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The Faustian Bargain: Technology & the Price Issue

The Faustian Bargain: Technology & the Price Issue. Who is Faust?. Dr. Johann Georg Faust (1480–1540) appeared in a German folk tale He made a pact with the devil. So what does that have to do with agriculture?. Farm prices are related to technology—technology increases production, BUT

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The Faustian Bargain: Technology & the Price Issue

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  1. The Faustian Bargain:Technology & the Price Issue Who is Faust?

  2. Dr. Johann Georg Faust (1480–1540) appeared in a German folk tale • He made a pact with the devil

  3. So what does that have to do with agriculture? • Farm prices are related to technology—technology increases production, BUT • As production increases supply, the price drops • FAUSTIAN BARGAIN: IN EXCHANGE FOR INCREASED PRODUCTION, FARMERS ACCEPT LESS INCOME PER UNIT & SHARE REWARDS WITH CORPORATIONS THAT PRODUCE THE TECHNOLOGY

  4. Before Industrialization • In an era of small farms, farmers used human & animal labor • They raised their own draft animals, produced their own inputs on the farm, grew their own animal feed, recycled animal manure, saved seeds, rotated crops • Inputs: seed, fertilizer, agrochemicals, fuel, etc. • In that era prices for farm products increased

  5. After Industrialization of Agriculture • Technology now short-circuits nature • Farm income depends more on the amount spent on land, machinery, and loans (with interest) • Most profits are used to purchase inputs • As both costs & yields increased, prices decreased

  6. Farm Economics (post WW II) • Crop yields increased 2-3 times • Costs increased 15 times • Crop prices fell 40 – 60% • The proportion of gross farm income kept as net income dropped 10% • 1940-Present: • 6.35 million farms 2.33 million farms • Small family farms large-scale farms

  7. ISSUE FOR DISCUSSION: IS TECHNOLOGY ITSELF EVIL?

  8. Solutions? • Would increasing crop prices help? • To dissuade farmers from adopting new socially & environmentally destructive technologies • The companies that sell the inputs would simply raise their prices • It is less the market, but rather technology that alters market supply & demand & controls prices • Low prices demonstrate the power of technology & those who produce it

  9. To Protect Farm Prices: • Limit production & reduce incentives to produce more • “You can’t have it both ways. Wanting both higher commodity prices & the right to unbridled use of technology is like wanting the coin to come up both heads & tails”

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