Next Generation Agricultural Technologies: Assessing the Market and Policy Implications

The historical impact of newer technologies in agriculture has been to increase the supply of food and fiber by increasing output per unit of input. Increases in market supply of food and fiber, net of demand changes, result in lower prices. Generally, this has been good for society in terms of meeting the social need for affordable nutrition and shelter for a growing population. However, lower food and fiber prices may not necessarily be good for farmers because they may result in lower farm incomes. Profitable and viable farms are required for the sustainable use of natural resources. This implies that a new technology may enhance farm productivity, enhance resource conservation but result in lower farm incomes. Such social impacts need to continue to be studied as newer technologies become available. Understanding the market impacts of such technologies is necessary to design food and fiber policies that will ensure that all components of the sustainable use of resources is addressed from both social and economic perspectives. We use market theory to assess the potential impacts of newer technologies on selected farm products. We use changes in supply that could potentially result from newer technologies to estimate the changes in the prices and farm revenues of selected agricultural products. We conclude that newer technologies will reduce the incomes of farmers who produce products that have inelastic demand and increase the incomes of farmers who produce products that have elastic demand.