4
Economic and Social Dimensions of the Sustainability of Farming Practices and Approaches

The ability of different farming practices or farming systems to further sustainability can be evaluated across a wide range of potential dimensions, including food security, environmental, economic, and social outcomes, as noted in Chapter 1. In this chapter, the committee examines the concepts and science of agricultural sustainability in terms of the impacts of farming practices and approaches on economic security, food security, and community and social well-being. This chapter will summarize evidence concerning social and economic sustainability outcomes of various production and marketing practices at the farm level and at broader scales. It also will reflect on additional socioeconomic complexities tied to agricultural sustainability, including contribution of farming to community well-being, and food adequacy, food quality, and distributional equity issues. Following this overview, Chapter 5 uses a few system types to illustrate how various farming practices and approaches can be combined in a farming system to produce different sustainability outcomes. Social, cultural, institutional, and policy contexts surrounding agriculture often influence the sustainability of farming systems, and these factors are considered in more detail in Chapter 6.

Scientific evidence related to sustainable farming practices or farming systems in accomplishing the main socioeconomic goals associated with sustainability are presented here in three main sections. The first covers economic security at the farm level related to different production, marketing, and diversification strategies. Next the socioeconomic outcomes at the community level, including farm labor issues, community economic security, food quality, and access to food by different segments of U.S. society are presented. Last, food security and socioeconomic sustainability at a broader scale, are addressed, including issues such as food adequacy, quality, and safety.

ECONOMIC SECURITY OF SUSTAINABLE FARMING SYSTEMS

The viability of any farming system depends largely on its ability to contribute to the economic security of the key actors in the farm and food system. At the farm level, economic



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4 Economic and Social Dimensions of the Sustainability of Farming Practices and Approaches T he ability of different farming practices or farming systems to further sustainability can be evaluated across a wide range of potential dimensions, including food security, environmental, economic, and social outcomes, as noted in Chapter 1. In this chapter, the committee examines the concepts and science of agricultural sustainability in terms of the impacts of farming practices and approaches on economic security, food security, and community and social well-being. This chapter will summarize evidence concerning social and economic sustainability outcomes of various production and marketing practices at the farm level and at broader scales. It also will reflect on additional socioeconomic com- plexities tied to agricultural sustainability, including contribution of farming to community well-being, and food adequacy, food quality, and distributional equity issues. Following this overview, Chapter 5 uses a few system types to illustrate how various farming practices and approaches can be combined in a farming system to produce different sustainability outcomes. Social, cultural, institutional, and policy contexts surrounding agriculture often influence the sustainability of farming systems, and these factors are considered in more detail in Chapter 6. Scientific evidence related to sustainable farming practices or farming systems in ac- complishing the main socioeconomic goals associated with sustainability are presented here in three main sections. The first covers economic security at the farm level related to different production, marketing, and diversification strategies. Next the socioeconomic out- comes at the community level, including farm labor issues, community economic security, food quality, and access to food by different segments of U.S. society are presented. Last, food security and socioeconomic sustainability at a broader scale, are addressed, including issues such as food adequacy, quality, and safety. ECONOMIC SECURITY OF SUSTAINABLE FARMING SYSTEMS The viability of any farming system depends largely on its ability to contribute to the economic security of the key actors in the farm and food system. At the farm level, economic 

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0 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY security includes at least three important objectives that are addressed in this part of this chapter: • Ensure individual farm business viability. • Maintain farm household economic security. • Maintain or increase the quality of life for farm families and workers. Ensuring that farm workers have economic security and fair labor conditions is another important goal at the farm level; however, labor issues (and farms’ contributions to com- munity well-being) are discussed in the second part of the chapter. At face value, most people would equate economic security with conventional mea- sures of financial profitability, efficiency, and returns to various assets. Although those aspects are indeed critical components of the economic security of farm businesses, house- holds, and communities, broader outcomes—such as having sufficient income to meet household needs, ensuring an adequate quality of life, minimizing risk, and treating people fairly—need to be considered. There are complex and varying linkages between economic performance of farming practices and systems, and broader economic well-being or secu- rity. The assessment of any individual farm’s economic performance might differ depend- ing on the treatment of short-term versus long-term time horizons, acceptable levels of volatility and risk, and perceptions about different forms of economic rewards and trade- offs between outcomes. There is often considerable variability in economic performance among farms that use similar technical and managerial production practices. Variations in economic performance could be a result of differences in biophysical conditions (such as soil type and weather), resource endowments, management ability, or local market condi- tions, rather than the types of farming practices themselves. Financial returns to farming businesses reflect prices for farm inputs and outputs that are determined not only by market forces of supply and demand, but also by policy con- text. For example, national farm commodity support programs, public subsidies for cer- tain types of conservation practices, and international trade rules all influence the costs of production and market prices for most important farm commodities. The development (or absence) of local institutions to facilitate direct producer-consumer markets is another example of the influence of collective institutions on the success of individual farm mar- keting strategies. Regional variability and short-term or long-term changes in policies, programs, or institutions affect farmers’ management decisions and influence the economic performance of many farming systems. Many of those broader contextual influences are discussed in Chapter 6. The social context of farm production influences the economic viability of farming en- terprises and farm households. The level of economic performance required to sustain the farm business depends, in part, on the personal goals and values, and on the consumption, life style, and level of income that is acceptable to the farmer or the household members (Gasson et al., 1988; Gasson and Errington, 1993). Access to nonfarming sources of income is another important factor (Mishra et al., 2002). The persistence of family-scale farming enterprises over the last 100 years has been attributed by many scholars to a willingness of such producers to accept levels of economic return that are below normal market rates (Friedmann, 1978; Bennett, 1982; Reinhardt and Barlett, 1989; Barlett, 1993). The organiza- tion and production practices adopted by individual farm businesses also can affect the economic security of hired farm workers, and conversely, the availability of labor can affect the economic outcomes and sustainability of the farm operation, as will be discussed in a later part of this chapter.

