AGRICULTURAL LAND,TECHNOLOGY AND FARM POLICY

The relative importance of farmland and of agriculture in a developed economy decreases over time, largely due to the landsaving bias in technological change. In spite of this decrease, or perhaps because of it, agricultural policies have sought to transfer income to farmers from consumers and taxpayers. Since World War II, a primary instrument which the US has employed in pursuing this transfer has been a system of acreage controls that restricts the input of land as a factor in field crop production. This programme has resulted in the transfer of benefits to land owners through capitalisation into land values. Evidence from a translog cost function and share equations of the US agricultural sector suggests that government intervention has moderated the decrease in the share of land in the value of agricultural production. At the same time, land-saving bias in technological change has been reinforced by the induced scarcity of land, thereby acting to reduce the land share.