The Agricultural Revolution: A Function of the Industrial Revolution

By

 


The Agricultural Revolution - settled farming, domestication of animals, irrigation - started about 10,000 years ago. The technology changed little until the beginning of the Industrial Revolution in the 1700s.

Because of the Industrial Revolution, agriculture has been radically transformed. A consequence of the “industrialization” of agriculture has been that farming has changed from subsistence farming (raising food to feed the farming family) to commercial farming (growing crops to sell in markets). Because of the reduction in transportation costs, markets for farm products are now global.

Like other industries, agriculture has gone through waves of absorbing innovation and new technology developed by input suppliers.

Agriculture, especially grain production, has been transformed by 
  • steel plows and implements. 
  • animal-drawn harvesters and combines. 
  • tractors and other mechanized equipment.
  • chemical fertilizers.
  • pesticides.
  • herbicides.
  • irrigation systems.
  • hybrid and genetically-modified seeds.
  • production planning information systems.

Many suppliers became large corporations, including Ford (tractors), John Deere, International Harvester, Caterpillar, and Bayer (owns Monsanto). Modern equipment manufacturers are currently incorporating sensors, robotics, GPS-based production planning, and artificial intelligence into their products and software. Driverless tractors, combined with automated computer-controlled planting, growing, and harvesting systems are being developed. AI platforms are already being used.

Farmers have combined many of these inputs to realize economies of scale. The result of all this innovation, plus better-educated farmers, has been dramatic increases in productivity – output per acre and output per farmer – and reduction in real unit costs. Owners of larger farms also tend to specialize. Also gigantic feedlots. 

Organic farmers use fewer inputs (no chemical fertilizers, no herbicides, no pesticides) so should have lower costs. But yields (output per acre) are so much lower that the unit cost is higher. On the other hand, organic farming avoids some of the "social costs" or "negative externalities" of modern farming (see below for a list of negative externalities).

Even if some agriculture continues to retain some aspects of perfect competition (global spot price markets), they rely on large suppliers of inputs to provide them with waves of innovation to reduce unit costs and increase productivity. They sell to large food processing companies that rely on new product development, branding, marketing, price discrimination, and economies of scale to increase sales and profits.

Agriculture, the dominant economic activity before the Industrial Revolution, has been radically transformed by the technological innovations of the Industrial Revolution. Before the Industrial Revolution, about 90% of the labor force were farmers or farm workers. In the United States, about 2% of the labor force is directly in farming. About 6 million farmers and agricultural workers produce enough food to feed 335 million Americans and contribute over $140 billion of exports. It is extraordinary that the world's farmers can produce enough food to feed eight billion people. And one billion cows.

For better or worse, agriculture has become energy-intensive. Not only to drive the machinery but also to produce nitrogen fertilizer and other chemicals.

In all wealthy countries, farmers are heavily subsidized with government payments and assistance. Agriculture subsidies are the largest category in the European Union budget.

But large parts of the world, particularly sub-Saharan Africa, are facing a future of increasing population, subsidence and low-yield farming, and expansion onto marginal land. In some countries, the average-sized farm is getting smaller (example - Burundi).

In many parts of the world, but especially in tropical zones, global warming is negatively impacting food production. A possible new example is that global warming may be interfering with the normal seasonal patterns of monsoon rains.  

"Social Costs" or "Negative Externalities" of Agriculture

The following is an AI Overview from Google's Gemini, with my added comments.

Negative externalities in agriculture are the unintended, harmful side effect effects of farming that are passed onto third parties or society and are not reflected in market prices. [1, 2, 3, 4]
Major Negative Externalities
  • Water Pollution: Excess nitrogen and phosphorus from inorganic fertilizers and animal manure leach into groundwater or run off into rivers and lakes. [1, 2, 3, 4, 5] Many countries, including the United States, have programs to minimize this problem.
  • Greenhouse Gas Emissions: Livestock, especially cows, release methane, a more dangerous greenhouse gas than carbon. [1]
  • Biodiversity Loss: Intensive monoculture farming, excessive land clearing, and pesticide use destroy natural habitats and kill beneficial pollinators or predators. [1, 2, 3]
  • Public Health Risks: Pesticide exposure harms farmworker and nearby resident health. [1, 2] Many pesticides and herbicides have been banned. 
  • Soil Degradation: Over-tilling and continuous monocropping deplete topsoil and reduce long-term land fertility. [1, 2] To fight this, many American farmers do not till the soil and use less herbicides.
Extensive, inefficient use of water in a period of global warming. Rapid reduction of aquifers.

