Agricultural economics is an applied field of
economics
Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services.
Economics focuses on the behaviour and interac ...
concerned with the application of economic theory in optimizing the production and distribution of
food
Food is any substance consumed by an organism for Nutrient, nutritional support. Food is usually of plant, animal, or Fungus, fungal origin and contains essential nutrients such as carbohydrates, fats, protein (nutrient), proteins, vitamins, ...
and
fiber
Fiber (spelled fibre in British English; from ) is a natural or artificial substance that is significantly longer than it is wide. Fibers are often used in the manufacture of other materials. The strongest engineering materials often inco ...
products.
Agricultural economics began as a branch of economics that specifically dealt with
land usage. It focused on maximizing the
crop yield
In agriculture, the yield is a measurement of the amount of a crop grown, or product such as wool, meat or milk produced, per unit area of land. The seed ratio is another way of calculating yields.
Innovations, such as the use of fertilizer, the ...
while maintaining a good
soil ecosystem. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader.
Agricultural
Agriculture encompasses crop and livestock production, aquaculture, and forestry for food and non-food products. Agriculture was a key factor in the rise of sedentary human civilization, whereby farming of domesticated species created f ...
economics today includes a variety of applied areas, having considerable overlap with conventional economics.
[Daniel A. Sumner, Julian M. Alson, and Joseph W. Glauber (2010). "Evolution of the Economics of Agricultural Policy", '' American Journal of Agricultural Economics'', v. 92, pp. 403-423.] Agricultural economists have made substantial contributions to research in economics,
econometrics
Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. M. Hashem Pesaran (1987). "Econometrics", '' The New Palgrave: A Dictionary of Economics'', v. 2, p. 8 p. 8 ...
,
development economics
Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural c ...
, and
environmental economics
Environmental economics is a sub-field of economics concerned with environmental issues. It has become a widely studied subject due to growing environmental concerns in the twenty-first century. Environmental economics "undertakes theoretical ...
. Agricultural economics influences
food policy
Food policy is the area of public policy concerning how food is produced, processed, distributed, purchased, or provided. Food policies are designed to influence the operation of the food and agriculture system balanced with ensuring human health ...
,
agricultural policy
Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultu ...
, and
environmental policy
Environmental policy is the commitment of an organization or government to the laws, regulations, and other policy mechanisms concerning environmental issues. These issues generally include air and water pollution, waste management, ecosystem ...
.
Origins
Economics has been defined as the study of resource allocation under
scarcity
In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good. ...
. Agricultural economics, or the application of economic methods to optimize the decisions made by agricultural producers, grew to prominence around the turn of the 20th century. The field of agricultural economics can be traced back to works on land economics.
Henry Charles Taylor was the greatest contributor in this period, with the establishment of the Department of Agricultural Economics at the
University of Wisconsin
A university () is an institution of tertiary education and research which awards academic degrees in several academic disciplines. ''University'' is derived from the Latin phrase , which roughly means "community of teachers and scholars". Uni ...
in 1909.
Another contributor, 1979
Nobel Economics Prize winner
Theodore Schultz, was among the first to examine
development economics
Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural c ...
as a problem related directly to agriculture. Schultz was also instrumental in establishing
econometrics
Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. M. Hashem Pesaran (1987). "Econometrics", '' The New Palgrave: A Dictionary of Economics'', v. 2, p. 8 p. 8 ...
as a tool for use in analyzing agricultural economics empirically; he noted in his landmark 1956 article that agricultural supply analysis is rooted in "shifting sand", implying that it was and is simply not being done correctly.
One scholar in the field, Ford Runge, summarizes the development of agricultural economics as follows:
Agricultural economics arose in the late 19th century, combined the theory of the firm
The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in eco ...
with marketing and organization theory, and developed throughout the 20th century largely as an empirical branch of general economics. The discipline was closely linked to empirical applications of mathematical statistics and made early and significant contributions to econometric methods. In the 1960s and afterwards, as agricultural sectors in the OECD
The Organisation for Economic Co-operation and Development (OECD; , OCDE) is an international organization, intergovernmental organization with 38 member countries, founded in 1961 to stimulate economic progress and international trade, wor ...
countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and macroeconomic
Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/ GDP ...
policy implications of agriculture in rich countries, and to a variety of production, consumption, and environmental and resource problems.
