Graph shows this is like farmers facing a horizontal demand curve. Farm incomes have had a tendency to decline over time because technological improvements have led to large increases in supply which have put downward pressure on farm prices. Increases in demand have been modest because agricultural products tend to have a low income elasticity of demand therefore the upward pressure on price has been small. Thus, the large increases in supply and small increases in demand have led to falling ag prices. Demand for these products also tends to the price inelastic so falling prices have meant falling incomes for farmers.
Graph shows falling prices and rising output with inelastic demand.
The government has tried to use price supports to keep ag prices high enough to generate decent incomes for farmers. The disadvantage of that policy has been the problem of what to do with agricultural surpluses. Graph shows the price support a price floor set above Pe. They have also used subsidies which they pay to farmers when they keep some of their land fallow. This reduces the supply on the market and raises the equilibrium price.