In the past, famine and starvation were real and constant threats. Now, in wealthy countries, the major threat from eating seems to be obesity.
 

Comments

Post a Comment

Most Popular Posts

Adam Smith's Pin Factory

By
Image
Adam Smith - Our Founding Father INTRODUCTION   This essay on Adam Smith and his famous example of a pin factory also serves as an introduction to some of the themes in the over 100 essays in this blog.   Adam Smith wrote the  Wealth of Nations  during the beginning of the Industrial Revolution. It was published in 1776. The dynamics of the Industrial Revolution continue to be a disruptive force; because of AI, it might be even more disruptive in the future.   ADAM SMITH’S PIN FACTORY   Adam Smith’s description of a pin factory is on the first page of  The Wealth of Nations .  (Chapter 1 – “Of the Division of Labour”)  Drawings of pin factories of this period show workers using hand tools. Smith says the process can be broken down into 18 distinct steps, including packaging the pins. Smith mentions that pin factory workers were poorly paid, despite their high productivity.    Adam Smith says he visited a pin factory empl...
Read more

The Stock Market Crash of 1929 and the Beginning of the Great Depression

By
Image
Famous Headline Before You Begin If you don't know the background of this complicated story, you might want to first read a shorter version that introduces some of the key factors explaining the Crash and the Depression. See, Introduction to the Stock Market Crash of 1929 and the Beginning of the Great Depression Before reading this essay, I strongly recommend you see the PBS video on YouTube. Type in Stock Market Crash 1929. Look for: US – The Crash of 1929 (PBS), ALLHISTORIES – PLAYLIST.  The documentary is broken into 6 parts to show commercials. Or buy the video on Amazon Prime. Great documentary with wonderful photos, videos, and scenes from movies of the 1920s and the crash. Shows what a crazy time it was. The video is also a great introduction to Andrew Ross Sorkin's recent best-seller  1929:  Inside the Greatest Crash in Wall Street History - and How It Shattered a Nation.  This book concentrates on the roles played by a small number of key men; the v...
Read more

The English East India Company (EIC): Trade with India and Asia

By
Image
The Mughal emperor Shah Alam hands a scroll to Robert Clive, the governor of Bengal, which transferred tax collecting rights in Bengal, Bihar and Orissa to the East India Company.  Illustration: Benjamin West (1738–1820)/British Library INTRODUCTION   Founded in 1600, the English East India Company (EIC), like its Dutch equivalent the United Netherlands East India Company (VOC, from the Dutch initials) was an innovative new type of corporation. It was a model for the limited-liability, stockholder-owned and funded modern corporation. The EIC and the VOC were early prototypes for the modern multinational corporation. Originally created as a company to develop profitable long-distance trade, the EIC evolved into a political organization that controlled or dominated about two-thirds of the Indian subcontinent by the early 1800s. The EIC and the Navigation Acts were the starting points for England's naval dominance and colonial empire. The large increase in England's income and we...
Read more

Bilateral Oligopoly

By
Image
The best movie about the Gunfight at the O.K. Corral is titled My Darling Clementine. A great western - great cast, great photography.  DEFINITION OF A BILATERAL OLIGOPOLY Models of market structure assume that the demand side is represented by a large number of buyers.  The structure of the market, and the assumed market outcomes, depends on the number of suppliers and how they compete.  Suppliers either post one price or exploit their knowledge of buyer categories by using price discrimination.  Despite the comments about the key role of consumers in determining economic performance, consumers are fairly passive when the discussion focuses on imperfectly-competitive industries.  But many markets along supply chains are not structured this way; the buyers are not passive consumers but large corporations that do not passively accept suppliers’ prices.  Net prices are actively negotiated.  These markets are often bilateral oligopolies. ...
Read more

Josiah Wedgwood, the Wedgwood Pottery Company, and the Beginning of the Industrial Revolution in England

By
Image
Wedgwood Anti-Slavery Cameo A better introduction to the beginning of the Industrial Revolution than Adam Smith is the history of Josiah Wedgwood and the Wedgwood Pottery Company. This is how one company actually ushered in the Industrial Revolution. The revolutionary generation that first adopted steam engines saw the following trends and changes: Manufacturing was being modernized by a small group of entrepreneurs. Much of the new raw material processing and manufacturing was concentrated in a small area in the middle of England, away from London. These modernizing entrepreneurs formed a new economic, intellectual and social network. Modernizing entrepreneurs like Wedgwood tended to be members of Dissenting sects (like Quakers) or Nonconformist churches (not members of the Church of England), Whigs (liberals) in politics, and believers in “progress.” They were optimistic about the future, influenced by the ideas of Hume, Rousseau, Locke and Adam Smith. They believed...
Read more