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 ECONOMIC AND SOCIAL DIMENSIONS Recognizing those complexities, this chapter’s overview will focus on the objectives associated with economic security as noted above: that is, farm business security, including production, marketing, and other diversification strategies, and quality-of-life issues that pertain to the sustainability of the operations (Figure 4-1). Economic Security at the Farm Level Strategies to improve economic security at the farm level include reducing production costs, increasing the value of farm products, and diversifying income streams. This section first addresses economic viability of different practices and systems associated with im- proving environmental performance of agriculture. It then discusses strategies for market- ing and diversification that can improve economic security. The committee recognizes that those economic aspects are often interrelated with nonfinancial dimensions, which can also affect the sustainability of the farm business and are explored in later sections. When the report Alternative Agriculture (NRC, 1989) was written, there was consider- able skepticism that emerging alternative production systems—for example, organic farm- ing, integrated pest management, or nonconfinement livestock farming—could be econom- ically competitive with the dominant conventional farming practices. Since then, numerous case studies, enterprise-level and farm-level models, and farm accounting datasets have demonstrated that it is possible to realize economic gains and sometimes gain competitive advantages from the use of those alternative systems and other related practices. However, such gains and advantages are not guaranteed. (See the Sustainable Agriculture Research and Education website at www.sare.org for examples.) Rather than presenting a compre- hensive summary of all of the relevant studies, illustrative examples are provided in this chapter to highlight key factors that influence economic outcomes for farm businesses. FIGURE - Levels of analysis for understanding economic security. 4-1.eps bitmap

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY Economics of Production Practices That Can Improve Sustainability This section highlights evidence related to the financial performance of some of the practices described in Chapter 3 for improving environmental sustainability—reduced- tillage systems, crop rotations, crop nutrient management strategies, and other conserva- tion best management practices (BMPs). The committee notes that the financial perfor- mance of those practices depends not only on production costs, but also on the prices at which the products are sold. Production costs and prices are dynamic and depend on multiple factors including policies, market demand, and geographic location. Therefore, the illustrations of financial performance used by the committee are context dependent. Conservation Tillage As noted in Chapter 3, conservation tillage practices (including no-till and minimum tillage that disturbs 30 percent or less of the soil) have proven to be effective ways to reduce soil erosion. Conservation tillage has proven to be amenable to various scales of production, ranging from small to large operations, in a variety of crops. Huggins and Reganold (2008) noted the benefits and tradeoffs of no-till systems. The benefits include reduction of soil ero- sion, conservation of water, improvement of soil health, reduction in fuel and labor costs, reduction of sediment and fertilizer pollution in waterways, and sequestration of carbon. The tradeoffs are that transition to no-till from conventional tillage systems can be difficult, necessary equipment such as no-till seeders are expensive, no-till often increases reliance on herbicides, plants pests can shift in unexpected ways, more nitrogen fertilizer might be required initially, and increased ground cover might slow germination and reduce yields. One of the main economic questions concerning no-till versus conventional tillage is whether the gains from reducing labor and fuel outweigh any reduction in yield. The eco- nomic results seem to vary by crop, region, and cropping system. Triplett and Dick (2008) surveyed several studies. In Iowa, conventional tillage had higher returns than no-till with continuous corn, but no-till systems were more profitable with a corn–soybean rotation. Yield stability was similar for the two systems. Similar results were obtained in another study conducted in Indiana and Ohio. In Mississippi, Martin and Hanks (2009) evaluated different types of tillage with crop rotations. Increasingly, farmers in that region are rotating cotton with corn. The highest net returns were found when cotton and corn rotations were combined with minimum tillage In Washington State, under dryland conditions with low rainfall, a study noted the environmental advantages of the annual no-till rotation of winter wheat over the conven- tional tillage system with winter wheat and summer fallow in terms of the reduction in wind erosion and improvement in soil health (Schillinger et al., 2007). However, that study also found that the conventional tillage system was more profitable because of the lower yields associated with the no-till system. In terms of other small grains, Lankoski et al. (2006) found in Finland that no-till production of barley was more profitable than conven- tional tillage, but that conventional tillage systems were more profitable with wheat and oats. In Canada, Mohr et al. (2007) found that the highest returns for wheat–pea cropping systems were found on the “high soil disturbance seeding system” in the clay loam soil, but that the highest returns were found with the “low soil disturbance seeding system” in the loam soil. There are other aspects to the economic decision to use no-till systems. Huggins and Reganold (2008) found that with the reduced labor associated with no-till systems, some farmers can almost double the acreage they farm with the same machinery complement. Others might pursue a better quality of life with their labor savings. Although yields might

