestock, have received less support. The federal government produces mechanisms (called marketing order), which allow producers of fruits and vegetables to restrict supply. The government also uses tariffs to restrict import from the rest of the world, especially when the imports are competing with US farms.

 

An important product is sugar. The US historically imported sugar, and much of it from Cuba. But after Castro rose to power, the US imposed a quota restricting sugar imports, and divided the quota to friendly regimes. The price of sugar in the US went up, which increased local production of sugar cane, and the use of corn syrup to replace sugar. The international price of sugar went down because of the reduction in US imports; while the few countries that got contracts for exporting to the US at the high US price gained a lot. Here we see how food was used to serve political purposes. One implication was that price of sugar to US consumers was higher, but with the concern about obesity, this may not be as bad as it was seen. Of course, even with these higher prices, sugary foods are cheaper than fruits and vegetables, and people like sugar, despite its health effects. So, there are now attempts to reduce sugar consumption by incentives and education (Cash, Sunding, Zilberman 2005). In the US, water has been subsidized, as well as R&D, but pesticides have been regulated.

 

In parliamentary European countries, the representatives of agricultural regions used their power to protect agricultural commodity prices. Like in the US, prices of grains and dairy have been subsidized and tariffs were imposed on imports. Both in the US and Europe, there has been a transition to support of environmental sustainability activities. They gained support from farmers because they were used as mechanisms to reduce supply.

 

One important development that has been seen and documented by Anderson, Rausser, and Swinnen (2013) is a reduction of price distortion due to GATT and WTO agreements. As Figure 5, the rate of agricultural commodity price distortion has declined. Namely, subsidies in developed countries declined, and the taxation in developing countries has decreased. Some developing countries, like China, moved from taxing agriculture to subsidizing it. Figure 6 illustrates that the big difference between developed and developing countries is in their relative support to agricultural producers.

 

Figure 5

Figure 6

 

The WTO introduced the notion of decoupling where support wasn’t aimed to distort prices, and develop ranking of distortion among different types of policies. So subsidies are considered to be less desirable than insurance, which is further considered to be less desirable than environmental policies. The desirability is from the perspective of social welfare perspective, and the trade agreements set limits on the amount governments could use subsidies and crop insurance. This regulation led to expansion of crop insurance, which has become an implicit form of crop insurance. In this case, farmers and insurance agencies became strong supporters of these schemes.

 

Developed countries subsidize agricultural research in order to have inexpensive food. Overall, the social rate of return for agricultural research is high, which implies it is underprovided. At the optimum, the rate of return of agricultural research should be equal to the discount rate. But while the discount rate hovers around 0%-5%, the rate of return for agricultural investments is above 15%, and many times approaches 40%. Farmers are aware that research that increases productivity reduces prices, but yet they need it to address sources of crop loss and provide new products. Allocation of funding to research is political – federal governments support research for major commodities that grow in many states, but individual states support research for specific crops, and then farmers’ associations further support research being exempt from anti-trust activities. One argument for support of agricultural commodity prices in developed countries is to compensate farmers for the increase in supply, and reduced prices, generated by public research.

 

In many developed and developing countries, governments have wanted to expand agricultural land use and to settle frontier areas, and therefore subsidized settlement in these areas, especially indirectly by providing property rights to settlers. This has occurred throughout the world. Governments also invested in transportation and irrigation infrastructure to spur development. Overall, there is wide agreement that improved transportation tends to be beneficial, but at the same time, excessive irrigation without regulation may cause depletion of resources.

 

Political economy of agricultural technology

 

It is useful to recognize how different types of technology affects different groups in order to understand the basic camps that shape political economy debates on various topics. We will illustrate it in the case of agricultural technology.

 

In developed countries, more and more agricultural research is conducted by the private sector, and property rights to agricultural innovation is moving to the private sector. So the political economy of technology considers the interest of consumers, farmers of different sectors, environmentalists, input providers, etc. For example, in the case of agricultural biotechnology, companies that developed the technology will lobby for it while companies that stand to lose will support opposition to it. Consumers may benefit, and they may be both final consumers or livestock producers in the case of technologies that increase feedstocks. Then there are environmental groups, and political attitudes vary by countries. Countries that invent technologies are more likely to support it.