List of Posts By Topic

By
Image
FIND POSTS BY CATEGORY The Beginning of the Modern Global Economy:  The Economic Rise of England Before the Industrial Revolution The Beginning of the Industrial Revolution in England and America The theme of the following five sections of the blog is that innovation and information, not price competition, are the main factors for understanding economic growth, competition, market structure and analysis. Basic Concepts and Theory Corporate Strategies And Management Market Behavior and Structure Market Dynamics and Information:  How Markets Work Economic Theory and Markets There is beginning a historic change in future populations and their demographics. This will interact with other variables and have a serious, maybe profound, effect on future economic growth. Demographics, Population Projections and Economics American History American Economic History Politics of the United States The Roman Republic and America - Differences and Some Possible Parallels China India Niger...
Read more

Government Finance 101. Fiscal Policy: Welcome to Alice in Wonderland

By
Image
Secretary of the Treasury UPDATE (8/2026) The expected yearly deficit for fiscal year 2026, ending September 30, 2026, is $2.1 trillion. This is higher than the deficit of $1.9 trillion in fiscal year 2025. One reason is that the expected $200 billion increase in government revenue from increased tariffs has to be refunded to importers and American companies because the Supreme Court declared the tariffs unconstitutional. The national debt will be over $40 trillion by the end of this fiscal year. Total interest expense will be around $1.1 trillion, with the interest rate a little under 3%. Thus, interest expense is now half of the total yearly deficit. Another way of looking at this is that half of new bond borrowing goes to paying interest on the national debt. Projections are that the national debt will be around $50 trillion in five years (FY 2031). Yearly interest expense might be between $1.75 trillion and $2.0 trillion, which assumes an interest rate of 3.5% to 4%. Th...
Read more

Explaining Derivatives - An Analogy

By
Image
You go around to farmers with cows. You buy all the cows and pay the farmers a small fee to milk the cows and sell the milk. You pay for the cows with ass(et)-backed securities called MBSs (Milked Bovine Securities) that you tell investors are udderly safe. But some of the cows don't give enough milk (cow flow problems) or give no milk at all. You take some of the asset-backed securities, say they're backed by the subprime cows, and use them as collateral to sell another set of securities called CMOs (Cow Milk Obligations). Then you buy CDSs (Cow Dried-up Swaps) from AIG (Angus Insurance Company) to insure the CMOs when the cows stopped giving milk. If you work it right, you collect more on the CDSs than you pay out to retire the CMOs. The money you get from selling the dead cows go to pay the CLOs (cow leather obligations). You could also sell CDOs (cow dung obligations) that depend on how much cow dung is produced. This is a typical Wall Street product - turning s...
Read more

John von Neumann Sees the Future

By
Image
John von Neumann JOHN VON NEUMANN CREATES THE FUTURE If you want to understand the world we live in, you have to know about the thinking of three men – Alan Turing, Claude Shannon and John von Neumann.   I’ve talked a little about Alan Turing in an earlier essay.   All three men knew each other, discussed their thinking with each other, and promoted each other’s ideas. John von Neumann has been called the smartest individual of the 20 th Century (by his brother-in-law, who won a Nobel Prize in Physics).   A n outline of von Neumann's accomplishments, which you can read about in  Wikipedia, is hard to believe.   He invented game theory, which I discussed in two earlier posts.   He belonged to a group of mathematicians who invented new statistical techniques at Los Alamos that made the atomic bomb possible. He invented game theory. In 1944, he wrote a memo that outlined the structure of the modern computer.   He then managed the design a...
Read more

The Roman Republic Commits Suicide: A Cautionary Tale for America

By
Image
Roman Legion Why Study Rome? Americans have focused on comparisons between Rome and America twice in American history.  The first time was during the period from before the Revolution to after the ratification of the Constitution and Bill of Rights, when the founding fathers and others looked to the Roman Republic for ideas and inspiration on how to structure the new government. After the American Revolution, the founding fathers, having read the Roman authors detailing the collapse of the Roman republic, worried about internal threats to the survival of their new republic.   The second time was when the United States became a superpower, especially after WWII, and then again after the collapse of the Soviet Union in 1991. Commentators compared America to the Roman Empire at the height of its power. There was some discussion about how America became a permanent warfare state and how it affected domestic democracy and civil society. ...
Read more