The Cropland Crisis

Myth or Reality?

Pierre Crosson

• Publisher: RFF Press
• Year: 2013
• Print ISBN: 9781617260131
• eBook ISBN: 9781135984137
• Topic: Technology & Engineering
• Subtopic: Ecology
• Index: Technology & Engineering

This book examines the factors affecting the demand for agricultural land in the United States and the costs of meeting increasing demand.

Originally published in 1982

1

The Long-Term Adequacy of Agricultural Land in the United States

Pierre R. Crosson

Introduction

Will the United States have enough agricultural land to meet rising demands for food and fiber over the next two to three decades and beyond? This question, or some closely related variant of it, was the subject of five major conferences held between November 1979 and July 1980. It was addressed in an important study by the U.S. Department of Agriculture (USDA) and was the principal focus of another interagency study by the federal government, spearheaded by the USDA and the Council on Environmental Quality.¹

Three events appear to have triggered this renewed concern with an old topic: (1) a rapid increase in U.S. grain and soybean exports since the early 1970s, which expanded cropland by 50–60 million acres; (2) an apparent reduction in growth of crop yields over the same period; (3) a report by the USDA that losses of agricultural land to nonagricultural uses accelerated in 1967–75 compared with the preceding decade.² Taken together, these events seem to portend steeply rising pressure on the nation’s supply of agricultural land, calling into question our ability to meet rising foreign demands for food and fiber, if not domestic demands.

While the question of the adequacy of agricultural land is much discussed, there is no consensus. Views range from the apocalyptic [“The 1980s may be known as the decade the earth ran out of earth,” according to one of the speakers at a conference sponsored jointly by the National Association of Conservation Districts (NACD) and the National Trust for Historic Preservation (NTHP)] to the notion that the current loss of agricultural land to nonagricultural uses is a matter of national concern that calls for action at the federal level (the National Agricultural Lands Study), to the position that while one should not be complacent about the agricultural land issue, it is not a matter of pressing national concern. Among contributors at the RFF conference, the prevailing view, as reflected in the papers in this volume, was closer to the last of those described than to either of the other two.

None of the conference papers presents a consensus on the adequacy of agricultural land, and I do not attempt one here. My own view, based on the analysis in chapter 6, is that the real economic costs of agricultural land are likely to rise and that, joined with rising real costs of energy, fertilizer, and water, and relatively slow growth in productivity, the result would be rising real costs of agricultural production. Moreover, the conversion to crops of much land now in pasture, forest, and range could cause a substantial increase in erosion. With the economic costs of production and the social costs of erosion both rising, an increase in concern about the adequacy of agricultural land is likely. However, I do not have the same sense of urgency about the issue as that expressed in the National Agricultural Lands Study or at the NACD/NTHP conference. For reasons discussed later, the judgment about rising economic and social costs is subject to high uncertainty. Moreover, the problem, if it develops, will emerge gradually enough to permit corrective action before there is a crisis.

Why is it so difficult to reach consensus about the adequacy of agricultural land? There appear to be two principal reasons. One is that the discussants are concerned with different aspects of adequacy without clearly recognizing this. They seem to be addressing the same question, but in fact they are not. The second reason is that even when the discussants agree on a definition of adequacy, they differ in how they read the evidence over the long term. By defining the question more precisely, it should be possible to improve the focus of the discussion and eliminate some of the differences in conclusions. Where the latter reflect differing readings of the evidence, however, equally competent and disinterested people may still come to different conclusions.

Framing the Question

Most of the discussion of the adequacy of agricultural land seems to focus on the question of whether the United States will have enough land to meet rising demands for food and fiber. This way of framing the question implicitly, if not explicitly, treats land as a factor of production. It is an essential factor of course, but not the only one. Indeed, in the United States other factors together contribute about three times as much as land to total agricultural production. This being the case, the “adequacy” of land cannot be determined independently of the cost and productivity of the land relative to the costs and productivities of other factors. If pressure on the supply of land makes it increasingly scarce, causing its price to rise relative to those of other productive factors, or if the productivity of the land declines (e.g., because of erosion), then farmers will have an incentive to substitute other factors for land in production. This will restrain the increases in the price of land and offset at least some of the decline in productivity that otherwise would occur.

On the other hand, if pressure on the supply of land rises rapidly or if possibilities for substituting other factors for land are narrowly constrained, a rise in the price of land or a decline in its productivity could result in a significant increase in the cost of agricultural production. In this case, those concerned about agricultural land would most likely agree that there was indeed a problem of adequacy, although they still might differ as to its seriousness.

