THE CHANGING STRUCTURE OF AGRICULTURE



that its production function is responsive to technical advance and
to changes in the relative prices of inputs. It is finding that its de-
mand function is responsive to changes in consumer incomes and in
the relative prices of outputs. It is finding that it needs knowledge of
new technical coefficients of production, new conditions in the sup-
ply of inputs, new conditions in demand for outputs, and new con-
ditions in the supply of capital funds. These new facts and conditions
are arising at an ever increasing rate.

As Sune Carlson pointed out in 1939 in his classic essay, The
Pure Theory of Production,
these are “the forces which influence
the entrepreneur in his decisions on what to produce and what meth-
ods of production to use.” A rational and informed entrepreneur will
operate within the forces to maximize their contribution to his own
personal goals. As these forces change, so do the plans and actions
of the entrepreneur. This responsiveness of individuals to the set of
incentives facing them offers a natural means for outsiders to use in
changing actions.

SOME IMPLICATIONS OF PAST AND PROSPECTIVE
CHANGES IN STRUCTURE

Outside forces have altered conditions facing farmers. Some, but
not all, of these alterations have been made by the government.
Free land and low transport costs, in part a result of land grants to
railroads, are examples from days when government was expected
not to meddle in private initiative. More recently, control of market-
ing and direct price supports for dairy products, wheat, and cotton,
with no similar action for feed grains and meats, may have con-
tributed to a shift of consumption toward fruits and vegetables, meat,
and synthetic fibers. Increased consumer incomes are usually cred-
ited for these. With recently increasing prices of animal products,
relatively, as a result in part of feed grain and other programs which
have diverted land to soybeans, consumption may be tending to shift
again to crops, but this time in the way of plant protein analogs as
substitutes for meat and milk products.

Distribution of Assets and Income

The effects of explicit agricultural policies of the past have usually
been reflected in changes in land values and in prices of food and
fiber to consumers. We have used practically all devices imaginable
in providing, and then maintaining, value to a natural resource with
which the United States fortunately is well blessed and which, due to
many factors some of which cannot be specified, was rapidly devel-
oped through a conscious policy of the federal government.

IOl



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