1. Changing Economic Perspectives on the Farm Problem
By Bruce L. Gardner

2. What is the Farm Problem?
Low incomes
Instability of incomes
Decline in farm numbers
3 Key Elements of the farm problem
Supply and demand factors
Factor markets
Model limitations

3. The Supply-Demand Model for Agricultural Products
Very inelastic demand
Very inelastic supply
Demand increases slowly over time
Supply increases more rapidly
Implication:
Farm product prices decline over time

4. The Incorporation of Factor Markets and Dynamics
Labour
Labour could earn higher real incomes elsewhere in the economy.
Low return on investment
Why should state of disequilibrium between sectors persist for decades and cause chronically low farm incomes?
Continuous technical innovation reduces demand for farm labour. Indicating declining wage rates and labour income.
Lack of labour mobility
Fixed Asset theory

5. Fixed Asset Theory
Resources get trapped in agriculture
Investment in farm specific resources increases productivity and output, however these additional resources simultaneously create low earnings and/or capital losses.
“Treadmill” Effect
During periods of rising commodity prices expected returns from investment exceed acquisition costs so new investments are made. However, demand beings to decrease again resulting in lower incomes.

6. Model Limitations Functions are of aggregate commodities
Model assumes isolated markets
Inconclusive evidence to either confirm or reject theory of asset fixity.