‘The farm problem’ and ‘Farmers have to run faster to stand still’ refers to the phenomena that

Question

BlackTom AI · Accepted Answer

The farm problem describes the long-term tendency for farmers’ costs to rise while the prices they receive for commodities decline, forcing continuous increases in productivity just to maintain income.

1. Relevant knowledge points and concepts
- Terms of trade for agriculture: the ratio of prices received by farmers to prices they pay for inputs tends to decline over time.
- Cost-price squeeze: rising input costs (fertilizer, fuel, machinery) with stagnant or falling output prices reduce profit per unit.
- Productivity treadmill (or “running faster to stand still”): farmers must increase yields or production per worker to offset narrowing margins.

2. Step-by-step reasoning
- Start with a farm selling a unit of output at price P and incurring cost C, so profit per unit = P − C.
- If over time C increases and P decreases, profit per unit shrinks.
- To keep total profit constant, the farmer must raise output (or productivity) so that (Pnew − Cnew) × Qnew = (Pold − Cold) × Qold.

3. Calculation with intermediate steps (numerical example)
- Suppose initially P0 = $120, C0 = $100 → profit/unit = $20.
- Later P1 = $115, C1 = $110 → profit/unit = $5.
- Required production multiplier = (old profit per unit) / (new profit per unit) = 20 / 5 = 4.
- So Q must increase fourfold for the farmer to earn the same total profit, illustrating the “run faster” effect.

4. Why the correct answer is correct
- The correct option states costs rise and prices received fall, thus necessitating continual productivity increases. This matches empirical agricultural trends and directly explains the treadmill metaphor.

5. Why the other options are incorrect
- Option 1 (both rise): If both costs and prices rise proportionally, the squeeze may not occur; it contradicts the observed pattern.
- Option 2 (both fall): If costs fall with prices, farmers wouldn’t necessarily need to increase productivity continually; also “cover time” is a typo.
- Option 3 (costs fall, prices rise): This would improve margins, eliminating the treadmill effect and contradicts historical evidence.

6. Conclusion
The correct answer is: over time farm costs rise and farm prices received fall which means farmers have to continually increase productivity and production to stay in business — matching the provided answer.

‘The farm problem’ and ‘Farmers have to run faster to stand still’ refers to the phenomena that单项选择题

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