Production Practices and Systems in Sustainable Agriculture
David L. Debertin and Angelos Pagoulatos*
Introduction
Interest in sustainable
agriculture probably had its roots in the concept of sustainable development.
From an international perspective, the sustainability of production systems in
agriculture is a very important component. Interest in environmental issues has
been a longstanding concern, In the 1950s, increased interest in outdoor
recreation stimulated interest in maintaining and improving the environment (Batie, p. 1083). Environmental issues and their linkages to
agriculture are not only of recent concern. The 1930s was a period of time in
which problems associated with wind and water erosion were causing considerable
concern for the future of American agriculture, and led to government policies
directed toward agriculture that were specifically aimed at environmental
issues. The Soil Conservation Service came into being 1935, but actually
started much earlier as the Soil Erosion service (Tweeten,
pg. 96).
"Sustainable development is a concept based on
intergenerational equity--that is, the current generation must not compromise
the ability of future generations to meet their 'material needs' and to enjoy a
healthy environment" (Batie, p. 1084). If we
apply an analogous definition to sustainable agriculture, then sustainable
agriculture is also based on intergenerational equity, that is, the current
generation of farmers must not compromise the ability of future generations of
farmers to meet their material needs and continue to enjoy a healthy environment.
That is, farmers have an "intergenerational obligation" to choose
production practices and farming systems that maintain the ability of
agriculture to produce agricultural commodities and products, maintain a decent
standard of living for the farmer, yet jeopardize neither the ability of future
generations of farmers to produce and maintain a decent standard of living, nor
the quality of the environment for either the current or future generations.
As recently as 1991, the concept of sustainability still
concentrated on the need to reduce the use of purchased inputs in agriculture,
but in 1991, Ikerd argued that the "low
input" aspect of sustainable agriculture was becoming less important as
public policy began to focus on the broader sustainability issues. He suggests
(p. 43) that the long run sustainability of agriculture could have far
different implications for southern farms than those implied by a simplistic
restriction, ban or even lowering of commercial agricultural inputs.
Technology in agriculture moves ahead at a steady pace over the
long term. Technological progress also occurs with respect to society's ability
to detect possible consequences to the environment of specific production
practices and farming systems in agriculture. Therefore, a production practice
or farming system that, during one period of time, is thought to be
environmentally benign, in a future time period made be found to have some
consequences to the environment that are of long- run concern. Thus, the
technologies employed within a specific sustainable farming system can only be
judged in relation to our ability at the same point in time to detect the
probable consequences of the technologies on future generations. Batie (1988, p. 1) argues that there continues to remain a
what she terms a "denial" among many agricultural scientists that
technological advances could be part of "the problem" as easily as
they could be a part of "the solution to the problem."
Science has created problems in other areas as well. Lead in gasoline
was once thought to be a simple, cheap, and environmentally benign way of
increasing the octane of gasoline. DDT was thought of as a "miracle
pesticide" that could alleviate a number of diseases transmitted by
insects and thus make future generations better off. Asbestos was the material
of choice for adding fire retardant properties to the interiors of public
buildings, and good choice for the homeowner was asbestos siding that would
give fire-retardant properties to the exterior of frame structures. These
products were endorsed by scientists, produced by manufacturers and used by the
public because they appeared to be effective, cost-efficient solutions to known
problems. All of these products of technology were ultimately shown to have
serious harmful long-term effects on the environment. The lead used in gasoline
saved oil for future generations. DDT saved lives from insect-borne disease:
asbestos saved lives because of reduced incidence and severity of fires in
homes and public buildings. In short, at one time, these appeared to be
technologies broadly consistent with the concepts underlying sustainability.
There exist no agricultural production technologies or farming
systems that are environmentally benign. All have some potential consequences
on the environment. Our ability to judge the probable consequences to the
environment of a specific production practice or farming system is only as good
as the technology in place to evaluate the probable environmental consequences.
Scientists can and frequently do make mistakes in conducting these assessments,
particularly assessments involving inter-temporal consequences. They err not
only in calling some technologies inconsequential to the environment when
indeed they are not, but also occasionally in finding environmental harm when,
in reality, no harm exists.
To the extent that cost-efficient technologies are abandoned
because scientists identify harmful effects that, in reality, do not exist,
future generations are also harmed. They are harmed because cost-effective
technologies are replaced with higher-cost technologies. Many of these
higher-cost technologies require the use of additional resources that instead
could have been saved for use by future generations. The choice of a particular
production technology or farming system thus becomes a judgement
call with regard to the probable consequences on future generations.
Multiple criteria are necessary to determine the probable
consequences of a particular farming system on the environment. It would be nice
if all probable environmental consequences (benefits and damages) of a
particular farming system could somehow be collapsed into a single measure or
indicator measuring the degree of environmental benefit or harm, but, because
of the diverse array of potential benefits and damage, this is very difficult
to do.
How should a specific reduction in soil loss due to erosion be
valued (weighted) in comparison to a change in the amount of surface a ground
water contamination? The environmental consequences of various reduced-tillage
farming systems further illustrate this point. It may appear that any farming
system that can significantly reduce water and wind erosion is broadly
consistent with the goals of sustainability. At the same time however, many of
the reduced-tillage farming systems (i.e. minimum-tillage or no-till) require
increased use of pesticides, pesticides whose increased use will undoubtedly
have some negative consequence on the environment.