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 ECONOMIC AND SOCIAL DIMENSIONS be reduced with no-till systems in the short term, the Food and Agriculture Organization (FAO) concluded that yields over time with the no-till systems are likely be higher because of the improved soil health (FAO, 2008). Another important question is whether non-herbicide-based no-till or minimum tillage methods can be effective and economical in organic systems. Because the majority of no-till farming systems in the United States depend on herbicide inputs as a means of controlling weeds, some sustainability analysts (and organic advocates) perceive this dependence as both an ecological and economic concern. The use of organic methods and no-till agricul- ture is an emerging area of research. Both researchers and farmers in the United States and in other countries have developed organic methods for conservation tillage that do not incorporate the use of herbicides. Using mulches (such as straw or crop residues), putting a transparent plastic cover over soil to solarize it (Law et al., 2008), crimping, rolling or mowing weeds to reduce competition, and growing particular varieties of cover crops that can outcompete weeds are a few examples (Chase and Mbuya, 2008). The committee is not aware of any economic analyses on those practices. Crop Rotations Corn–soybean rotations have been shown repeatedly to have higher net returns than continuous corn rotations as a result of reduced production costs (less fertilizer and herbi- cide input), although tillage practices and management inputs can affect comparative net returns (Katsvairo and Cox, 2000). Moreover, corn–soybean rotations exhibited significantly less risk of serious income declines over a 14-year study period; part of the risk reduction was the result of diversification inherent in any rotation, although some came from posi- tive yield interactions between the two crops. Olmstead and Brummer (2008) found that adding alfalfa to Iowa farmers’ corn–soybean rotations can produce significant economic gains. They found that a simulated five-year rotation that included corn–soybean–oats/ alfalfa–alfalfa–alfalfa would result in a 24 percent net income increase compared to a five- year rotation of corn–soybean–corn–soybean–corn, even if the row crops received farm support payments. However, they pointed out that commodity program incentives have served as a disincentive for producers to move toward forage crops in rotations. Zentner et al. (2002) found that including oilseed and pulse crops in rotations with grains contrib- uted to higher and more stable net farm income in Canada. Other studies have reported comparative economic disadvantages associated with some diversified crop rotations under current market conditions. For example, Kelly et al. (1996) simulated a range of tillage and crop rotation options in the Upper Midwest and estimated their economic and environmental impacts over a 30-year period. They found that no-till rotations provided the greatest estimated net economic returns, followed by a conventional corn–soybean rotation; net returns on the two cover crop rotations were low- est, although they generated significant environmental benefits. Jatoe et al. (2008) simulated the impact of introducing environmentally beneficial crop rotations into potato production systems in Canada and found that the most environmentally protective rotations required substantial reduction in gross margins to producers. Cover Cropping As with many farming practices for improving sustainability, the economic perfor- mance of cover cropping is difficult to quantify. A holistic assessment of the economic performance of cover cropping would include estimates of direct and indirect costs, cost savings provided by the practice, and increased income as a result of improved yield. Snapp et al. (2005) reviewed economic costs of cover cropping internal to farms. A direct cost of

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY cover cropping is establishment. The establishment cost is particularly high for leguminous cover crops—up to 10 times higher than that for grasses—because of the high seed costs and the large amount of seed necessary for establishment. Indirect on-farm costs of cover crops include hindering establishment of the succeeding cash crop as a result of slow warming of soil or delayed nutrient mineralization and unanticipated cover crop management prob- lems that reduce the expected benefits. Another cost of cover cropping is the opportunity cost of income foregone from cash crops (Snapp et al., 2005). Despite the aforementioned direct, indirect, and opportunity costs, cover cropping can provide many benefits that often lead to cost savings and improved productivity, includ- ing weed suppression and improved pest control. Indirect cost savings—as a result of im- proved soil fertility and overall improved health of the cropping system—accumulate over time and are difficult to quantify. Long-term economic analyses of the benefits and costs of cover cropping might provide valuable information to farmers and encourage adoption of such practices (Snapp et al., 2005). Crop Nutrient Management Strategies Nutrient input for crops usually accounts for 30 percent or more of total variable costs of production (Lu et al., 2000). Using on-farm nutrient sources such as green manure and animal manure could reduce input costs, but crop productivity might be compromised to some extent. Gareau (2004) conducted a meta-analysis of 120 studies to examine the eco- nomic profitability of using synthetic fertilizer versus cover crop-based or animal manure- based fertility treatments. The analysis suggests that conventional systems using commer- cial fertilizers had higher profits than organic systems using cover crop-based or animal manure-based nutrient management for most grain crops. Nonetheless, cover crop-based and animal manure-based nutrient management systems hold promise if they are used in an organic system, partly because of the price premium (Gareau, 2004). Conservation Best Management Practices A nutrient management plan is designed to balance plant nutrient requirements with purchased and on-farm nutrient inputs. A plan provides several benefits, including creat- ing an optimum nutrient climate for plant growth, improving water quality, and improving farm profits by reducing inorganic fertilizer purchases (Maryland Cooperative Extension, 2009). Steinhilber (1996) noted that by giving nutrient credits to a preceding alfalfa crop, a farmer can save about $15–$30/acre in fertilizer costs from carryover nitrogen. A farmer can save $15–$30/acre in reduced inorganic fertilizer costs by giving credit to manure either applied in the previous year or in the current year. However, not all farmers benefit equally from nutrient management planning. A crop farmer without any previous legume crops or application of organic sources of nutrients and who is already conducting soil testing and following accepted fertilizer recommendations might not save any fertilizer costs from a nutrient management plan (Steinhilber, 1996). A survey of 487 Maryland farmers showed that there can be biases in nutrient management planning (Lawley et al., 2009). Nutrient management plans were adopted more frequently by larger farm operations with grain and livestock and less on environmentally sensitive land. Biases also depended on who wrote the plan. Independent crop consultants tended to recommend increases in fertilizer uses. By comparison, farmers who were educated and certified to write their own plans recommended decreases in their own fertilizer use. Poultry and dairy farmers in Virginia who are implementing nutrient management plans based on nitrogen and phosphorus can experience significant reductions in financial returns (Yang et al., 2000). Poultry litter (manure), in particular, is high in phosphorus. Re-