Agricultural economists have made many well-known contributions to the economics field with such models as the
cobweb model
The cobweb model or cobweb theory is an economic model that explains why prices may be subjected to periodic fluctuations in certain types of markets. It describes cyclical supply and demand in a market where the amount produced must be chosen bef ...
,
hedonic regression pricing models, new technology and diffusion models (
Zvi Griliches),
multifactor productivity and efficiency theory and measurement, and the random coefficients regression. The farm sector is frequently cited as a prime example of the
perfect competition
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoret ...
economic paradigm.
In
Asia
Asia ( , ) is the largest continent in the world by both land area and population. It covers an area of more than 44 million square kilometres, about 30% of Earth's total land area and 8% of Earth's total surface area. The continent, which ...
, the Faculty of Agricultural Economics was established in September 1919 in
Hokkaido Imperial University,
Japan
Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
, as
Tokyo Imperial University's School of Agriculture started a faculty on agricultural economics in its second department of agricultural science.
In the
Philippines
The Philippines, officially the Republic of the Philippines, is an Archipelagic state, archipelagic country in Southeast Asia. Located in the western Pacific Ocean, it consists of List of islands of the Philippines, 7,641 islands, with a tot ...
, agricultural economics was offered first by the
University of the Philippines
The University of the Philippines (UP; ) is a Higher education in the Philippines#State universities and colleges, state university system in the Philippines. It is the country's national university, as mandated by List of Philippine laws, Re ...
Los Baños Department of Agricultural Economics in 1919. Today, the field of agricultural economics has transformed into a more integrative discipline which covers farm management and production economics, rural finance and institutions,
agricultural marketing and prices, agricultural policy and development, food and nutrition economics, and environmental and
natural resource economics
Natural resource economics deals with the supply, demand, and allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand the role of natural resources in the economy in order to devel ...
.
Since the 1970s, agricultural economics has primarily focused on seven main topics, according to Ford Runge: agricultural environment and resources; risk and uncertainty; food and
consumer economics; prices and incomes;
market structures; trade and development; and
technical change and
human capital
Human capital or human assets is a concept used by economists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a subs ...
.
Major topics in agricultural economics
Agricultural environment and natural resources
In the field of environmental economics, agricultural economists have contributed in three main areas: designing incentives to control environmental
externalities
In economics, an externality is an indirect cost (external cost) or indirect benefit (external benefit) to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced ...
(such as
water pollution due to agricultural production), estimating the value of non-market benefits from natural resources and environmental amenities (such as an appealing rural landscape), and the complex interrelationship between economic activities and environmental consequences.
[Catherine L. Kling, Kathleen Segerson and Jason F. Shogren (2010). "Environmental Economics: How Agricultural Economists Helped Advance the Field" '' American Journal of Agricultural Economics'', v. 92, pp. 487-505.] With regard to natural resources, agricultural economists have developed quantitative tools for improving land management,
preventing erosion,
managing pests, protecting biodiversity, and preventing
livestock diseases.
[Erik Lichtenberg, James Shortle, James Wilen and David Zilberman (2010). "Natural Resource Economics and Conservation: Contributions of Agricultural Economics and Agricultural Economists" '' American Journal of Agricultural Economics'', v. 92, pp. 469-486.]
Food and consumer economics
While at one time, the field of agricultural economics was focused primarily on farm-level issues, in recent years agricultural economists have studied diverse topics related to the economics of food consumption. In addition to economists' long-standing emphasis on the effects of prices and incomes, researchers in this field have studied how information and quality attributes influence
consumer behavior
Consumer behaviour is the study of individuals, groups, or organisations and all activities associated with the purchase, use and disposal of goods and services. It encompasses how the consumer's emotions, attitudes, and preferences affe ...
. Agricultural economists have contributed to understanding how households make choices between purchasing food or preparing it at home, how
food prices
Food prices refer to the average price level for food across countries, regions and on a global scale. Food prices affect producers and consumers of food. Price levels depend on the food production process, including food marketing and food di ...
are determined, definitions of
poverty thresholds, how consumers respond to price and income changes in a consistent way, and survey and experimental tools for understanding consumer preferences.
[Laurian Unnevehr, James Eales, Helen Jensen, Jayson Lusk, Jill McCluskey and Jean Kinsey (2010). "Food and Consumer Economics" '' American Journal of Agricultural Economics'', v. 92, pp. 506-521.]
