Recognizing those complexities, this chapter ’s overview will focus on the objectives associated with economic security as noted above: that is, farm business security, including production, marketing, and other diversification strategies, and quality-of-life issues that pertain to the sustainability of the operations (Figure 4-1).
Strategies to improve economic security at the farm level include reducing production costs, increasing the value of farm products, and diversifying income streams. This section first addresses economic viability of different practices and systems associated with improving environmental performance of agriculture. It then discusses strategies for marketing and diversification that can improve economic security. The committee recognizes that those economic aspects are often interrelated with nonfinancial dimensions, which can also affect the sustainability of the farm business and are explored in later sections.
When the report Alternative Agriculture (NRC, 1989) was written, there was considerable skepticism that emerging alternative production systems—for example, organic farming, integrated pest management, or nonconfinement livestock farming—could be economically competitive with the dominant conventional farming practices. Since then, numerous case studies, enterprise-level and farm-level models, and farm accounting datasets have demonstrated that it is possible to realize economic gains and sometimes gain competitive advantages from the use of those alternative systems and other related practices. However, such gains and advantages are not guaranteed. (See the Sustainable Agriculture Research and Education website at www.sare.org for examples.) Rather than presenting a comprehensive summary of all of the relevant studies, illustrative examples are provided in this chapter to highlight key factors that influence economic outcomes for farm businesses.