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 ECONOMIC AND SOCIAL DIMENSIONS peated applications of poultry litter or dairy manure to the soil can raise the phosphorus levels of soil and cause runoff of phosphorus and reduction in water quality. A nutrient management plan based on nitrogen and phosphorus will limit the applications of manure or litter to the land because the phosphorus levels are too high. A farmer can incur signifi- cant costs in either reducing the herd or flock size, transporting excess manure or litter to different locations, or purchasing inorganic fertilizer to meet nitrogen requirements that could have been supplied by the manure that was shipped elsewhere. The precision of fertilizer recommendations associated with nutrient management plans is also affected by weather and other variables during the growing season. Rajsic and Weersink (2008) compared ex ante recommendations of nutrient management plans with ex post analyses of optimal nitrogen application rates (based on actual field and weather conditions), and found that nutrient plans often recommend nitrogen application rates that are below optimum in Minnesota. Precision Agriculture for Nutrient Management Advances in technology have facilitated the development of farming equipment and management systems designed to apply agricultural inputs with greater precision, depend- ing on site-specific soil and crop plant conditions (Zilberman et al., 2002). Most precision agriculture technology is based on Global Positioning Systems (GPS) that are used to map soil fertility levels, crop yields, and other indicators with a great deal of spatial accuracy (often within a few feet). That information can then be used to operate variable-rate ap- plication equipment that applies different amounts of agricultural inputs to specific parts of a crop field. Theoretically, precision agriculture systems can reduce use of unnecessary agricultural fertilizers, pesticides, water, or labor and thus minimize loss of nutrients and chemicals to the environment and improve farmers’ net economic returns (Batte, 2000). A number of experimental studies have reported gains in productivity, input use efficiency, and economic returns from the use of precision agriculture systems across a range of pro- duction environments (Khosla et al., 2008). While enthusiasm about the promise of preci- sion agriculture remains high, adoption by farmers has not met with initial expectations. Explanations for low adoption include farmer uncertainty about economic benefits, risk aversion (which contributes to continued overapplication of inputs as insurance against crop failure), and the fact that some of the social benefits of the technology (for example, reduced losses to the environment) do not accrue as economic gains for producers (Napier et al., 2000; Zilberman et al., 2002). A growing number of experimental and long-term field studies suggest that impacts and economic benefits of precision farming practices can be variable across time and space (Koch et al., 2004; Rider et al., 2006; Tozer and Isbister, 2007; Bachmaier and Gandorfer, 2009; Biermacher et al., 2009). The net present value of nitrogen and phosphorus management can be affected by spatial and temporal variability in carryover nutrient levels from previ- ous crops, water availability, weed or pest pressure, and weather conditions, all of which lead to volatility in crop yields and economic returns (Bullock and Lowenberg-DeBoer, 2007; Lambert et al., 2007). Economic returns tend to be greatest when variability in soil con- ditions at the subfield level are high and the relative gains from site-specific management is increased relative to uniform application of farm inputs (Swinton and Lowenberg-DeBoer, 1998; Isik and Khanna, 2002; Robertson et al., 2008). Precision agriculture approaches that require investments in expensive machinery and equipment are more profitable on larger farming operations that can spread the fixed costs of precision agriculture technology across more acres (Fernandez-Cornejo et al., 2001; Godwin et al., 2003). Economic returns are also sensitive to market conditions for farm inputs and commodities. In general, the

