Farmers as Entrepreneurs: Regulation and Innovation in American Agriculture during the Twentieth Century

Abstract

For the last half-century American agriculture has been one of the most regulated, yet most successful, sectors of the American economy. The federal government administers programs to restrict production, control prices, and provide special credit for farmers. Still, what is striking about this regulation is that its introduction in the 1930s coincided with the start of a revolution in agricultural productivity: in the three decades prior to 1930, total factor productivity in the farm sector increased at a mere 0.5 percent annual rate. By contrast, between 1935 and 1975 farm productivity increased at a 3.0 percent annual rate -- a performance that surpassed rates achieved in all but two industries of the manufacturing sector. So great were the gains in agricultural productivity that by 1980 one farmer fed 76 Americans on average, or 8 times the