Q. What is the relationship between technology
adoption and farm size?
A. Advances in agricultural technology
have often been associated with productivity growth and
lower agricultural commodity prices. Furthermore, these
changes have been related to a reduction in farm numbers
and increased farm size (see farm
structure briefing room). Understanding the process
of technology adoption helps researchers determine potential
scale effects of new technology, as well as who may benefit
from technical change.
Part of the gain from agricultural productivity growth is transferred
to consumers and other sectors of the economy through increased
production and lower prices. However, the distribution of gains
from new technology among agricultural producers may be uneven.
Early adopters of new technology may realize increased profits,
at least in the short run. As more farmers adopt the technology,
the increase in aggregate supply causes agricultural prices to fall,
which can reduce farmer profits. Farmers who have adopted the new
technology are less likely than nonadopters to be driven out of
business because the technology may also reduce their production
costs. To remain in business, nonadopters may be compelled to adopt
the new technology. This cycle of technological advance, supply
increase, price decrease, and structural readjustment is often referred
to as the "technology treadmill."
There are concerns that technology development may squeeze small
farms out since certain types of technology may be more easily adopted
on larger farms. In addressing these concerns, it is useful to distinguish
between two broad categories of agricultural technology.
- Yield-increasing technology, such as new crop varieties, fertilizers,
pesticides, and agronomic practices, tend to be scale neutral
in their performance. In other words, they are composed of divisible
inputs that can be applied as efficiently on small farms as
on a large farms.
- Labor-saving technology substitutes machinery for labor. Mechanical
technologies may have scale effects since they are often most
efficiently applied on large farming units.
Some yield-increasing technologies may also be more rapidly adopted
by very large farms, which may be able to acquire information or
other inputs at lower cost, or receive higher prices for their products
than smaller farms. These factors may lead large farms to adopt
any new technology more rapidly than small farms, regardless of
the characteristics of the new technology. Nevertheless, empirical
studies have shown that small and medium farms quickly catch up
in the adoption of yield-increasing technologies, so that the gap
in the time of adoption by farm size is not large.
|