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY higher the cost of farm inputs or farm commodity, the more likely precision agriculture will produce net economic gains (Khosla et al., 2008). The profitability of many precision agriculture systems can be overestimated if uncer- tainties such as variable operating costs and other uncertainties inherent in cropping systems are not incorporated into economic models (Tozer, 2009). Several researchers have called for more long-term fundamental scientific research across a wider range of production envi- ronments to establish a more solid foundation for the design and management of precision agriculture systems (Isik and Khanna., 2003; Bullock and Lowenberg-DeBoer, 2007). Integrated Pest Management Field studies have shown that integrated pest management (IPM) can improve finan- cial performance by reducing the cost of pesticide input, pest populations, and crop dam- age by pests. Trumble et al. (1997) compared two treatments of experimental celery plant- ings. The chemical standard treatment of nine applications of methomyl and permethrin were compared to an IPM program that included three or four applications of Bacillus thuringiensis, the need for which was determined by sampling insect populations for estab- lished thresholds. Both treatments resulted in less crop damage and better yields than the untreated control, but IPM had better economic returns than chemical treatment be- cause of reduced input costs. Reitz et al. (1999) found similar results in field station trials and also conducted a commercial trial in collaboration with a celery producer in Ventura County, California. The IPM program that relied on biological control agents and rotations of selective, environmentally safe biorational insecticides (Bacillus thuringiensis, spinosad, tebufenozide)—applied only when pests exceeded threshold levels—resulted in 25 percent fewer pesticides used compared to the grower’s program. The cost savings from reduced pesticide use were more than $250/hectare (Reitz et al., 1999). Burkness and Hutchison (2008) compared the efficacy and economics of an IPM pro- gram that uses reduced-risk pesticides (that is, pesticides with minimal negative effects on beneficial insects) on basis of need determined by established threshold with a conventional grower-based program in cabbage production. They found that the IPM program was more effective in reducing pests and resulted in an average of 10.5 percent higher marketable yields than the conventional program. Although the IPM program did not reduce pesticide use in all years, the average pesticide use over four years was 24 percent lower in the IPM program than the conventional program. The lower pesticide expense and higher market- able yield on average resulted in higher average net returns (Burkness and Hutchison, 2008). Few other articles examine the economics of pest management. A survey of articles on the topic from 1972 to 2008 shows that less than 1 percent of the articles include economic evaluations. Moreover, the economic analyses in at least 85 percent of the papers that in- cluded them were conducted by entomologists and not economists (Onstad and Knolhoff, 2009). Because economic performance can influence the rate of adoption of farming prac- tices that improve sustainability, research on economic evaluations are important to the future of agricultural sustainability. Business and Marketing Diversification Strategies Diversification of crop and livestock enterprises represents an important component of many modern sustainable agricultural systems. However, there has been growing attention to efforts of some farmers to diversify their income by developing alternative agriculturally related enterprises and marketing strategies (Barbieri et al., 2008). Four types of farm busi-

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 ECONOMIC AND SOCIAL DIMENSIONS ness and marketing diversification strategies that pertain to sustainability are discussed in this section: value-trait or niche marketing, direct marketing, agritourism and recreation, and diversification of income through value-added processing and off-farm income. Re- search suggests that all those types of diversification (and others such as contract service work) are increasing in importance in the United States (Hinrichs and Lyson, 1995; Barbieri et al., 2008), Canada (Smithers et al., 2008), Europe (van der Ploeg et al., 2000; McNally, 2001; Ilbery and Maye, 2007), Australia, and New Zealand (Guthrie et al., 2006). Broader di- versification strategies are typically motivated by dissatisfaction with economic pressures and returns from conventional markets (Renting et al., 2003). Generally, such strategies can offer economic benefits to the extent that they employ underutilized farm assets, are complementary to existing farming practices, increase the farmer share of income from con - sumer spending on retail food products, or reduce reliance on generic farm commodities as a source of farm business income (McInerney, 1991; McNally, 2001; Barbieri et al., 2008). The attractiveness of various business and marketing diversification strategies to farmers also depends on such nonfinancial reasons as impacts on leisure time, pleasurable work, compatibility with farm and nonfarm work commitments of household members (Anosike and Coughenour, 1990; Barlas et al., 2001), and farm type, size, and location. Value-Trait Marketing Consumer concerns about the safety and quality of modern farming and food systems have led to the rapid growth of markets for “value-trait” food products that offer particular traits that these consumers value. Most notable has been the increase in the organic market, which has grown at a rate of approximately 20 percent per year since 1990. Other value- traits that have established niche markets include sale of “local,” “natural,” and “fair-trade” foods, as well as “free-range,” “pasture-raised,” and “hormone-free” livestock products (Pollan, 2006). Factors that contribute to the growth of the organic market and other niche markets include consumers’ preference and sustainability initiatives of large retailers. (See Chapter 6.) Many farmers have recognized that emerging niche markets offer unique opportunities for diversifying farm business income and for differentiation in the market. The economic competitiveness of organic farming practices often depends on payment of price premi- ums by consumers seeking certified organic products. Farmers’ ability to tap into those niche markets can be an obvious way to improve the economic sustainability of the farm enterprise. While higher prices for products are possible, participation in niche and value-trait markets can generate new costs and challenges for the producer, including learning and adopting new production practices, as well as spending more management time to under- stand and establish new market channels and to interact with consumers, transport prod- ucts to market outlets, and ensure consistency in the quality and supply of their value-trait farm products (Lyson et al., 2008). In many situations, the development of successful value-trait food chains requires col- lective action by larger groups of producers and consumers (Conner, 2004), or development of institutional mechanisms to establish standards and certification systems or to maintain the integrity of product labels in the marketplace (Hatanaka et al., 2006), as discussed fur- ther in Chapter 5. Relatively small niche markets also have challenges in balancing supply and demand. When price premiums are high and entry into the market is easy, markets are at risk of becoming oversaturated, and competition among producers can erode price premiums, which has happened for some organic products. Similarly, economic downturns can result