 

Political economy of biofuels is quite interesting. In the case of biofuels that are produced from corn or sugarcane, crop producers support it due to increase in output price. Livestock producers are against corn ethanol, on the other hand. Consumers, at least in the short-run, are divided – while drivers may like it due to downward pressure on fuel prices, the impact on food prices will result in negative impacts on some low-income consumers (grain comprises a low percentage of expense of food in the US, but not in developing countries). Petroleum companies will support some level of ethanol because it reduces their cost because ethanol increases octane of fuel. But beyond a certain level, oil companies will oppose biotechnology because it reduces the price of fuel. Environmentalists will support it if it reduces greenhouse gases; but the reduction in greenhouse gases, in many cases, is not significant and biofuels may lead to expansion of agricultural acreage.

 

Agricultural technologies aimed at labor savings have caused major debates. The US developed a Bracero program where Mexican workers would come to the US and work as seasonal farm workers, and then required to return. As another example, Vietnam had a program that shipped workers to Russia and now Taiwan. The cotton harvester in the 1950s in the US, reduced the demand for sharecroppers in the South, and contributed to the major migration from the South to the North, while allowing President Johnson to support liberal policies. The 1960s led to the abolition of the Bracero program and led to the introduction of the tomato harvester as well as unionization of farm labor in California. The farm labor unions and activists sued the UC system for developing the harvester because it reduced the power of the farm workers. When it comes to automation of agriculture then, there are those that benefit (farmers, high level farm workers, some farmers) and those that lose (most farm workers). When there are good jobs in urban areas, introduction of technologies to automate processes is made easier.

 

Today, experts expect in California and Europe agriculture to see increased mechanization. On one hand, due to supply factors and improved information technologies, as well as increased minimal wage and reduced migration from Mexico to the US. In the future, we can expect other interesting technologies. One example is cultured meat that relies on biological processes to produce meat products (e.g. hamburgers). It is done without the use of animals, but with the use of animal proteins and enzymes and converting feedstock, like soybean, to meat. The research into this technology is pushed by rich investors, some of whom are vegan and others seeking a disruptive technology.

 

This technology may lead to significant changes in agriculture. In the long-run, it will significantly reduce the size of the livestock sector, and the communities that depend on it. It will reduce the acreage of land allocated to grains and other meat feedstocks, and may provide more water and land for other uses. It may also reduce the greenhouse gas impact of agriculture, and actually provide more land for bio-based products, and the bioeconomy. Of course, there will be many supporters (investors, environmentalists, consumers) but also opposed to it (livestock producers, etc). The acceptance of this technology will vary by different regions based on their conditions – it may be adopted first in some developed countries that export meat, and adopted later in livestock dependent, developing countries. Signing a global agreement on climate change may lead to enhance acceptance of this technology.

 

Conclusion

Agriculture is considered a traditional sector, but in some developing countries it is stagnant. In developed countries and in many sectors of developing countries it has actually modernized significantly and industrialized. It has gone through many changes and is likely to evolve further. But the extent and rate of these changes are affected by political considerations. Generally, agriculture becomes more open and competitive, but still is subject to a lot of regulation and market distortion. Understanding the impact of different policies and technologies in agriculture requires understanding of economics, but even more of the political economy.

 

References

 

Anderson, Kym, Gordon Rausser, and Johan Swinnen. “Political economy of public policies: insights from distortions to agricultural and food markets.” Journal of Economic Literature 51, no. 2 (2013): 423-477.

 

Carson, Rachel. Silent spring. Houghton Mifflin Harcourt, 1964.

 

Cash, Sean B., David L. Sunding, and David Zilberman. “Fat taxes and thin subsidies: prices, diet, and health outcomes.” Acta Agriculturae Scand Section C 2, no. 3-4 (2005): 167-174.

 

Cochrane, Willard W. The development of American agriculture: A historical analysis. U of Minnesota Press, 1979.

 

Gardner, Bruce L. “Changing economic perspectives on the farm problem.” Journal of economic literature 30, no. 1 (1992): 62-101.

 

Olmstead, A. L., & Rhode, P. W. (2008). Creating Abundance. Cambridge Books.

 

Schultz, T. W. (1964). Transforming traditional agriculture. Transforming traditional agriculture.

 

Schultz, Theodore W. “The value of the ability to deal with disequilibria.” Journal of economic literature 13.3 (1975): 827-846.

 

 

[1] See https://en.wikipedia.org/wiki/Great_grain_robbery

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