Potential advances from biotechnology too may pose serious
dilemmas. The public is concerned with respect to the potential risks
associated with releasing into the environment genetically altered plants or
animals. This is true even though, for example, the biotechnology has the
potential for long-term environmental benefits, for example, by genetically
altering non-legume plants to reduce or eliminate the need for fertilization
employing chemical nitrogen.
The question thus becomes "what is sustainable and what is
not?" In agriculture, specific production practices and farming systems
that at first appear to be broadly consistent with the concept of
sustainability may not ultimately be sustainable. Other production practices
and farming systems thought to be inconsistent with sustainability concepts may
ultimately be found to be sustainable.
The quest for sustainability stems from the idea that the limits
of growth are about to be reached. As a consequence, sustainability overrides allocative optimality of conventional Economics (Daly).
There is quite a variety of sustainability notions, differing according to the
basic questions of sustainability of what, for whom, where and when.
Sustainability is an ecological concept that stems from the
predator with "prudent behaviors" that avoids overexploiting its prey
to ensure an "optimum sustained yield" (Odum).
Income, then can be defined as the maximum value that can be consumed during a
period of time and still expect to be as well off at end of that period as
....at the beginning. Depending on the source of supply of welfare-relevant
goods and amenities, three categories of sustainability can be distinguished.
They are, the economic, ecological and social
sustainability (Bartelmus). However, many other
factors may influence the supply-production process. Some of these, as
alternative production processes and technologies or discovery of natural
assets may increase the scope of sustainability. Others, such as natural and/or
man-made disasters may reduce sustainability. Strong sustainability, calls for
the maintenance of each category of initial capital, assuming its complementarily (non- substitutability) in production (Bartelmus, Daly). Strong sustainability assigns, an
"existence value" to each capital category. Weak sustainability
focuses on maintenance of income or production, allowing for substitution and
technological progress. Weak sustainability refers to the maintenance of the
overall capital base, rather than of each of its components.
Sustainable national income has been defined as Net National
Product with adjustments for the degradation of renewable and non-renewable
capital. It reflects the implicit conditions for sustainable development:
intergenerational equity, ecosystem resilience, and equity in opportunity and
human development. Implementation of these three conditions leads to
environmental and equity constraints on economic optimization. Tests of
sustainability require defining and measuring changes (depletion or increase in
stock) in critical natural capital (Pearce and Atkinson). Resource accounting treats
natural capital in a similar manner to reproducible capital in accounting
terms. If a correct value can be placed on natural capital under an accounting
system, then if stocks of natural-capital are depleted to increase stocks of
reproducible capital then under a strong sustainability rule, the ability to
generate future income will be maintained. Natural capital changes and their
measurement have been discussed by Hartwick and Maler.
Net national product becomes the traditional gross product less a rental
defined as the price less marginal cost multiplied by the change in the stock
of capital.
Thus the modified NNP can be calculated as being the aggregate
consumption plus the change of the pollution stock multiplied by its rental
value, minus the change in stocks of renewable and exhaustible resources (net
of their mean annual natural increments) multiplied by their respective rental
values.
In the case of a farmer or a farming system then a detailed
account of each natural resource used in the production process should be made
and according to the modified NNP definition about keeping track of decreases
or increases in the modified NNP so defined.
Modified NNP = C + 
Km - (Pe - MCe) (Qe - De) + (Pr - MCr) (MAI - Qr) + (Px - MCx) X
Where
C
= aggregate consumption
Km = reproducible capital stock
Pe = price of exhaustible resources
MCe = marginal cost of extraction of exhaustible
Qe = extraction of exhaustible resources
De = discoveries of exhaustible resources
Pr = price of renewable resources
MCr = marginal cost of renewable resources
MAI = growth of renewable resources (mean annual increment)
QR = harvest of renewable resources
Px = price of pollution
MCx = marginal cost of pollution
X = pollution stock
= change
Sustainable Agriculture: Basic Definitions and Concepts
Defining sustainable
agriculture should be a simple task, but as the broad set of issues surrounding
the concept of sustainability suggests, the task may be somewhat more arduous.
Johnson characterizes a sustainable agricultural system as one that is
economically viable, environmentally sound and socially acceptable (p. 75). He
argues that "...beginning with the Agricultural Adjustment Act of 1933, we
as a society must have felt that the American Agricultural System as it now
exists is not sustainable and have legislated numerous laws in an attempt to
make it such"(ibid). He argues that agriculture largely succeeded in
reducing food costs, releasing labor from the farm, stabilizing prices for
farmers and consumers, and feeding an increasing population, but only recently
has attempted to seriously address environmental concerns linked to
agriculture's exploitation of natural resources. One widely accepted definition
of sustainable agriculture comes legislation, specifically that contained in
the 1990 Farm Bill, technically the U.S. House of Representative's conference
report on the Food, Agriculture and Trade Act of 1990 (p. 1055). The conference
report defines sustainable agriculture as
"An integrated system of plant and animal production
practices having a site-specific application that will, over the long term: (1)
satisfy human food and fiber needs; (2) enhance environmental quality and the
natural resource base on which the agricultural economy depends; make the most efficient
use of non-renewable resources and on-farm resources, and integrate, where
appropriate, natural biological cycles and controls; (4) sustain the economic
viability of farm operations; and (5) enhance the quality of life for farmers
and society as a whole."
The National Research Council, (cited in Ray, et al., p. 51)
suggests that the numerous definitions of sustainable agriculture share the
common elements of retaining natural resources, minimizing environmental
damage, providing adequate farm profits and optimizing farm production with a
low level of fertilizer and other inputs.