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY in dramatic decreases in consumer demand for value-trait products if they are sensitive to price or income (Box 4-1). Moreover, producers who participate successfully in niche or value-trait markets generally need to be located relatively proximate to their consumer base, or at least close to a central processing or distribution facility that assists with market- ing. Producers in more remote locations are likely to have fewer options to participate in value-trait food chains (Selfa and Qazi, 2005). In spite of the challenges, increasing numbers of producers are participating in the previously mentioned types of niche markets, in part because they prefer the market options over the intense competitive pressures and consoli- dation trends associated with mainstream market channels. Direct Marketing For various reasons, operators of small- and medium-sized farms have difficulty com- peting with large farms in the mainstream food marketing system. For example, they might be unable to provide sufficient quantities needed to fulfill the supply requirements of large corporate buyers, they might not be able to take advantage of economies of scale to reduce their production costs, and they are not likely to have the manpower or capital to meet cri- teria imposed by buyers to monitor compliance with increasingly complex food safety and quality standards (Hendrickson et al., 2001; Reardon et al., 2001). These difficulties motivate farmers to seek other venue for sales. Many direct marketing approaches have been developed to meet the demand for value- trait products. Approaches to direct sales including the following: • Farmers’ markets. • Farm stands or “U-Pick” operations. • Community Supported Agriculture programs (CSAs). • Sales to institutional food service, such as “farm-to-school” programs. • Sales to local restaurants. • Sales to local grocery or specialty stores. For many reasons, direct marketing can be a viable strategy to increase the economic sustainability of a farming system (Hinrichs and Lyson, 1995; Feenstra, 2002). Initially, B OX - I mpacts of Economic Recession on Organic and Local Food Markets Food products produced with organic practices or other farming practices for sale to niche markets have typically captured price premiums in the marketplace (Greene et al., 2009). Although those products are perceived by consumers to offer important traits, emerging niche markets might be particularly suscep- tible to changes in consumer disposable income associated with the spike in energy costs, credit crunch, and declining personal income levels associated with the economic recession that began in 2008 (Hills, 2008). Various sources provide mixed evidence about the impact of recent economic downturns on these markets. For example, analysis by the Nielsen Corporation in early 2009 suggested that growth in organic sales had stagnated (Nielsen News, 2009), and news reports suggested that organic dairy markets were negatively affected (Martin and Severson, 2008; Zezima, 2009). However, analysis by the Organic Trade Association suggests that organic sales continued to increase at double-digit rates in 2008 (OTA, 2009). Aside from the impacts of economic stress, the rise of private-label organic products provided by some grocery chains has reduced demand for some branded-label products, leading to lower market prices and reduced total dollar value of organic sales (Hills, 2008).

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 ECONOMIC AND SOCIAL DIMENSIONS direct marketing allows a farmer to build social ties with the people who consume their food (Hinrichs, 2000; Lamine, 2005). The farmer-consumer relationship is built on trust and mutual exchange that can be more secure and long-lasting than anonymous market transac- tions in the mainstream food system (Granovetter, 1985; Kirwan, 2004). As such, producers might gain more control over the prices they receive for their products and reduce annual price volatility. By cutting out the role of food processors and retailers, direct marketing al- lows farmers to capture a larger share of the end consumer’s food dollar. Farmers engaged in direct marketing also report satisfaction in knowing the people who consume their food and feel that they are contributing to the well-being of their local community (Hinrichs, 2000; Smithers et al., 2008). In turn, consumers might benefit by knowing more about where their food comes from, might have access to food that is perceived as fresher and more healthful, and are able to better appreciate the contributions of farming to their local landscape and community (Sharp and Smith, 2003; Smithers et al., 2008). Two of the most common forms of direct marketing used by U.S. farmers are sales to local consumers through farmers markets and CSA arrangements. The majority of farm- ers’ market vendors sell their products as organic, natural, or other value-trait products (Gillespie et al., 2007). Although farmers’ markets and CSAs have grown dramatically in number and size over the past 10–20 years, those market approaches cannot always provide a sustained income to participating farm households (Feenstra et al., 2003; Varner and Otto, 2008). Many surveys consistently find that the vast majority of producers at farmers’ markets are relatively small-scale businesses that do not rely principally on farmers’ markets income to support their household, either because they rely on off-farm income or because they have other commercial farming ventures that generate more net income (Brown and Miller, 2008). Although the scale of economic opportunities for farmers might be limited at farm- ers’ markets, they have been an important opportunity for producers to develop business and marketing skills, and they play a major role in the creation of more localized food systems (Gillespie et al., 2007). According to the U.S. Department of Agriculture (USDA-NAL, 2009), Community Sup- ported Agriculture consists of: [a] community of individuals who pledge support to a farm operation so that the farm- land becomes . . . the community’s farm, with the growers and consumers providing mu- tual support and sharing the risks and benefits of food production. Typically, members or “share-holders” of the farm or garden pledge in advance to cover the anticipated costs of the farm operation and farmer’s salary. In return, they receive shares in the farm’s produce throughout the growing season, as well as satisfaction gained from reconnecting to the land and participating directly in food production. Members also share in the risks of farming, including poor harvests due to unfavorable weather or pests. The CSA concept was brought to the United States by Jan VanderTuin from Switzerland in 1984. CSA projects in Europe date to the 1960s, when women’s neighborhood groups approached farmers to develop direct, cooperative relationships between producers and consumers (Allen et al., 2006a). Two distinct types of CSAs have developed: (1) farmer- managed, subscription-based operations, which constitute 75 percent of all CSAs and (2) shareholder CSAs organized by a group of consumers, sometimes organized as not- for-profit organizations, who “hire” a farmer. The success of any CSA depends heavily on highly developed organizational and communication skills (Brown and Miller, 2008). Money raised by the sale of CSA shares is used as operating capital to finance farm pro- duction activities, and consumers typically receive weekly deliveries of fresh produce (and

