Gilliam, Henry C., Jr.

English

Research Papers in Economics

SOUTHERN  JOURNAL  OF AGRICULTURAL  ECONOMICS  JULY,  1977
DISCUSSION  OF FACTORS  AFFECTING STRUCTURAL CHANGE  IN
AGRICULTURAL  SUBSECTORS:  IMPLICATIONS  FOR RESEARCH
Henry  C. Gilliam,  Jr.
Two  major  themes  of the  provocative  paper  by  tween  risk  preference  and  socio-economic
Drs.  Reimund,  Moore  and  Martin  are  that:  (1)  re-  characteristics  of  participants  in  various pro-
search  is  definitely  needed  concerning  the  causes,  duction  subsectors,  and  to  identify  other
nature  and  results  of structural  change  in agricultural  attitudinal  characteristics  that tend to support
production,  and  (2)  the  model  derived  from  their  or  impede  adoption  of  new  production  or
historical  analysis  of  changes  in  the  cattle  feeding,  institutional technology.
broiler  and  processing  vegetable  production  sub-  4.  Positive,  rather  than  merely  normative,
sectors  may  serve  as  a  prototype  for  some  of  this  analyses  of  firm growth,  and  of the  formula-
needed  research.  This author concurs on both counts.  tion  of  yield  and  price  expectations,  with
Consequently,  remarks  will  be  more  of  a  summary  emphasis  on  the  marginal  value  of  more
than a criticism of their presentation.  precise information.
The  paper  begins  and  ends  with  emphasis  on  Though  far  from  inclusive,  this  panoply  of
current  inability  of  our  profession  to  provide  an  suggested research  needs might lead to the conclusion
adequately  documented  answer  to  the  question,  that  structural  change  research  is  a  hopelessly  com-
"Who  will  control  agriculture?"  One plausible  reason  plicated  task.  Preferable  is  the  alternative  interpreta-
for  this  knowledge  gap  is the  complexity  and variety  tion  apparently  held  by  Drs.  Reimund,  Moore  and
of  research  the authors  believe  is  needed to come  to  Martin,  that  this  research  represents  an  amazingly
grips with  the problem.  The list includes:  broad  and  promising  challenge  to  agricultural
1.  Assessment  of potential  economic  efficiency  economists  in  that  it  encompasses  research  interests
and  social  welfare  impact  of production tech-  and  expertise  of  virtually  any  member  of  the
nology.  They emphasize  importance of broad-  profession.
scope  analysis  by  pointing  out that  advances  What,  then,  accounts  for  scarcity  of  empirical
in  biological  and  mechanical  technology  of  work in  this area?  Perhaps  it is the lack of pioneering
feed  grain  production  was  a  major  factor  in  efforts-attempts to explore, however tentatively,  this
structural  change  in  the  cattle  feeding  sub-  largely  uncharted  morass.  If  so,  Dr.  Reimund  and
sector.  co-workers  are to be doubly complimented  for efforts
2.  Analysis  of  development  and  influence  of  to derive and publicize  a prototype.
institutional  technology,  which  they  define as  In  their  comparative  analysis  of  changes  having
including  organizational  linkages  between  occurred  in  fed  cattle,  broiler  and  processing
various  stages  of  a  given  subsector  and  vegetable  production,  they  identified  16  circum-
ancillary  services,  and  programs  and  policies  stances or events of varying relative importance  which
of  such  agencies  as  the  IRS,  EPA,  FTC  and  they  concluded  necessary  for  structural  change  to
OSHA, in addition to USDA.  occur  in  any  agricultural  production  subsector.
3.  Behavioral  research to measure  distribution of  Designated  as  key  factors  were:  (1)  new production
risk  aversion,  to  assess  the  relationship  be-  technology,  (2) new  institutional  technology,
Henry  C.  Gilliam,  Jr.  is  Agricultural  Economist,  Commodity  Economics  Division,  Economic  Research  Service,  stationed  in
Raleigh,  North Carolina.
21(3) shifts  in  interregional  competition  and  (4)  risk  The  problem  is  that  there  seems  to  be  no  clear
management  strategies.  demarcation  between  basic  causes  and  resulting
This listing  is amazingly  similar  to  one suggested  characteristics  of the  change.
in  1969  by  Paarlberg  [3].  In "...  trying to  identify  Dr.  Reimund  and  co-workers  place  major
those  conditions  that  appear  to  be  conducive  to  the  emphasis  on  the  importance  of  understanding  the
development  of  a  large-scale  integrated  system  .. .",  factors  that promote  structural  change.  By  contrast,
he  listed:  (1)  unexploited  scientific  knowledge,  less  attention  is  given  to  the  need  for  analysis  of
(2) economies  of size,  (3)  market opportunities  to be  forces  tending  to retard  or prevent intensification  of
exploited,  (4) large requirements  for management  and  production.  Several  economic  and  institutional
capital  and  (5)  favorable  attitude  toward  large-scale  factors  that  may  fall  into  this  category  are  men-
operations.  Paarlberg  was  considering  one  specific  tioned,  but  no  attempt  is  made  to  specify  the