The Science Council of Canada (p. 15) reports that the definition
adopted by Canada's federal department of agriculture is
Sustainable agri-food systems are those
that are economically viable, and meet society's need for safe and nutritious
food, while conserving and enhancing Canada's natural resources and the quality
of the environment for future generations.
They argue that by simply deleting the word "Canada,"
the definition would apply anywhere in the world.
Ikerd suggests that the difference between sustainable and conventional
agriculture is more due to a difference in what he terms "farming
philosophy than due to what he terms farming practices and methods (p. 45). In
order to satisfy long-term (intergenerational) needs of a society, sustainable
agriculture must employ a farming system comprised of a collection of
interrelated and integrated agricultural production practices that can be
continued (or "sustained") over a long period of time. The period of
time is at least many production seasons, perhaps as long as the remaining
years a farmer intends to farm, or perhaps even longer, assuming that the farm
is passed on to another generation.
A key element of sustainability is that the farming system in
place must be sufficiently profitable such that it is economically viable over
the long term. If a farmer is to continue farming over a long period of time
and ultimately transfer ownership of the farm to the next generation, the
specific farming practices employed over the period of time must be profitable,
at least in most years. Therefore, a key element of sustainable agriculture is long-run
profitability of the set specific
sustainable production practices comprising the farming system. Dicks (p. 53)
argues that any family owned farm that has been passed through
several generations is, somehow, economically viable, but may not be
ecologically sound.
Sustainable agriculture involves the long-run maintenance and improvement of soil
fertility while minimizing the undesirable effects of wind and water erosion. This suggests that if a farmer employs sustainable
agriculture practices, at the time the farm is transferred to the next
generation, the farm will at least have maintained, and perhaps even increased
in "real" value over the period, even when the effects of inflation
have been considered. In part, this is because the topsoil depth and soil
fertility level is maintained to the extent possible through the production
practices employed.
Thus, sustainable agriculture practices often appeal to farmers
who adopt as a goal a long-run strategy of attempting to maximize net worth
over many production seasons, rather than a short run strategy of profit
maximization in one or two production periods. Land tenure (ownership)
considerations enter here, as farmers who are owners rather than renters would
more likely be willing to make choices regarding farming systems that are
consistent with building net worth over a long time horizon.
Sustainable agriculture practices show a concern for the environment. Hoag et al. (p. 2) suggest that while most
definitions of sustainable agriculture mention enhancing environmental quality
as a major goal, what is meant by this is often ambiguous. They note that the
1990 Farm Bill definition (pp. 391-2) of environmental quality includes
wildlife habitat, soil conservation, water quality, air quality and
preservation of natural resources. Pearce and Turner (as cited in Dicks, p. 53)
identify four basic rules that must be followed for a system to be
environmentally sustainable. They are:
1. Use renewable resources at a rate less than the natural rate of
generation.
2. Maintain wastes from production at a level below the
assimilative capacity of the
environment.
3. Ensure that the reduction of stock resources is compensated for
by increases in renewable resources.
4. Depletion of stock resources should occur with an increased
standard of living.
Any agricultural production
activity will have some impact on the environment. However, people need to eat,
and the only way to produce food is to engage in an activity that somehow
changes (in some manner harms) the environment. This is true whether food comes
from agricultural production on farmland or from the ocean. Even sustainable
agriculture practices change the environment in some way, but sustainable
agricultural practices attempt to minimize the harmful
effects on the environment from pollution, wind and water erosion and other
types of environmental damage arising from agricultural production.
Evaluating Alternative Sustainable Farming Systems
A sustainable farming
system is not simply a series of production practices that can each be
evaluated independently from one another, but rather a series of production
practices that are integrated and interrelated with each another. Ikerd suggests that sustainability is determined by the
system as a whole, not its individual components (pg. 46). He argues that what
he calls "synergism" is the key to sustainability. The interdependent
linkages between production practices comprising a farming system makes evaluation
of the profitability and environmental benefits attributed to a specific
practice difficult.
A specific production practice, say a particular type of tillage,
when taken alone, may appear to be inconsistent with the goals of sustainable
agriculture. However, it is the farming system in place, that is, the
integrated system of interrelated production practices that ultimately
determines the sustainability of the farming system.
Any sustainable farming system may include some specific
production practices that might not appear to be consistent with the goals of
sustainable agriculture, and yet, when integrated with other specific
production practices, the entire farming system in total might be quite
sustainable.
Identifying Specific Farming Systems Consistent with Sustainable
Agriculture
The two underlying
themes that appear in most definitions of sustainability and sustainable
farming systems deal with (1) the economic profitability of the farming system
over a long period of time; and (2) long-term benefits to the environment.
Environmental benefits are sometimes not measured as an overall improvement in
environmental quality over time, but instead compared with what would have
happened to the environment over time had conventional (previously-employed,
non-sustainable) production practices been continued.
For example, it is generally recognized that any type of
agricultural land use will result in a significant loss in topsoil. Even idle
land in grass steadily loses topsoil. An environmental goal of a sustainable
farming system might not be to actually increase the quantity of topsoil on the
farm, but rather to employ a farming system that minimizes the amount of
topsoil loss over time, especially when compared with alternative farming
systems that might instead have been continued.
Thus, farming systems cannot simply be divided into two
dichotomous categories, labeled either conventional or sustainable. Instead,
there are degrees of sustainability. An existing farming system—one that might
be described as conventional—may be profitable even over a long time period,
consistent with one of the primary goals of sustainability. Furthermore, a
farming system labeled as sustainable because the probable benefits to the
environment over the long term are great may incorporate a number of specific
production practices that, if taken individually, would be called conventional.
