From cheap land in the 1800s to 140 bushel corn yields today, the U.S. agriculture sector has capitalized on advancements of technology and genetics to make it one of the most powerful agricultural nations in the world, explains Federal Reserve Chairman Alan Greenspan.
Greenspan explains that although land values have risen, intensive cultivation is also rapidly closing the gap between productivity on farms and ranches and productivity on nonfarm business establishments. "Agricultural productivity rose at an annual rate of 5%, more than twice the rate for nonfarm business firms," Greenspan said in a prepared statement at a Federal Reserve Bank of Kansas City and the Organization of Economic Development sponsored event on rural economic issues.
The size of farms, farm population and structure of rural communities have changed, causing strains on schools, hospitals and county services, he says. "Despite the migration of farm populations towards cities, the nonfarm population and the level of employment in rural America as a whole have increased substantially over time and have more than offset the declines in populations involved in farming and other resource-based industries."
'Well positioned' in export markets
Greenspan states the nation's farmers are highly dependent on exports to absorb high productivity. To compete internationally producers must be able to lower costs faster than producers in other countries. "Given the institutions that our nation has developed for maintaining rapid agricultural innovation and for quickly disseminating the new techniques through the farm economy," Greenspan says, "U.S. producers are well positioned in this regard."
He adds that foreign producers are adopting innovations quickly. "Efforts to increase the openness of world markets will need to be maintained and intensified so that the full benefits of farm productivity gains can raise standards of living worldwide."
He concludes by saying gains in U.S. agricultural productivity have benefited consumers, regardless of a connection to a farm, in the form of lower prices, better quality and more choices at retail outlets.