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0 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY the Consumers Union, Baker et al. (2002) compared pesticide residue from foods in three market categories: organic, integrated pest management, and conventional. They found that produce from the conventionally grown category had the highest amount of pesticide residue. Organic produce had the lowest amount (about one-third that of conventionally produced fruits and vegetables) of pesticide residues and are less likely to contain multiple pesticide residues. Food Quality and Nutritional Completeness Producing quality food in terms of nutritional value and flavors is one of the objec- tives of satisfying human food needs. Along with food safety and price, nutrition and taste are among the values that consumers reported as most important to them (Lusk and Briggeman, 2009), even though taste and flavor attributes are partly subjective and difficult to measure and quantify. There are, however, studies that compare the nutritional quality of foods produced using different farming practices and systems. For example, Venneria et al. (2008) compared the nutritional characteristics, including fatty acids content, unsa- ponifiable fraction of antioxidants, total phenols, polyphenols, carotenoids, vitamin C, total antioxidant activity, and mineral composition, among genetically modified wheat, corn, and tomato crops and their nonmodified counterparts. Their study supported that genetically modified wheat, corn, and tomato crops are nutritionally similar to their non- modified counterparts. Abouziena et al. (2008) compared the total soluble solids of fruits and vitamin C content of fruits from mandarin trees grown under different weed suppres- sion treatments. They found no significant difference in total soluble solids of fruits among treatments, and vitamin C content was only significantly lower in the unweeded control. Hargreaves et al. (2008) examined antioxidant and vitamin C content in raspberries grown with two different organic composts (ruminant and municipal solid waste compost and compost teas) and did not observe any significant differences. In general, nutritional char- acteristics of crops are influenced by a multitude of factors including climatic variations, geographic locations, soil quality, cultivar, farming practices, and time of harvest. Many studies showed large year-to-year variations in the nutritional content of crops (Hargreaves et al., 2008; Koudela and Petkikova, 2008). Therefore, the effect of farming practices on nutritional characteristics, if any, is likely masked by the larger variability as a result of the other factors. The food quality and nutritional completeness of organic crops are discussed in Chapter 5. Next Generation of Farmers Farmers are the key to the vitality and sustainability of agriculture. As of 2008, about 40 percent of U.S. farmers are 55 years old or older (USDA-ERS, 2009), and one-fourth are at least 65 years old. Older farmers and landowners who control more than one-third of all U.S. farm assets are staying in farming longer than previous generations. Improved health and technological advances in farming equipment allow farmers to work in older age than farmers of previous generations. Farming is becoming popular as a part-time retirement activity (Gale, 2002). Although the turnover of farm assets will be gradual, many U.S. farm- ers will retire over the next decade. The graying of the farm population has led to concerns about what might happen to the large amount of farmland owned and managed by older farmers when they retire. Efforts have been initiated to support beginning and entering farmers as a strategy to ensure a diverse and viable farm sector. Beginning farmers are also valued because they

