@article{Creason:50102,
      recid = {50102},
      author = {Creason, Jared R. and Runge, C. Ford},
      title = {Agricultural Competitiveness and Environmental Quality:  What Mix of Policies Will Accomplish Both Goals?},
      address = {1990-07},
      number = {1686-2016-137113},
      pages = {48},
      year = {1990},
      abstract = {Agricultural competitiveness and environmental quality are  increasingly consensus objectives for American agriculture.  Yet the institutional interests undergirding agricultural  policy are often at odds with those promoting improved  environmental quality. This paper examines ways in which  institutional reforms can improve both agricultural  competitiveness and the environment. Farmers, like other  business managers, make decisions based on information  received from markets and other sources. This report shows  how farm management as an activity responds to signals from  commodity markets, federal agricultural policies, federal  and state environmental regulations, and private sector and  university extension recommendations. These individual  signals are examined and compared in terms of their effect  and compatibility. The signals are not always consistent,  placing the farmer in a cross-fire between environmental  critics and other interests that defend current  agricultural practices. We examine four ways in which  institutional reforms can improve both agricultural  competitiveness and the environment. First, the world  market should be the primary determinant of what is grown  at the farm level. For markets to .work effectively, all  policies, including trade and tax policies, must be  conducive to a stable macroeconomic environment. Second,  world market signals should not be distorted by farm  policies which reduce planting flexibility and control  supply. The "whole farm" base or Normal Crop Acreage  proposals now under discussion in Congress have merit on  both competitiveness and environmental grounds. Evidence  from a variety of case studies clearly indicates that  current programs place farmers in a position in which they  must often forsake good agronomic practices which are  environmentally responsible in order to retain program  benefits. Income support to the farm sector, if paid on a  whole farm base, would increase flexibility without  increasing the risk of lost income due to changes in  cropping practices or adoption of different agronomic  practices. Indeed, support levels could even be structured  to reward adoption of improved agronomic practices that  enhance the environment. Third, even if federal  agricultural policies were so reformed, there would still  be an important role for specific policies designed to  promote a variety of environmental improvements. But what  appear in Washington to be effective environmental  regulations appear to many farmers as misguided and  ineffective. One set of environmental regulations affecting  agriculture is based on denial of all farm program benefits  to farmers who fail the conservation compliance, sodbuster  and swampbuster tests of the 1985 Food Security Act. These  provisions are difficult to uniformly enforce and are  poorly designed, and should be amended to allow graduated  penalties based on the degree of damage per acre. The  Conservation Reserve Program (CRP) needs to be revamped so  that its bidding process reflects true costs, and so that  it is targeted to areas most in need of environmental  protection. The CRP and the conservation compliance,  sodbuster and swampbuster programs would all work more  effectively if the acreage reduction program (ARP) were  eliminated and a whole farm base adopted. This would lower  the opportunity cost of permanent land retirement at the  farm level, target such retirement specifically to acres  low in productivity and high in environmental  vulnerability, and increase the flexibility with which  productive land could be used. The other set of  environmental regulations affecting agriculture involve  prohibitions on agricultural chemical use. The  chemical-by-chemical registration process of EPA, in part  because it has proceeded at a snail's pace, has actually  hampered the development and marketing of more  environmentally benign chemicals, while leaving other  products in use. Legislation has established cancer risk at  the lowest detectable level as the basis for prohibiting  agricultural chemicals. This has led to restrictions on  chemicals with much lower levels of risk than those now in  use, and has failed to focus regulatory oversight where  human health risks are actually highest. Finally,  regulatory gridlock at the federal level has encouraged  states to act unilaterally, creating a patchwork of state  laws without any overarching pattern. Due to shortages of  funds, states will be tempted to move in the direction of  taxes on fertilizer or chemical inputs. Such taxes will  raise farm costs but are unlikely, unless they are  punitively high, to affect substantially the level of input  use and thus environmental quality. In sum, current  environmental policies hamper agricultural competitiveness,  without substantial benefits to the environment, and are in  serious need of reform. Fourth, research, extension and  private sector recommendations will remain crucial to both  improvements in environmental quality and to retaining the  competitive posture of U.S. agriculture. Critics have  emphasized the past preoccupation with yield increases to  the exclusion of environmental concerns. Yet, there are  opportunities for growth in technologies that address both  goals. Research and extension need to focus on both  productivity and environmental stewardship. Unfortunately,  neither the regulatory nor the farm policy environment is  providing positive incentives in these areas.},
      url = {http://ageconsearch.umn.edu/record/50102},
      doi = {https://doi.org/10.22004/ag.econ.50102},
}