Economic Factors Affecting Farming

by Devra Gartenstein; Updated September 26, 2017
In the field of agricultural machinery available.

Although farming is one of the world's oldest professions, modern farming is affected by uniquely modern economic factors. Farmers today compete in a complex economic environment where customers choose from produce grown all over the world and governments provide financial incentives for the production of certain crops rather than others. Although independently minded growers manage to create markets of their own through direct sales and other creative strategies, the majority of American farmers are still at the mercy of both economic factors and the weather.

Commodity Prices

The price of major commodity crops such as corn and soy depends of a variety of factors, such as investor speculation, weather and demand for these crops for both food and nonfood uses such as biofuels. Farmers who grow commodity crops earn or lose money based on the current rate that industrial buyers will pay for their output. In addition, commodity prices are affected by international economic factors, such as the weakness or strength of the dollar, because these farmers are competing with American farmers as well as with growers from all over the world.

Subsidies

The American government pays subsidies to farmers who grow commodity crops such as corn and soy because modern federal agricultural policy is based on the assumption that agricultural mass production benefits the economy by keeping food prices low. In theory, this policy provides farmers with a measure of economic stability, and provides consumers with affordable prices on the many processed food products made from these commodity crops. This policy encourages farmers to create an oversupply of a narrow range of crops because they make money for growing these foods regardless of current market conditions.

Labor and Immigration Laws

For better or for worse, mainstream agriculture depends on poorly paid labor that is often performed by migrant farmers, who are frequently living in the country illegally. The work pays so little that most naturally born citizens are unwilling to do it. If we are to continue buying agricultural produce at the prices to which we have grown accustomed, we must rely on workers who will work for the low wages that are customary in the field. Farming is affected by immigration laws that influence the availability of labor, as well as labor laws that allow or disallow subsistence agricultural wages.

About the Author

Devra Gartenstein has owned and run a variety of food businesses for more than 20 years. She has published two cookbooks: "The Accidental Vegan" and "Local Bounty." Gartenstein holds Master of Arts degrees in philosophy and English literature.

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