Change in the Supply of Agricultural Products: Technological Advance

Abstract

The output from agriculture in all industrialised countries seems to be on an inexorable upward trend. While in the EC high prices for farm products, heavily supported by Community aid, are often blamed for overproduction, in real terms prices of many crops and livestock have declined. At first sight this seems at odds with what has been described in the preceding chapter in which supply in the shorter term was seen to be directly related to prices of farm products; we might have expected that lower prices would cut supply. Clearly there must be some other explanation why expansion continues, in the UK at about 2–3 per cent per year. Furthermore, there are suggestions that greater expansion occurs at times when farmers’ profits are under most pressure from depressed market prices or higher costs. Much of the explanation lies in the area of technological advance.