A sustainable farming system does not necessarily employ an entirely different
set of specific production practices and does not necessarily preclude the use
of some specific practices that might be labeled "conventional."
Sustainable farming systems are, indeed, systems. In this context,
a sustainable farming system must consist of a series of related and integrated
production practices. In some instances, it may be possible to determine if a
specific production practice incorporated into a farming system is more or less
sustainable than another alternative production practice. For example, a
specific production practice that makes better use of green manure crops than
chemical fertilizers to improve soil fertility might result in environmental
benefits arising from decreased ground and surface water contamination. Such a
production might be labeled as sustainable based on perceived environmental
benefits.
Furthermore, differences in profitability that occur might be
directly attributed to differences in the specific production practices that
are employed. The farmer who reduces purchased chemical fertilizer use by
relying more heavily on green-manure crops in a rotation to improve soil
fertility will likely experience some change in the pattern of profitability
over time. Presumably, to the extent that profits change, the change occurred
because of the modification in the specific production practice that was
employed.
From the perspective of sustainability, an ideal situation would
be one in which profits increase as a result of shift from chemical fertilizers
to green manure in a rotation, and the environment is also significantly
enhanced because of reduced nitrate pollutants in ground and surface water.
Further, this could actually happen. A farmer who reduces chemical fertilizer
use will likely decrease out-of-pocket expenses, enhancing profitability. But
output levels may not remain constant, either, since profit is the net of
revenue over costs. Moreover, the improvements to the quality of ground and
surface water by reducing or eliminating chemical fertilizer use may not be
significant or even measurable.
In most cases, however, the concept of a sustainable farming
system suggests forgoing some profit (in comparison with the production system
previously employed) over the short run (the first few years a farming system
is in place) with the expectation that benefits will be achieved over a longer
period of time. Long-run profitability may be increased relative to
what would have occurred if the conventional
farming system had continued indefinitely. While the ideal would be improved
environmental quality over time, the sustainable farming system may be
justified (and considered successful) if the benefit is only that the
environment is less harmed than would have been the case if the conventional
farming system had continued to be employed.
Thus, environmental benefits from alternative, sustainable farming
systems must be evaluated not only in terms of absolute improvement in
environmental quality, but also in relative terms, that is, relative to what
would have occurred had the new, sustainable farming system not been
implemented. Similarly, the consequences of such a sustainable farming system
on profitability must be evaluated not only over a multi-year time horizon, but
also relative the likely profitability of the conventional system over the
same, multi-year time horizon.
Environmental Considerations
The environmental
benefits associated with sustainable farming systems can thus be categorized
into four major groups:
1.
Benefits accruing from a reduction
in soil erosion due to wind and water
2.
Benefits accruing from a reduction
of pollutants in ground and surface water linked to chemical fertilizers, primarily nitrates,
but also phosphates.
3
Benefits accruing from a reduction
in pollutants in ground and surface water and in the air arising from herbicides
and insecticides.
4.
A larger and more nebulous category
of benefits that occur because, for example, soil structure might be maintained
and enhanced with certain crop rotations, the use of animal manure, and other
similar benefits arising from specific farming practices that help maintain and
improve the productivity of the land over a long period of time.
Heimlich argues that improvement of wildlife habitat should be am important goal. Among advocates, this category of
benefits is quite important. For agricultural scientists, rationalizing
sustainable farming systems based on these kinds of benefits is controversial.
In many instances, the scientific evidence in support of these benefits is
inclusive, or has not been conducted over a sufficient period of time such that
the benefits, if any, can be measured.
It is tempting to define as sustainable only those farming systems
that produce environmental gain. However, as earlier indicated, the diverse
array of environmental benefits and damages makes it difficult to compress the
various facets of environmental quality into a single measure or indicator. Each
alternative farming system whether labeled as sustainable or not will generate
a unique combination of environmental benefits and damages. A new farming
system, for example, may significantly reduce soil erosion, but at the cost of
additional ground water contamination relative to a farming system that had
been previously employed. Questions arise that are not easily answered. Is such
a farming system sustainable? Must all environmental consequences of a new
farming system at least be no worse than what existed under the previously
employed system?
Other questions pose additional difficulties. Are there tradeoffs
between various categories of environmental benefits? If so, in valuing
environmental benefits, what weights should be employed for each type or
category of benefits? Should these weights be constant across states and
regions? Is a ton of soil loss from erosion in an area where the topsoil is
several feet thick as serious an environmental concern as a similar amount of
loss from an area where the topsoil is fragile and only a few inches thick?
Should greater weight be placed on reducing pollutants in instances where
scientific evidence exists that a pollutant is harmful to human health, or
should a reduction in any kind of pollutant be equally valued? These are
difficult questions to answer.
Environmental benefits
(and damages) can be categorized with respect to whether the benefits (and damages)
occur on-site or off-site. A farmer who implements a production practice that
reduces nitrate pollution in drinking water from a farm well is realizing an
on-site (benefit to the farmer) environmental benefit, whereas, if the
production practice reduces nitrate contamination in wells of neighboring
farms, an off-site benefit (benefit to others) occurs. If additional costs (and
perhaps a reduction in profitability) are incurred from a particular production
practice that also provides environmental benefits (or reduces harm to the
environment), farmers would likely be more interested in implementing practices
that provide primarily on-site benefits (benefits to them) than primarily
off-site benefits (benefits to others).
