As shown in Table 3.7, broiler chickens have a low price elasticity of demand, as
do many other agricultural products. This low demand elasticity accounts for the
wide swings in the income of farmers, particularly in response to bumper crops,or large increases in supply. Farm production is subject to many factors outside
producer control, such as the weather and attacks by insects. Crops are grown and
then thrown on the market for whatever price they will bring. If there is a bumper
crop, this increase in supply drives farm product prices down. Because quantity
demanded does not increase proportionately, given the inelastic demand, total revenue
to the producers decreases. This is the essence of the “farm problem” that has
confronted U.S. policy makers for many years
As shown in Table 3.7, broiler chickens have a low price elasticity of demand, asdo many other agricultural products. This low demand elasticity accounts for thewide swings in the income of farmers, particularly in response to bumper crops,or large increases in supply. Farm production is subject to many factors outsideproducer control, such as the weather and attacks by insects. Crops are grown andthen thrown on the market for whatever price they will bring. If there is a bumpercrop, this increase in supply drives farm product prices down. Because quantitydemanded does not increase proportionately, given the inelastic demand, total revenueto the producers decreases. This is the essence of the “farm problem” that hasconfronted U.S. policy makers for many years
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