If the discussion were framed in the context of the costs of production to the nation, and land was considered only one among many factors of production, there still could be differences but that element sometimes giving the discussion the character of a “dialogue of the deaf” would be absent, or at least much less prominent. This element is present in large part because some of those ostensibly concerned with the adequacy of land as a factor of agricultural production are really concerned about it as a source of amenity values, such as open spaces.³ Preservation of agricultural land also preserves rural life styles, an objective important to many, not excluding urban dwellers. The Jeffersonian concept of the yeoman farmer as the backbone of a democratic society and best guarantee against government tyranny has by no means been swept away by the urbanization of American life. It is significant that some of the most vigorous public agitation about preservation of agricultural land and the most ambitious policies to achieve it are in states which contribute relatively little to the nation’s agricultural production capacity, for example, New York, New Jersey, Maryland, and Oregon. Among major producing areas—California, the Cornbelt, the Plains states, and the Mississippi Delta—only California has adopted measures that have the sweep or force of those undertaken in these states.

If the concern with the adequacy of agricultural land is really a concern for amenity values, even the strongest arguments that land preservation is unnecessary to maintain productive capacity will not be persuasive. Amenity values and production values are not the same, and demonstrations that one set of values can be preserved will be irrelevant if the real concern is with the other, and it appears threatened.

If much of the concern about agricultural land is really over amenity values rather than productive capacity, why is the discussion typically cast in terms of capacity? Why are the amenity and capacity issues not treated separately, as they should be? One cannot be sure, but two reasons come to mind. One is muddled thinking, a simple failure to recognize that agricultural land provides both commodity and amenity values, but not in fixed proportions. The other reason is that maintenance of capacity is more likely to enlist political support than maintenance of amenity values. This is likely to be particularly compelling if the objective is to shape national policies for agricultural land preservation. Threats to our ability to feed ourselves and meet our felt obligations to a hungry world are more likely to mobilize a political response to preserve agricultural land than threats to the pleasures of a Sunday afternoon drive through the countryside.

Even when there is no confusion between the amenity and capacity issues, there is often a failure to recognize that when the focus is on capacity the issue is the economic availability of land, not its physical availability. After the USDA’s Conservation Needs Inventory of 1967 (CNI) revealed that there were 264 million acres of land in forest, range, and pasture with the physical capability of being used for cropland, that figure frequently was cited as evidence that losses of cropland to nonagricultural uses posed no threat to long-run productive capacity.⁴ Such “evidence” proves nothing, however, in the absence of information about the economic and environmental costs of converting the land to crops.⁵

The failure to reckon the availability of agricultural land by the economic and environmental costs of bringing it into production is part of a more general failure to recognize that for useful discussion of resource management decisions, capacity must be defined in economic, not physical terms. In virtually every conceivable circumstance, output of any particular commodity or of any sector of the economy can be increased at some cost; the longer the time horizon, the greater the increase in output for a given cost increase. Situations in which no additional output is possible because of absolute physical limits to the availability of one or more resources are so rare as to be of little practical importance. Where they occur, they can most appropriately be treated for analytical purposes as polar cases of the economic definition of capacity where marginal costs of production become infinite.

It is clear that the country’s ability to increase production of food and fiber will not be constrained by physical limits to the amount of land that can be turned to agricultural production, but such a statement is irrelevant to judging whether our supply of agricultural land will be adequate. The sooner such statements are eliminated from the discussion of adequacy, the sooner it can focus on the relevant issues: the economic and environmental costs of meeting demands on the land.

Acceptance of the economic concept of the capacity of agricultural land carries a cost of its own, however. It means that judgments about adequacy are likely to be ambiguous. Clearly, if demands on the land can be met with no increase in economic and environmental costs, all could agree that the supply of land is adequate. But if these costs rise, judgments become more difficult. Any increase in cost is less favorable than no increase, but few would argue that any increase demonstrates that the supply of land is inadequate. How much must costs increase before serious questions of adequacy would arise? There is no clear answer to this question, but that is true for any resource. Rising costs raise questions of resource adequacy when they begin to disrupt achievement of widely held social goals, such as improving the standard of living. The escalating prices of art may be distressing to museum managers and other collectors, but they cause no concern among governments or the publics they represent. A 10 percent increase in the price of food, however, is quite another matter.

We thus can expect no unambiguous answer to the question of the adequacy of agricultural land. However, it will help clarify discussion of the issue if the question is defined properly.

Reading the Evidence

Even where distinctions between capacity and amenity issues are properly made, and people agree on how to frame the question of adequacy, they still may arrive at sharply different answers because they read the evidence differently.

When the issue is capacity, opinions depend upon judgments about three future events: (1) the prospective growth of demand for food and fiber; (2) the prospective growth of per-acre yields; and (3) the supply of land, where supply is defined as the amount of land that can be brought into production at specified economic and environmental costs. The faster the expected increase in demand, the slower the expected increase in yields, and the more inelastic the supply of land, the more likely the perception of a shortage.

