updated 3/25/2004 10:35:00 AM ET 2004-03-25T15:35:00

By pursuing innovative methods to grow crops and raise livestock, U.S. farmers have generated huge productivity gains that have given Americans and consumers around the world more food choices at lower prices, Federal Reserve Chairman Alan Greenspan said Thursday.

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Speaking to an international agricultural conference, Greenspan acknowledged that the vast improvements in farm productivity have come with some painful economic dislocations in the form of declining population in rural areas.

Only a few million Americans make their livings as farmers now compared with a peak U.S. farm population of 33 million in 1916, he noted. Declining farm populations have put severe strains on such institutions as schools, county government service and hospitals in the Great Plains and other rural areas, Greenspan said.

But he said that even with the decline in the number of farmers, rural areas were seeing an increase in their non-farm populations as manufacturers and, more recently, service companies have decided to locate in rural areas.

He said all the counties in America that were labeled non-metropolitan have seen their populations increase by one-fourth since 1960. He said that growth was particularly strong in towns "with attractive lifestyles and other amenities that are much in demand among today's workers."

"The growing tendency of workers today to migrate to rural areas also reflects space-reducing innovations in transportation, infrastructure and communications, such as satellite television, that have helped to lessen the physical remoteness of many rural areas," Greenspan said.

Greenspan said that U.S. farmers have led the world in productivity gains over the last century, but he predicted that they will have to keep pushing to boost crop and livestock yields further as the rest of the world begins to catch up.

However, he noted that even nations reporting rapid advances are still far behind the United States. He said that yields per acre of corn in Argentina have been roughly one-third less than those in the United States since the 1990s and yields in China are just one-half of those in the United States.

Greenspan, as he has been doing often in recent speeches, put in a plug for free trade, saying that American farmers had benefited greatly from the ability to sell their production in other countries.

"Today our nation's farmers are highly dependent on exports to absorb their remarkable productivity and their ability to compete internationally depends on lowering unit costs faster than producers in other countries are lowing costs," he said.

"Efforts to increase the openness of world markets will need to be maintained and intensified so that the full benefits of farm productivity gains can raise standards of living worldwide," Greenspan said.

Greenspan said that U.S. farmers were in a good position to meet this challenge because of the systems in place in the United States to support innovation in agriculture and to quickly disseminate the findings of that research.

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