A farming system that reduces soil erosion from water provides
long-term on-site benefits to the farmer in the form of a reduced rate of loss
of soil productivity over time. However, the reduction in silting of rivers
arising from reduced water erosion may be highly beneficial to others, including
taxpayers who must pay for the cost of dredging silted rivers. In this
instance, the private interests of the farmer and the public interest of others
coincide. In general, sustainable farming systems that reduce soil erosion
provide considerable private on-site benefits. The public off-site benefits may
be noticeable, however, only if a comparatively large number of farmers adopt
production practices that lead to a significant reduction in soil erosion in an
area.
Aside from the water well example, the on-site benefits to farmers
of reducing the use of chemical fertilizers and pesticides may be somewhat less
clear. Some farmers and soil scientists have argued that monocultures employing
chemicals ultimately lead to a deterioration of the soil structure over time,
with consequent negative effects on the long-term productivity of land. The
long-term safety of certain agricultural chemicals to farmers their families
and hired employees is another concern. Agricultural scientists who deal with
pesticides are equally convinced of the current safety of the products, if
applied in the manner and in the amounts as labeled.
Categorizing Sustainable Farming Systems based on Short and Long
Run Profitability
This section outlines a
procedure for categorizing specific farming systems according to the likely
willingness of farmers to implement them in the short and long run. An ideal
sustainable farming system is one that is highly beneficial to the environment,
costs very little to implement, improves profitability immediately from the
time of implementation, and for which the long-run profitability is greater
than for the farming system it replaces. At the other extreme, another farming
system may enhance environmental quality only slightly, be costly to implement,
and substantially reduce profitability in both the short and long run.
Four categories of sustainable farming systems can be defined.
Category I consists of those farming systems that reduce harmful effects of
agriculture on the environment and increase the profitability of the farm in
both the short and long run. Category II includes systems that reduce farm
profitability in the short run but increase long-run profitability. This, in
turn, leads to an increase the value of the farm over the long run. Category
III includes systems that reduce profitability and the short and long run, but
increase the long run value of the farm (and perhaps, the farmer's net worth).
Category IV includes systems that reduce the harmful effects of agriculture on
the environment but reduce profits in the short and long run. Unlike Category
III practices, however, Category IV practices have no impact on the long-run
value of the farm. Table 1 summarizes consequences for various categories of
sustainable farming systems.
Patterns of Profitability and Environmental Benefits over Time
A widely held belief is
that the only sustainable farming systems that we can expect farmers to
implement those that are profitable. A conclusion could be that no farming
system consistent with the overall goals of sustainable agriculture should be
considered unless it is profitable immediately after implementation. But many
desirable farming systems that are consistent with the environmental goals of
sustainability may not be profitable in the first or even the first few years
of implementation. Over a period of 10 to 20 years or even longer, however,
these practices may be quite profitable when compared with conventional
practices and also prove increasingly beneficial to the environment. This section
illustrate alternative patterns of profitability and discusses the complex
issues involved when one attempts to determine if a specific sustainable
agriculture production practice is profitable.
Figure 1 illustrates profits over time for four hypothetical
farming systems. Suppose that the first farming system, labeled here as
"conventional," represents some existing technology currently
employed. Even this farming system may incorporate some specific production
practices broadly consistent with the goals of sustainability. Such a
conventional farming system might be representative of a tillage- monoculture
cropping system that tends to deplete soil organic matter (requiring increased
amounts of chemical fertilizer to sustain output levels over time, and
ultimately reducing profitability), and leading to a loss of topsoil due to
erosion from wind and water. Even if yields can be maintained over time with
increased applications of chemical fertilizers, the cost of these additional
units of fertilizer over time ultimately decreases profits. Thus, this
"conventional" farming system illustrates a pattern of decreasing
profitability over the ten year period.
In contrast, the option labeled as sustainable option 1 represents
a nearly ideal farming system. Profits exceed the profitability of the
conventional system in all years of the ten-year time horizon being evaluated,
and greatly exceed the profitability of the conventional system in years 5-10
of the time horizon. Unless such a system requires a large up-front capital
outlay, farmers easily will be convinced that such a system should be
implemented. Only a basic educational program is needed to acquaint farmers
with specific production practices to be employed within the system.
The line labeled as sustainable option 2 perhaps represents a more
typical, "textbook" case with respect to a sustainable farming
system. In this hypothetical farming system, profitability in the early years
is considerably below the profitability of the conventional system. This reduced
profitability could be due to a number of reasons. Perhaps the new system
requires a large up-front cash outlay in order to implement. Further, the
possibility may be that either output is reduced or other (variable) costs are
higher than under the conventional system. By year 4, however, the benefits
(perhaps due to improved soil fertility or reduced erosion) are such that
profits exceed the profitability of the conventional farming system. This
option clearly has an advantage over the conventional option in sustaining
profitability over time.
The line labeled sustainable option 3 represents yet another
pattern of profitability over time. Although profitable, profits for this
option remain below the conventional system in all years of the time horizon.
This example might be most closely associated with a series of production
practices incorporated into the farming system that, from a sustainability
perspective, primarily yield off-site benefits to the environment. An example
might be a farming system that employs specific production practices designed
to reduce surface or groundwater contamination from nitrate pollutants by
decreasing the use of chemical nitrogen fertilizers. Option 3 as illustrated
here is clearly sustainable in that it is profitable over the time horizon, but
profits to the individual farmer are considerably reduced relative to the other
systems over the long term. At the same time, however, off-site environmental
benefits under this option may be greater than for the other options.
