Mandatory supply controls versus flexibility policy options for encouraging sustainable farming systems

We analyzed two sets of farm policy options, representing different ideological approaches to government involvement in agriculture, to estimate their effects on the relative economic attractiveness of "sustainable" and "conventional" farming systems. The mandatory supply control approach, through strict acreage limitations on program crops, represents a strong government role in commodity supply management. The Normal Crop Acreage approach on the other hand, allows farmers greater flexibility in deciding what crops to grow. We used economic models of five pairs of case study farms in different agroclimatic areas of South Dakota, covering corn-soybean, spring wheat, and winter wheat growing regions. Mandatory restrictions on the planted acreage of "program" crops, including soybeans, were found to favor the conventional systems, because they induced high prices for crops that predominate in conventional systems, especially corn, soybeans, and wheat. In principle, however, mandatory acreage controls could require compliance with certain sustainable agriculture practices. Normal Crop Acreage (NCA) proposals can encourage greater use of sustainable farming systems. Where conventional corn and soybean production is relatively profitable, as in parts of eastern South Dakota, NCA options by themselves appear insufficient to induce change overs to sustainable cropping systems. In wheat growing areas of northern and western South Dakota, however, where the two systems often are about equally profitable, NCA policies could promote sustainable systems, particularly if deficiency payments are not reduced for harvesting legumes and other non-program crops on NCA base. To have this positive effect, NCA policies must be introduced gradually and structured to limit adverse effects on the markets for legumes and other non-program crops that are important in sustainable rotations.