Comparing current and 1970 farm prosperity: Cash farm expenses
The lack of expansion in planted acres in the U.S. implies that the often-referenced food vs. fuel debate is an inaccurate characterization of the situation confronting U.S. agriculture in the 21st Century. U.S. crop agriculture has become not only a provider of food and fuel but also a provider of environmental services, such as reduced water and wind erosion and improved wildlife habitats. In other words, 21st Century Agriculture is not just characterized by an expansion into the fuel market but also by an expansion into the environmental services market. Hence, it is not a food vs. fuel dilemma but a food vs. fuel vs. environmental services dilemma. It is not unreasonable to conjecture that crop prices would be notably lower and livestock profits notably higher if all the land in CRP was in production. This observation is not a criticism of farm environmental programs. Instead, it is pointing out a fundamental difference between the current and 1970 periods of farm prosperity -- the willingness of contemporary American society to continue to support farm-based environmental services in a period of high farm commodity prices. To put this observation somewhat differently, are the events of the last 7 years asking us to ponder this question, Is U.S. society as whole choosing farm environmental services over profitability of the U.S. livestock sector?
The next post in this series will further examine the expansion in production during the 1970 and current periods of farm prosperity.
This publication is also available at http://aede.osu.edu/publications
Source: Carl Zulauf, Department of Agricultural, Environmental and Development Economics, The Ohio State University
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