1/25/2024 0 Comments Means of production examplesIn 1954 President Eisenhower ordered the US Dept of Agriculture to prepare a report on the state of the agricultural economy. Agricultural productivity continued to increase as new labor-saving technologies were developed.įarm incomes fell after World War II and again there was unrest in the countryside. The US economy moved through two World Wars and the Great Depression after the parity price period. The United States followed policies geared toward maintaining those prices for decades. In fact, “parity” prices were established in the period from 1915 to 1919. The period following the report was very good for US agriculture. The increases in productivity were directed toward technologies that substituted capital for labor. This Commission report renewed the efforts to improve the lives of the farmers by increasing their productivity. The Commission found that in spite of the advances and money spent up until that time “… agriculture is not commercially as profitable as it is entitled to be for the labor and energy that the farmer expends and the risks that he assumes …” and “The farmer is almost necessarily handicapped in the development of his business because his capital small and the volume of his transactions limited and he usually stands particularly alone against organized interests” (Report of Commission on Country Life, 1909, in Wunderlich, p. In 1909 President Roosevelt formed the Country Life Commission to address the issues of poverty in rural America. In the early part of the 20th century problems emerged for this ideal, problems related to economies of size. Jefferson won the debate and the United States followed the principal objective of promoting family farms. Hamilton argued for selling the land to the highest bidder as a means of paying off the Revolutionary War debt. Jefferson argued for family ownership of farms as a means of ensuring interest in the democratic process. One of this country's earliest political debates centered on the conflicting views held by Thomas Jefferson and Alexander Hamilton regarding land ownership. 2ĭiscussion of economies of size in production agriculture and the desirability of small farms has ebbed and flowed over time. Hofstrand summarized the concepts of size and scope by noting that size spreads fixed resources over more units of output whereas scope spreads the cost of a given set of resources or skills over more than one product or enterprise. The other concept is economies of scope, which refer to reducing costs for using resources by spreading the resources over more than one enterprise. If costs per unit go down, there are increasing economies of scale, and if the costs per unit remain the same, there are constant returns to scale. If costs per unit go up, then there are diseconomies of scale. One is economies of scale, which measure what happens if all inputs are increased by the same proportion. Two related concepts will be mentioned here only for the sake of avoiding confusion. And, as a result, monitoring in this fashion would actually provide a cost advantage to a larger operation. As the number of pigs sold increases, the costs for this aspect of production would decrease. If the farm is required to monitor the groundwater around the facility for contamination, they must put in a well and monitoring equipment, which represent fixed costs and can serve a large number of pigs. An example would be the cost for pollution monitoring around a swine production facility. Or, economies of size can occur when a farm is able to obtain volume discounts for inputs such as seed or fertilizer. The economies can occur because the farmer is able to spread more production over the same level of fixed expenses. The concept of economies of size means that the average cost per unit of production decreases as the size of the farm increases. 1īefore beginning any discussion on economies of size it is first necessary to define the term. The theoretical underpinnings and economic discussions can be found in other sources. The discussion on economies of size presented here is from an overall perspective. It focuses mainly on Midwestern agriculture, but to the extent possible other regions will be discussed. This article discusses economies of size, especially as they relate to production agriculture.
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