Published: January 30, 2004 12:00 am            

Readers' Retreat: Cochrane still speaks on agriculture economics

"Why, in the face of falling farm prices and declining gross incomes, do farmers persist in adopting new technologies and thus expanding output? Why, in the 1950s, have farmers pushed aggregate output ahead of demand through widespread technological advance and thus driven down the prices of their own products? And why are they likely to keep right on behaving in this seemingly irrational manner?"

Economist Willard Cochrane asked those questions in 1958 in a chapter for a book called "Farm Prices: Myth and Reality." They have found their way into Cochrane's new book "The Curse of American Agricultural Abundance: A Sustainable Solution."

Cochrane, who was an 88-year-old emeritus professor of economics when he finished the book in 2003, has been a influential presence in agricultural economics for a long time. He was an economic adviser to John F. Kennedy as well as an adviser to the United Nations and the government of India.

In fact, Cochrane has been around long enough for his colleague, University of Minnesota Economist Richard Levins, to write his biography, "William Cochrane and the American Family Farm."

We are fortunate to have someone of Cochrane's depth of experience and wisdom among us. It would be well for us to listen to him. He did, for instance, explain in 1958 why farmers keep pushing down prices by adapting new technologies. His answer is as good today as it was then. He did explain in the 1950s why increasingly affluent - and largely overfed - Americans will stop spending more money on farm products. They will likely spend more money on eating food at restaurants or more money for a perceived higher value, he explained, but the net result will not be an increased demand for hogs or corn.

But, "The Curse of American Agricultural Abundance" is not merely a recycling of still useful ideas from the 1950s. Rather, it is Cochrane's dipping into his deep well of wisdom and experience and coming up with clear and bold suggestions for agriculture's future.

In the book, Cochrane takes excerpts from his significant body of work from two periods of American agriculture; 1953 to 1966 and 1997 to 2002. With observation from those two largely similar periods, he then offers a path toward future solutions.

"But, two things about American agriculture never seem to change," he writes in the book's prologue, "first, its capacity to produce abundantly and, second, the inability of our social and economic system to make effective use of that abundance. The propensity for American agriculture to produce too much, and the failure of our social and economic system to make effective use of that unending abundance, is the subject of this book."

Whether or not Cochrane's book will help hew a path out of the thicket of America's agricultural dilemma will be determined by historians. But, his writings deserve attention from and discussion among those of us in agriculture who are affected by the big economic events but often feel helpless in the face of them.

His 1950s discussions about elasticity should, long ago, have brought pause to those in the agricultural community who thought we could promote our way out of excess supply. Those same discussions echo the much more modern thinking on the importance of farmer ownership of commodities beyond the farm gate and the maturing concept of farmers taking responsibility for adding value to commodities. Part of the pleasure of reading Cochrane is that he's not afraid of lumbering old sacred cows:

"Some farmers and their leaders, not understanding how markets work in the global economy, particularly the role of demand in determining prices, and seeing their gross returns falling from declining product prices at home, are inclined to reason, 'If we could send more of our products abroad, that would take the downward pressure off our domestic prices."

Cochrane explains exports under those conditions might well have the effect of further depressing domestic prices.

"Local markets for those basic commodities are part of the global market; there is no great unseen foreign market onto which we can dump surplus American farm products with no effect on our domestic markets."

It is Cochrane's seventh chapter, titled "American Agricultural Abundance: Curse or Opportunity," that many readers may find revolutionary. He begins by laying out a brief history of agriculture's attempts at production controls and surplus management. Then he takes a sharp turn from the accepted thinking.

"I propose here a national sustainable agriculture program to essentially replace the provisions of the FAIR act," he writes. "Its purpose is to move farmers to a way of farming that has the capacity to provide them and their families with an acceptable standard of living, to protect and improve the quality of resources on participating farms, to put an end to the degradation of the environment beyond the farm gate and to end the greater farm community's dependence on continuous farm subsidies. Conventional farm practices, and past and present government price- and income-support programs, have left the farm economy in a shambles and the land in a continuing state of environmental degradation. We need a new approach. I am proposing one: a national sustainable farm program."

Cochrane has some ideas for such a program. But, his book is a little, although expensive, book. I suggest you buy it or get it from your library and read it. I also suggest you get copies for your friends and urge them to read it. Then take the book to where you gather with other farmers and other citizens, and discuss it. Then go visit with your legislators and tell them we need a new approach to agriculture policy that will truly protect American farmers, American farm communities, the American environment and the security of the American food supply.

"The Curse of American Agricultural Abundance" is available from the University of Nebraska Press or your local book store for $35.

        

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