A PERSPECTIVE ON THE ECONOMIC-IMPACTS OF REDUCING AGRICULTURAL CHEMICAL USE

Adoption of agricultural practices that reduce or eliminate chemical use creates tradeoffs among yields and output, production costs and net income at the farm level. If widespread adoption is to occur, potential improvements in human health and the environment from reduced chemical use must be weighed against effects on aggregate farm income and consumer food prices. At present, these tradeoffs are subject to considerable debate. I review available farm level and aggregate economic studies of reductions in total agricultural chemical use. At the farm level, available studies suggest that organic and low-input farming systems result in declines in per acre yields and in lower net returns than most conventional farming systems, although the studies do indicate that net returns for the two systems can be comparable under some conditions. Several studies suggest that low-input systems perform well with respect to risk criteria. I also discuss the potential influence of government programs on the profitability of some low-input farming systems. All aggregate economic models conclude that widespread adoption of organic farming would result in decreased yields, decreased aggregate output, increased farm income, and large increases in consumer prices. These models have limitations, however. Recommendations are made for further economic research of the impacts of reducing agricultural chemical use at both the farm and aggregate levels.