Option 3 would be the most difficult to convince most farmers to
implement, since the benefits of implementing such a practice or farming system
largely accrue to those other than the farmer. If the environmental benefits
are sufficiently great, however, the government may decide that a cost-sharing
strategy might be appropriate.
In the example illustrated in Figure 1, all options were shown to
be profitable in all years of the time horizon. This is, perhaps, an
unrealistic assumption, and profits might be negative for some options in some
years. Part of the issue centers on whether or not, when calculating profits as
returns over costs, all costs are covered. For example, should a charge be
levied for the farmer's own labor and capital? Depending on answers to such
questions, the profitability and sustainability of the various options is in
question.
Figure 2 is based on the profit scale illustrated in Figure 1, but
instead compares the profitability of the various sustainable options with the
conventional farming system. The profit measured on the vertical axis in Figure
1 is represented as a deviation from the profit obtained from the conventional
system, as represented by the zero axis. Values above
the zero axis represent profits above the conventional
system, whereas values below the zero axis represent profits below that of the
conventional system.
To the extent that the profits represented here are negative, they
represent the implicit or imputed costs associated with attainment of the
environmental benefits. If profits are positive, then the imputed cost of the
environmental benefits (whatever he benefits might be) is negative. Farmers
would likely be pleased if environmental benefits could be attained at no cost
as measured by foregone profits. They would be even more pleased if a
sustainable farming system that generated greater environmental benefits while
generating more profit than the conventional system.
Figure 3 is identical to figure 1 but assumes an increase in fixed
costs of $42,000 per year. The patterns for the various options are the same as
in Figure 1, except that the vertical axis labeled profit has been adjusted.
This might occur, for examples in instances where more of the true economic
costs are accounted for. Examples include opportunity costs of owners’ equity
capital, chargers for labor supplied by the farmer and other, similar, non-cash
costs.
With this adjustment, the conventional option remains profitable
only until year 4. The profitability of sustainable option 1 drops to zero in year
5. Sustainable option 2 is profitable for only a few years, whereas sustainable
option 3 is not profitable in any year. Even though the profitability pattern
for each option remains the same over time, the consequences of this adjustment
might lead to dramatically different conclusions with respect to farmers'
willingness to implement the various options. Clearly, option 3 is not now
sustainable. Even the sustainability of option 2 is questionable, given that
profits are positive in only a few years. The conventional production practice
(system) is no longer profitable after year 4.
In (farm) business analysis, profits represent the return to all
inputs that are not specifically deducted as individual cost items. In a normal
farm business analysis, profits are defined as the return to the farm
operator's managerial skills, entrepreneurship (that is, willingness to assume
risk), farmer-supplied labor and the farmer's own equity capital. The
definition of profit frequently used in farm business analysis differs
significantly from an economic definition of profit. Using the economic
definition, a charge for the farmer's own labor and equity capital would
definitely be made. Profitability of the various options depicted in Figures 1
and 3 thus depends heavily on the whether the farm analysis or the economist's
definition of profit is employed.
Each of the farming system options presented in these graphs will
different types of environmental benefits and damages, and will occur as a
stream of benefits or damages over time. Figure 4 simplifies the problem by
collapsing a variety of environmental benefits and damages into a single
environmental index (sometimes called an environmental indicator) that varies
for each option over time. Such an indicator might include the effects of the
option on wind and water erosion, surface and ground water contamination, and
other measures. Similar techniques are widely used to rank cities with regard
to the quality of life based on weighted average of a variety of individual indicators.
Figure 4 thus illustrates some hypothetical patterns for
environmental indicators over time for the various farming system options over
time. Under the conventional option, after initially rising for a short period
of time, the indicator then steadily decreases. For sustainable option 1, the
indicator increases slowly but steadily over time, although over the time
period it does not achieve the levels illustrated for options 2 and 3. Under
option 2, the environmental indicator is higher than for either conventional
option or option 1. Option 3, the least profitable option, results in the
highest environmental index, and the environmental index remains nearly
constant over time as well. Each farming system option will potentially
generate a different stream of environmental benefits over time. Furthermore,
each will have a different stream of benefits and damages with respect to soil
erosion, fertilizer and pesticide leaching and potential for ground and surface
water contamination.
As suggested by these illustrations, tradeoffs frequently exist
between the environmental benefits to a particular production practice or
farming system, and the profitability of the practice or system over time.
Neither the profitability nor the environmental benefits to practices broadly
consistent with sustainability remain constant over time.
Figure 5 illustrates
possible hypothetical impacts on farm value (real value, that is, net of
inflation) of various production systems over time. A conventional system,
employing production practices such as conventional tillage systems that result
in high rates of wind and water erosion and chemicals instead of crop rotations
(leading to a potential reduction in soil organic matter and the deterioration
of soil structure over time) results in a declining real farm value. As the
benefits from reduction in wind and water erosion accumulate over time,
sustainable options 1 and 2 result in an increase in the value of the farm over
time. Sustainable option 3, however, merely maintains the real value of the
farm over time.
The Need for Public Support to Encourage Sustainable Agriculture
This section discusses
the need for public support (such as federal- or state-funded educational
programs and subsidies) to encourage farmer adoption of specific sustainable
agriculture production practices and integrating them into overall farming
systems. The type of public support may vary depending on the particular
farming practice or system under consideration.
