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Published online by Cambridge University Press: 07 November 2014
Twice during the past five years the peculiar problems of the agricultural industry in the political economy have been analysed with acute perception in papers presented to this Association. There is a surprising unanimity of opinion among economists as to the nature of these problems; there is also, I believe, a rather wide area of agreement as to the general principles upon which policy designed to cope with these problems should be based. There is something of a gap between the way in which organized agriculture would attempt a solution to what, for the moment, I shall call “the farm problem” and that recommended by the economist. It is my purpose in this paper to attempt to explore the nature of this gap. Since more often than not this discrepancy in policy recommendations revolves around the function of the price system I have chosen the label “the farmer and the market.”
This paper was presented at the annual meeting of the Canadian Political Science Association in Halifax, June 9, 1949.
1 Schultz, T. W., “Two Conditions Necessary for Economic Progress in Agriculture” (Canadian Journal of Economics and Political Science, vol. X, 1944, pp. 298–311)CrossRefGoogle Scholar and K. E. Boulding, “Economic Analysis and Agricultural Policy” (ibid., vol. XII, 1947, pp. 436-46).
2 With about one-fourth of the gainfully occupied engaged in farming, the Canadian agricultural industry produces from one-eighth to one-sixth of the national income. See my article “Do Canadian Farmers Produce a Fair Share of the National Income” (Agricultural Institute Review, 05, 1948, pp. 205–7).Google Scholar
3 The census definition of a subsistence farm is as follows: “Farms on which the value of products consumed or used by the farm household amounted to 50 per cent or more of the gross farm revenue were classed as ‘subsistence Farms’. ‘Combination of Subsistence Farms’ are farms where the value of products used or consumed and the revenue from another main type, such as poultry, livestock, etc. were required to form 50 per cent or more of the gross farm revenue.”
4 Bachman, K. L. et at., “Appraisal of the Economic Classification of Farms” (Journal of Farm Economics, 11, 1948, p. 684).Google Scholar
5 Refer to Galbraith, J. K., “Monopoly and the Concentration of Economic Power” (in A Survey of Contemporary Economics, Ellis, Howard S., ed., Philadelphia, 1948, p. 114).Google Scholar
6 W. A. Mackintosh, The Economic Background of Dominion-Provincial Relations, Appendix 3 to the Report of the Royal Commission on Dominion-Provincial Relations (Ottawa, 1939), p. 85.Google Scholar
7 Johnson, D. Gale, Forward Prices for Agriculture (Chicago, 1947), p. 65.Google Scholar
8 Drummond, W. M., “Government Pricing of Farm Products” (Proceedings of the Eighteenth Annual Meeting of the Canadian Agricultural Economics Society, p. 51).Google Scholar
9 Mr. J. G. Taggart has interpreted the intent of Parliament in passing the Agricultural Prices Support Act as being that of obtaining income, rather than price parity. Taggart, J. G., “Stabilization of Prices of Farm Products” (Agricultural Institute Review, vol. I, no. 1, 1945, p. 23).Google Scholar This legislation has been used so far as a means of helping out the producers of products, the price of which has, or would have, for one reason or another, declined below a level considered fair, e.g., apples, honey, dry beans, butter, and potatoes. The price of the product rather than the income of the producer, appears to have been the primary criterion used in determining which products should be selected for price support.
10 Schultz, T. W., Agriculture in an Unstable Economy (New York, 1945), pp. 221–35.Google Scholar
11 Johnson, D. Gale, Forward Prices for Agriculture (Chicago, 1947), p. 176.Google Scholar
12 Report of the Royal Commission on Dominion-Provincial Relations (Ottawa, 1940), bk. I, p. 250.Google Scholar
13 Although inclined to believe that economists have been prone “to overrate greatly the performance of highly organized commodity markets as an institutional means for achieving an optimium allocation of resources in the production of farm products” Professor Schultz judges that there are, nevertheless, “strong grounds for putting more rather than less of the price-making burden on (private) institutions, for it seems apparent that the government has taken over aspects of the pricing function which it is ill-equipped to do.” Refer to his two articles: “The Theory and Measurement of Price Expectations” (American Economic Review, vol. XXXIX, 1949, p. 141)Google Scholar and “Agricultural Price Policy” (Proceedings of the Academy of Political Science, vol. XXIII, 1949, p. 17).Google Scholar