Economic Factors Affecting Diversified Farming Systems

In response to a shift toward specialization and mechanization during the 20th century, there has been momentum on the part of a vocal contingent of consumers, producers, researchers, and policy makers who call for a transition toward a new model of agriculture. This model employs fewer synthetic inputs, incorporates practices which enhance biodiversity and environmental services at local, regional, and global scales, and takes into account the social implications of production practices, market dynamics, and product mixes. Within this vision, diversified farming systems (DFS) have emerged as a model that incorporates functional biodiversity at multiple temporal and spatial scales to maintain ecosystem services critical to agricultural production. Our aim is to provide an economists’ perspective on the factors which make diversified farming systems (DFS) economically attractive, or not-so-attractive, to farmers, and to discuss the potential for and roadblocks to widespread adoption. We focus on how a range of existing and emerging factors drive profitability and adoption of DFS. We believe that, in order for DFS to thrive, a number of structural changes are needed. These include: 1) public and private investment in the development of low-cost, practical technologies that reduce the costs of production in DFS, 2) support for and coordination of evolving markets for ecosystem services and products from DFS and 3) the elimination of subsidies and crop insurance programs that perpetuate the unsustainable production of staple crops. We suggest that subsidies and funding be directed, instead, toward points 1) and 2), as well as toward incentives for consumption of nutritious food.