In some instances, a particular production practice may be
beneficial to the environment and profitable from the first year of adoption.
Public support in this instance might be limited to (1) research aimed at
identifying and developing such specific practices and farming systems, and (2)
educational programs aimed at making farmers aware of the specific practice or
even an entire farming system. There may be other practices or integrated
farming systems that are expensive to adopt, and the cost of adoption may pose
a significant deterrent to adoption by farmers. Such practices and systems
might produce beneficial long-run impacts on the environment and still be quite
profitable for farmers.
To the extent that the proposed farming system provides greater
off-site benefits than the farming system currently in place, federal, state
and even local governments may have an interest in assuring that the
alternative is implemented. For example, if the alternative, proposed system
requires a capital outlay by the farmer in order to implement, the federal government
(through agencies such as the Soil Conservation Service) might agree to share
part of the initial start-up cost. The greater the off-site benefits, and the
greater the ratio of off-site to on-site benefits, the more interest government
an any level should be in assuring that the alternative farming system is
adopted.
With a few exceptions, pollution from agricultural activities is
classified by resource economists as "non-point" That is, it does not
arise from a specific identifiable site such as a manufacturing plant. An
exception would be pollutants arising from a facility such as a livestock
feedlot. The Environmental Protection Agency historically has largely had
regulatory authority to deal with pollution from point sources, such as the
site of a manufacturing plant. Point pollution is comparatively easy to
regulate in that the source and cause of the pollution and the identity of the
polluter is usually easy to determine. Regulation
often involves requirements to install devices capable of controlling the
pollutants of concern, with fines and orders to stop manufacturing processes
that are causing the pollution in extreme cases.
Pollution from agricultural activities largely arises as a result
of the collective consequences of decisions made by many individual producers. Batie, for example, wonders if farm-level solutions to non-
point environmental problems even exist (1994, p. 75). If a farming system is
chosen that results in high nitrate or pesticide runoff, each individual farmer
will be responsible for only a small, perhaps not even measurable, proportion
of the environmental pollution. Significant pollution problems only occur if
many (perhaps most) farmers in an area all choose farming
systems that generate high nitrate or pesticide pollutant levels. Furthermore,
to have a significant impact on reducing the pollution load, many farmers will
need to adopt farming systems that each, taken individually perhaps has little
impact.
Regulatory strategies commonly used for dealing with point
pollution problems are often much less effective when applied to non-point
pollution. Without a specific site, who should be regulated or fined? Other,
more creative approaches may be needed for dealing with non-point pollution
arising from agricultural production. Generally, these solutions require
other-than regulatory strategies. Some possible strategies include the
following:
1.
Research. Research is needed to determine if there are
alternative, economically viable production systems capable of doing less
environmental harm than those currently in place. The U.S. private and public
agricultural research system has proven very capable in designing new crop
varieties, improving the genetics of livestock, and in designing pesticides
capable of effectively controlling a specific weed or insect pest. This
research system has been far less successful in developing research capable of
dealing with questions that must be answered on a farming system basis. Many of
these questions can only be answered with research projects involving many
different specialists, and these projects in many instances, must be conducted
over a period of at least 5-7 years. An additional issue is that of tracking
the economic viability of alternative systems over several years, and comparing
the results with conventional systems.
Funding of agricultural research largely proceeds on a
year-to-year basis. As a consequence, academic researchers are anxious to show
results from their research activity in a comparatively short period of time,
at most a year or two. The prospect of a research project involving researchers
from a number of different disciplines with the measurable outcomes only
available over of a period of 5 to 7 years may not hold a great deal of appeal
to agricultural scientists and administrators.
2. Education.
Once the alternative farming systems have been identified as being economically
viable and environmentally beneficial, programs need to be developed to enable farmers
to make the changes necessary in order to implement the alternative farming
system. Crop and enterprises differ markedly in the knowledge and technical
skills required. This suggests that farmers might select enterprises in part,
by assessing their own knowledge an
skills about each enterprise.
Sustainability to some carries a connotation of somehow returning
agriculture to a simpler time, a time in which success at producing crops and
livestock was less information dependent, and a time in which farming practices
such as crop rotations and the use of green-manure crops substitute for
technology-intensive chemical fertilizers and pesticides. It does not
necessarily follow, however, that a sustainable farming system will require
less knowledge or technical skills than conventional production systems. For a
long time, farmers who adopt sustainable farming systems will still be
competing with farmers who do not choose to do so. In order to be profitable
over the long in competition with farmers opting for conventional farming
systems, greater knowledge and technical skills, not less, may be needed. The
extension service and the Soil Conservation Service are two publicly-funded
agencies that will become increasingly involved in providing educational programs
designed to farmers with the requisite knowledge and technical skills needed to
enable them to adopt sustainable farming systems.
3. Cost-Sharing. The
requisite research and farmer education programs are important to the adoption
of alternative sustainable farming systems. However, even if the research and
educational programs are in place, farmers still may choose to not adopt
sustainable farming systems. Farmers generally have a good understanding of the
risks associated with the set of production practices they are currently using.
Even if some farmers are convinced that an alternative farming system could be
as profitable as the one they are currently using, they may be reluctant to
adopt because of a fear that the variability in profit over time will be
greater than under the conventional farming system that are currently using.
Further, in order to change farming systems, some capital items will need to be
disposed of, and other capital items will need to be purchased. The up-front
costs of disposing partially depreciated machinery such as tillage equipment
while purchasing other items to accommodate the specific production practices
making up the new, sustainable system could be large.