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 ECONOMIC AND SOCIAL DIMENSIONS bring skill sets that complement traditional management and production technologies and can be a source of innovation and entrepreneurial activity (Ahearn and Newton, 2009). Programs that target beginner farmers include Future Farmers of America (FFA), which has more than 506,000 members across 50 states; 4-H, which has more than 6 million members in 50 states and 80 countries; the American Farm Bureau Federation Young Farmers and Ranchers Program; National Young Farmer Educational Association; International Farm Transition Network; American Farmland Trust; and Land Trust Alliance. USDA provides financial assistance to beginning farmers and ranchers under its Direct Farm Ownership Down Payment Loan Program. The program provides retiring farmers the opportunity to transfer their land to future generations of farmers and ranchers. An individual requesting direct farm ownership assistance has to have participated in the busi- ness operations of a farm or ranch for at least three years, irrespective of whether the indi- vidual was the primary operator of the farm or ranch. Applicants are required to provide a down payment of at least 10 percent of the purchase price and meet all other direct farm ownership eligibility requirements to qualify for the Direct Farm Ownership Down Pay- ment Loan Program. Critics of this program state that direct loan limits have not changed in years and have not kept pace with inflationary changes. More funding and better rates and terms are needed to encourage entry into farming (USDA, 2010). Even with these programs, startup costs for farming is high and unaffordable for some. In addition, small-sized tracts of land that beginner farmers could afford are becoming in- creasingly rare. Beginner farmers who start out by renting land sometimes never have the opportunity to purchase farmland of their own because high land rental costs lower their profit margins. Contract farming requires large startup capital, and contract terms offer little long-term financial return or opportunities for young farmers to control and manage their own operation (Ahearn and Newton, 2009). Some states have programs to link up retiring farmers with young aspiring farmers to meet their mutual needs and to preserve family farms. FarmLink and other similar programs maintain databases of retiring farmers and potential young farmers looking for an opportunity to gradually purchase or run a successful farming operation. Some states have created linking programs, but greater effort is needed at the federal and state level, as well as with farm associations and Cooperative Extension to train and support the next generation of farmers and provide access to farmland (DiGiacomo, 1996). SUMMARY The use of certain farming practices or systems is partly dependent on whether they provide reasonable economic returns. Yet, research on economic sustainability of farming practices and systems is sparse compared to research on environmental sustainability and productivity. Chapter 3 listed approximately 30 practices that can improve environmen- tal sustainability, but the committee found economic studies on only a handful of those practices. Likewise, studies on social justice and community well-being related to farming practices and systems are lacking. Conducting research on the social and economic performance of farming practices and systems is complicated by the fact that their economic “viability” is always influenced by the specific development and constellation of market and policy conditions. Similarly, social impacts or social “acceptability” of individual farms can be influenced as much by the behavior of key actors and the values of community members as by inherent qualities of specific production practices or farming systems. These complexities do not make re- search on social or economic sustainability impossible, but require a more extensive base

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 TOWARD SUSTAINABLE AGRICULTURAL SYSTEMS IN THE 21ST CENTURY of research findings and more complex research designs to draw strong conclusions. Given those limitations, review of the scientific literature by this committee suggests several im- portant conclusions: • The economic benefits of some farming practices accumulate over time as the farming system becomes more resilient. Long-term economic assessment of farm- ing approaches would provide valuable information on economic sustainability of different practices. • Although such strategies as direct marketing, CSA, and agritourism help to pro- mote farm products and diversify farm income, financial security at the farm level remains a concern because many farms in the United States rely heavily on non- farm sources of income. • Some practices for improving environmental sustainability also contribute to im- proving community well-being because they enhance the aesthetics of the com- munity (for example, maintaining buffer strips). • Other social facets, such as farm labor conditions, can be improved irrespective of farming practices or systems used for production. Social sustainability can be im- proved by limiting the number of hours on repetitive tasks and allowing workers to switch between several tasks in a day. • Although some farmers reported that providing equitable wages and benefits to workers could be a financial constraint to their farms, some research and case studies have demonstrated the feasibility of designing production systems that are environmentally, economically, and socially sustainable. Hence, additional and sustained economic and socioeconomic research is necessary to complement the research on productivity and environmental sustainability and provide farmers with knowledge to design their systems to achieve the different sustainability goals simultaneously. REFERENCES Abouziena, H.F., O.M. Hafez, I.M. El-Metwally, S.D. Sharma, and M. Singh. 2008. Comparison of weed suppres- sion and mandarin fruit yield and quality obtained with organic mulches, synthetic mulches, cultivation, and glyphosate. HortScience 43(3):795–799. Ahearn, M., and D. Newton. 2009. Beginner Farmers and Ranchers. Washington, D.C.: U.S. Department of Agri- culture Economic Research Service. Allen, P. 1999. Reweaving the food security safety net: mediating entitlement and entrepreneurship. Agriculture and Human Values 16:117–129. ———. 2004. Together at the Table: Sustainability and Sustenance in the American Agrifood System. University Park: Pennsylvania State University Press. ———. 2008. Mining for justice in the food system: perceptions, practices, and possibilities. Agriculture and Hu- man Values 25(2):157–161. Allen, T., T. Gabe, and J. McConnon. 2006. The Economic Contribution of Agri-Tourism to the Maine Economy. Orono: University of Maine Department of Resource Economics and Policy. Anosike, N., and C.M. Coughenour. 1990. The socioeconomic basis of farm enterprise diversification decisions. Rural Sociology 55(1):1–24. Bachmaier, M., and M. Gandorfer. 2009. A conceptual framework for judging the precision agriculture hypothesis with regard to site-specific nitrogen application. Precision Agriculture 10(2):95–110. Baker, B.P., C.M. Benbrook, E. Groth, and K.L. Benbrook. 2002. Pesticide residues in conventional, integrated pest management (IPM)-grown and organic foods: insights from three US data sets. Food Additives & Contami- nants 19:427–446. Barbieri, C., E. Mahoney, and L. Butler. 2008. Understanding the nature and extent of farm and ranch diversifica- tion in North America. Rural Sociology 73(2):205–229.

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