This point is vividly illustrated by the contrasting projections of production growth in the National Agricultural Lands Study (NALS) and by Martin Abel in this volume (chapter 3). The key difference between the two sets of projections is in exports. The NALS projects an annual growth of 4.5 to 6.5 percent in total agricultural exports between 1980 and 2000. Abel’s projection of grain and soybean exports to 2005 implies an annual growth of 2.3 percent between that year and 1980. Since most of the growth in exports will be in grains and soybeans, Abel’s projections for these commodities imply less than 2.3 percent growth in total agricultural exports. Both the NALS and Abel assume constant real prices.

This difference in growth of export demand is the main reason for the difference between the NALS conclusion that the adequacy of agricultural land is now a crucial national concern and my own—which is that it is not. (My assumptions about trends in yields are not essentially different from those of the NALS. I am somewhat more optimistic about the supply of cropland, but this difference is small compared with the difference in export projections.) If I believed that exports were likely to grow as fast as projected by the NALS, I would share their view that the country faces a serious shortage of agricultural land.

Similar differences may—in fact, do—arise in interpreting the evidence on trends in crop yields,⁶ and information about the economic and environmental costs of bringing more land under crops is so meager that widely differing estimates are equally plausible.

Key Areas of Uncertainty

My relatively optimistic conclusion about the capacity issue was derived from analysis of the growth of demand for grains and soybeans (chapter 3), of trends in technology and yields (chapter 2), and of the potential supply of cropland (chapters 4 and 5). The conclusions in each chapter represent the authors’ best judgments of what the future will look like, but all of them recognize that the future is uncertain and their conclusions perhaps wrong. Consequently, tentativeness pervades each of the discussions.

In the balance of this section I deal with the key uncertainties as I perceive them. I suspect the authors of the rest of the chapters in this volume would share my perceptions in most respects, but they are not responsible for the views I express here.

Growth of U.S. Exports

Both Abel and Heady make it clear that foreign demand is the dynamic element in the growth of total demand for U.S. agricultural production. Because the income elasticity of domestic demand for food and fiber is low, the growth of per capita income adds little to the growth of domestic demand; neither does domestic population growth. Foreign demand, however, has increased rapidly since the early 1970s, reflecting both population and income growth abroad and the strong competitive position of the United States in world markets for grains and soybeans.

Virtually all observers expect continued growth in world income, but the sharp increase in energy prices since 1973 and the prospect for continued increases make predictions about future growth rates uncertain. The easy confidence of the 1950s and 1960s in this regard no longer holds.

Recent declines in population fertility in the developing countries add to the uncertainty about the increases in demand. If these declines portend a slower growth in LDC population than anyone thought likely only a few years ago, the contribution of population growth to demand for U.S. food exports would be less than expected. On the other hand, slower population growth in the LDCs might make it possible for these countries to achieve faster increases in per capita income, stimulating more rapid growth in demand. The relationship between growth in population and per capita income is not well understood, however, so it is unclear what net effect slower population growth in the LDCs would have on growth in demand for food.

Food production and demand are more interdependent in the LDCs than in the developed countries because a much higher proportion of LDC income originates in agriculture. If the increase in food production lags, the growth of income and hence of demand for food will also be restrained. A healthy rate of growth in LDC food production, however, is quite consistent with a sustained rise in food imports, at least for several decades. Because per capita income is low, the income elasticity of demand for food is relatively high. Per capita income growth of 3.0 to 3.5 percent annually, combined with a population growth of some 2 percent, could easily result in a 3.5 percent annual growth in food demand. Hence, even if food production were to increase 3 percent annually—a healthy rate—food imports would rise.

Leaders of the People’s Republic of China (PRC) and the Soviet Union would deny any similarity between their policies, but for foreign observers the food policies of both countries have much in common: opaqueness and resulting uncertainty about future food imports. There is evidence that both countries have decided to upgrade the diets of their people and are prepared to increase imports substantially to achieve this, if necessary. The main thrust of food policy in both countries, however, is to increase domestic production,...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Copyright Page
• Contributors
• Contents
• Foreword
• Preface
• Acknowledgments
• 1 The Long-Term Adequacy of Agricultural Land in the United States
• 2 The Adequacy of Agricultural Land: A Demand–Supply Perspective
• 3 Growth in Demand for U.S. Crop and Animal Production by 2005
• 4 The Potential Supply of Cropland
• 5 Irrigation and the Adequacy of Agricultural Land
• 6 Future Economic and Environmental Costs of Agricultural Land
• 7 Agricultural Land: Policy Issues and Alternatives
• 8 Market Performance and the Adequacy of Agricultural Land
• Index