To the extent that off-site environmental benefits of the alternative
farming system are large (with benefits to the non-farm public as well), it may
be reasonable for the government to share in at least some of the start-up
costs associated with the implementation of the alternative system. Such a
program might function similar to programs employed by the Soil Conservation
Service for implementing environmentally sound practices aimed, for example, at
reducing soil erosion. A program like this recognizes that there are both
public and private benefits from farmer adoption of production practices with
considerable environmental benefits.
Green Support Programs and Sustainable Agriculture
Few farmers will likely
adopt sustainable farming practices and systems that significantly reduce
profitability in the short and long run, even if the benefits for the
environment are high. If such practices and farming systems are to be adopted,
there will likely be a need for additional government involvement beyond the
publicly-funded research, educational programs and cost-sharing suggested
above. A number of authors have argued that the current system of government
price and income support payments for a number of major crops--payments that
increase as the volume of the commodity produced increases-- encourages farmers
to employ production techniques designed to increase crop production possible,
even if attaining this goal results in other, undesirable consequences. Such
government programs might, for example, depend heavily on historical yields,
and, as a result, (1) encourage farmers to apply more fertilizer than would be
deemed adequate in the absence of government payments, and (2) encourage
farmers to continue to keep in production land only marginally suited to crop
production, because if such land were put into other non-crop uses, the volume
of output would be reduced, and the government payments as well.
One approach that has been suggested is called a Green Support
Program (GSP), A GSP is a voluntary program that
provides monetary payments to farm operators or farmland owners in return for
the provision for environmental benefits (Lynch and Smith). Those advocating
such an approach would revamp the current commodity price support program to
focus more heavily on environmental goals. Environmental goals entered starting
with the swampbuster and sodbuster provisions of the
1985 Farm Bill with the swampbuster and sodbuster
provision, and extending to the additional environmentally- oriented programs
including the Wetland Reserve Program, the Water Quality Incentives Program,
and the Integrated Farm Management Program (Batie,
1994, p. 74).
One way of looking at a Green Support Program is as a logical
extension of the current sodbuster and swampbuster
programs of the 1985 Farm Bill and the additional environmental goals
articulated in the 1990 Farm Bill, designed to encourage farmers to implement a
variety of production practices that provide environmental benefits. Critics of
the current system of farm program payments argue that the emphasis on tying
program payments to output levels provides economic encouragement for farmers
to use production practices and adopt farming systems that are likely to be
harmful to the environment over the long run.
Under a GSP, government payments to farmers would be linked to the
adoption of production practices and farming systems that produce significant
environmental benefits. Thus, the system of federal farm program payments would
no longer be based entirely on acreages and production levels. Rather farmers
who adopted practices that are environmentally beneficial would, in part, be
compensated for the potential reduced long run profitability of such practices
through a revamped system of farm program payments. Those who choose not to
adopt these production practices would be ineligible for such payments.
Batie argues that a GSP provides specific incentives or penalties,
voluntary adoption may be difficult. She argues that a successful GSP, if
voluntary--that is, without government incentives-- must (a) identify and
target the location of the environmental problem (b) have access to and make
available the requisite technologies needed to enhance environmental quality,
and (c) producers must be somehow encouraged to make the adjustments needed on
a voluntary basis.
The threat of losing government payments from commodity price
support programs has been an important policy "tool" for
"encouraging" farmers to comply with the environmental provisions of
the 1985 and 1990 Farm Bills. Much of the current discussion about reducing and
eventually eliminating commodity price support programs in an effort to reduce
federal outlays has ignored the fact that once the commodity price support
programs are eliminated, the government will no longer have this tool to
discourage farmers from implementing farming systems and specific production
practices that are harmful to the environment. In the face of reduced,
unsubsidized commodity prices at world market price level, and without acreage
allotments, farmers may have economic incentive to maintain income by returning
fragile lands--land not in production when acreage allotments were in
effect--to production.
The idea of using money that was once used to support prices of
basic agricultural commodities instead to encourage farmers to adopt production
practices beneficial to the environment sounds highly desirable. Skees, however, suggests that major problems may occur in
designing specific mechanisms used for developing an implementation strategy
designed to achieve this kind of change in government policy (p.102).
Skees points out that politicians are primarily interested in funding
programs that result in obvious short-run benefits, and a GSP designed to
encourage farmers to adopt production practices that are environmentally
beneficial will, by definition, provide the bulk of the benefits in the long
run (p. 96). In this case, the long run is a period of time in which the
environmental benefits of the GSP are obvious that is longer than the period of
time to the next election. From a political perspective, there must be some
short-run benefits to a GSP that politicians who support such a program could
identify with as a basis for reelection.
Policymakers within the federal government are interested in
reducing and eventually eliminating price support payments on commodities such
as wheat and feed grains. Promises to cut spending in order to reduce the
budget deficit combine with the political position of the U.S. government in
international trade negotiations in which the U.S. is encouraging governments
worldwide to eliminate subsidies to specific industries, thus "leveling
the playing field" for all traders in world markets.
Any federal program aimed specifically at encouraging farmers to
adopt farming systems and specific production practices consistent with the
goals of sustainable agriculture must compete with policy designed to achieve
the dual goals of deficit reduction and free trade worldwide. Any regulations
placed on U.S. farmers in an effort to achieve environmental goals cannot be so
onerous such that U.S. farmers will no longer be able to produce commodities
profitably at world market prices.
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*David L. Debertin and Angelos
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at the University of Kentucky
