Thursday, September 29, 2016

Agriculture is a unique business, in which land tends to be used no matter what, researchers say

Agriculture is unique in that nearly every inch of farmland is utilized, unlike other industries where large portions of land often remained unused to save room for peaks in demand, opine Harwood Schaffer and Daryll Ray of the Agricultural Policy Analysis Center at the University of Tennessee, in their latest edition of "Policy Pennings."

While a building that houses a business may have previously held several other types of business, been altered to fit changing needs or excess space been idled or sold, "the same is not true for agriculture, particularly crop agriculture," Schaffer and Ray write. "Crop farmers tend to use all of their acres all of the time. Total planted acres remain remarkable stable over time. Farmers may change the mix of crops they grow, but they are unwilling to allow acres go unused. They typically will plant cropland to something."

"In response to several years of higher crop prices, farmers are relatively quick to convert some of their pasture land to cropland as we saw during the last decade," Schaffer and Ray write. "The shift in the other direction does happen, but historically the change has been exceedingly slow. When a farmer goes bankrupt or otherwise leaves the industry, the land does not. It is sold to another farmer and remains in production, often with higher yields."

"Unlike the building that can be used by businesses in different economic sectors, when land on the edge of town is converted to a subdivision or paved over for a shopping mall or small industrial plant, the change is virtually permanent. It would be very expensive to return it to agricultural production," Schaffer and Ray write. "Buildings can be put up most anywhere, but agricultural cropland is where you find it and it tends to be used no matter what." (Read more)

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