RECONSIDERING THE FARM PROBLEM UNDER AN INDUSTRIALIZING AGRICULTURAL SECTOR

Traditional notions about the "farm problem" may have to be reconsidered in light of the changing economic characteristics of industrialized agriculture. These changing conditions will affect the opportunity set ofpolicy alternatives available to policy makers in developed countries. Changes in four economic characteristics of the farm sector may affect the acceptability of policy alternatives: (1) An increasing integration of domestic and international markets; (2) An increasing differentiation offarm production intended for specific end uses; (3) An increasing demand for environmental quality, with the income elasticity of the demand for environmental quality being greater than the income elasticity of the demand for food; and (4) An increasing economic diversity in rural areasthat erodes the remaining linkages between the commercial agricultural sector and the rest of the rural economy.