type  structural  change,  while  Dr.  Reimund  and  combinations  or relative  levels  at which  such  impedi-
associates  address structural  change in  general.  ments  may effectively  block or modify the utilization
This  raises  the  question  of inevitability  of move-  of  available technology.  It appears  that this problem
ment in agricultural  production toward what has been  must also  be  dealt  with  before  the  goal of projecting
termed  the industrial  model  which,  in  its pure  form,  subsector structure  can be achieved.
includes  no  fixed  factors  of  production  [1].  Is  The  only point  made  by Reimund to be strongly
increasing  industrialization  the  only  relevant  and  challenged  is  the  rather  incidental  assertion  that
significant  type  of  structural  change  in  agricultural  change  in  interregional  competition  has  not  been
subsectors?  Or,  is  there  merit  in  the  contention  by  recognized  as an important structural  change  variable.
some  that  developing  scarcities  of  some  industrial  Observation  and  logic  seem  to  suggest  just  the
inputs,  notably  those  that  are  petroleum  based,  will  opposite;  because  shifts  in  location of production  are
reverse the  trend [2]?  more  easily  observed  than  most  other  factors,  con-
This  author's  unsupported  guess  is  that  tech-  siderable  attention  has  been  given  to  this phenom-
nology  will  triumph;  that  substitutes  at  affordable,  enon.  In  fact,  this  author  contends  that  significant
though  higher,  costs  will  be  developed  to  sustain  the  locational  change  signifies  structural  change  to  some
trend  to  increasing  intensification  in  agricultural  economists and many politicians.
production.  At worst, deviation  from this trend seems  Finally,  it  may  be  noted  that  new  production
unlikely  in  the  near  future.  Thus,  the  prototype  technology  and  evolving or potential  shifts in produc-
suggested  by  Reimund and  associates  appears  to be a  tion  location  are  features  of a number of commodi-
significant  step  toward their concept  of the ultimate  ties that  are important  in the South. The  rather rapid
goal of structural  change research,  which is to provide  increase  in highly coordinated,  large-scale  hog produc-
the  means  to  simulate  and  project  the  structural  tion,  especially  in  North  Carolina and  Georgia,  is one
configuration  of the various commodity  subsectors in  example.  This  subsector,  in  fact,  appears  to  be  a
agriculture.  prime  candidate  for  structural  change  research.  "Will
As  stressed  by  the  authors,  further  application  pigs  go  the  way  of  broilers?"  is  being  asked  with
and  refinement  of  their  prototype  is  obviously  increasing  frequency  both  in  the  South  and  in  the
warranted.  Further  testing  appears  needed,  for  traditional production region,  the Corn Belt.
example,  to  determine  whether  all  16  of  their  Also,  it  is  widely  believed  the location  stability
primary  structural  change  factors are  really essential  of two  major "money  crops"  of this region-tobacco
to  promote  rapid  industrialization  in  other  agri-  and peanuts-depends heavily on Government policies
cultural  subsectors.  Recall  that they characterize new  and  programs  that will  expire  this year. Further,  new
production  technology  as the triggering  factor  in the  production  technology  in  the  form  of  mechanical
process and suggest  that new institutional technology  harvesters  and  bulk  handling  and  curing  facilities  is
plays  an  implementing  role.  Are  these  two  factors  available  and  is  being  adopted  in  the  tobacco  sub-
alone  enough  to  ensure  that  the  structure  of  a  sector.  Thus,  importance,  value  and  timeliness  of
subsector  will  change  in  the  pattern  followed  by  analyses  of structural change  effects  of any  proposed
subsectors  analyzed?  Or are some  or all other factors  major  revisions  in tobacco  legislation  seem  apparent.
involved  in  their  hypothesized  scenario-shifts  in  The  contribution  made  by  the  work  of  Drs.
location  and  concentration  of production, innovative  Reimund,  Moore  and  Martin  is  welcome,  the  invita-
entrepreneurs  from  outside  the  subsector,  develop-  tion for others to join the effort is wide open, and the
ment  of  pecuniary  economies,  etc.-also  necessary?  potential payoff appears quite promising.
22REFERENCES
[1]  Breimyer,  H.  F.  "The  Three  Economies  of  Agriculture,"  Journal of Farm Economics, Volume  44,  No.  3,
August 1962, pp.  679-699.
[2]  Breimyer,  H.  F.  "Long-run  Demand,  Supply,  and  Political  Considerations  for  U.S.  Agriculture,"  Paper
presented  at Midwest Outlook Conference,  Purdue  University,  Lafayette, Indiana, August 16,  1973.
[3]  Paarlberg,  D.  "The  Forces  Modernizing  Agriculture,"  Address  at the  National  Farm  Institute,  Des  Moines,
Iowa,  February  14,  1969.
23

DISCUSSION OF FACTORS AFFECTING STRUCTURAL CHANGE IN AGRICULTURAL SUBSECTORS: IMPLICATIONS FOR RESEARCH

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Research Papers in Economics