Production economics and farm management
Agricultural economics research has addressed
diminishing returns
In economics, diminishing returns means the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal ('' ceter ...
in agricultural production, as well as farmers' costs and supply responses. Much research has applied economic theory to farm-level decisions. Studies of risk and decision-making under uncertainty have real-world applications to
crop insurance
Crop insurance is insurance purchased by agricultural producers and subsidized by a country's government to protect against either the loss of their crops Failed acreage, due to natural disasters, such as hail, drought, and floods ("crop-yield ins ...
policies and to understanding how farmers in developing countries make choices about technology adoption. These topics are important for understanding prospects for producing sufficient food for a
growing world population, subject to new resource and environmental challenges such as
water scarcity
Water scarcity (closely related to water stress or water crisis) is the lack of fresh water resources to meet the standard water demand. There are two types of water scarcity. One is ''physical.'' The other is ''economic water scarcity''. Physic ...
and
global climate change.
[Jean-Paul Chavas, Robert G. Chambers and Rulon D. Pope (2010). "Production Economics and Farm Management" '' American Journal of Agricultural Economics'', v. 92, pp. 356-375.]
Development economics
Development economics is broadly concerned with the improvement of living conditions in low-income countries, and the improvement of economic performance in low-income settings. Because agriculture is a large part of most developing economies, both in terms of employment and share of GDP, agricultural economists have been at the forefront of empirical research on development economics, contributing to our understanding of agriculture's role in economic development, economic growth and structural transformation. Many agricultural economists are interested in the
food systems
The term food system describes the interconnected systems and processes that influence nutrition, food, health, community development, and agriculture. A food system includes all processes and infrastructure involved in feeding a population: grow ...
of developing economies, the linkages between agriculture and nutrition, and the ways in which agriculture interact with other domains, such as the natural environment.
[Douglas Gollin, Stephen Parente and Richard Rogerson (2002). "The Role of Agriculture in Development" '' The American Economic Review'', v. 92, pp. 160-164.][C. Peter Timmer (2002). "Agriculture and economic development" '' Handbook of Agricultural Economics'', Vol 2, Part A, pp. 1487-1546.]
Professional associations
The
International Association of Agricultural Economists (IAAE) is a worldwide professional association, which holds its major conference every three years. The association publishes the journal ''
Agricultural Economics
Agricultural economics is an applied field of economics concerned with the application of economic theory in optimizing the production and distribution of food and fiber products.
Agricultural economics began as a branch of economics that specif ...
''. There also is a European Association of Agricultural Economists (EAAE), an African Association of Agricultural Economists (AAAE) and an
Australian Agricultural and Resource Economics Society. Substantial work in agricultural economics internationally is conducted by the
International Food Policy Research Institute.
In the United States, the primary professional association is the
Agricultural & Applied Economics Association (AAEA), which holds its own annual conference and also co-sponsors the annual meetings of the
Allied Social Sciences Association (ASSA). The AAEA publishes the ''
American Journal of Agricultural Economics'' and ''
Applied Economic Perspectives and Policy''.
Careers in agricultural economics
Graduates from agricultural and applied economics departments find jobs in many sectors of the economy:
agricultural management,
agribusiness
Agribusiness is the industry, enterprises, and the field of study of value chains in agriculture and in the bio-economy,
in which case it is also called bio-business or bio-enterprise.
The primary goal of agribusiness is to maximize profit ...
,
agricultural marketing,
education
Education is the transmission of knowledge and skills and the development of character traits. Formal education occurs within a structured institutional framework, such as public schools, following a curriculum. Non-formal education als ...
, the
financial sector
Financial services are economic services tied to finance provided by financial institutions. Financial services encompass a broad range of service sector activities, especially as concerns financial management and consumer finance.
The financ ...
,
government
A government is the system or group of people governing an organized community, generally a State (polity), state.
In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...
,
natural resource
Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest, and cultural value. ...
and
environmental management
Environmental resource management or environmental management is the management of the interaction and impact of human societies on the environment. It is not, as the phrase might suggest, the management of the environment itself. Environment ...
,
real estate, and
public relations
Public relations (PR) is the practice of managing and disseminating information from an individual or an organization (such as a business, government agency, or a nonprofit organization) to the public in order to influence their perception. Pu ...
. Careers in agricultural economics require at least a
bachelor's degree
A bachelor's degree (from Medieval Latin ''baccalaureus'') or baccalaureate (from Modern Latin ''baccalaureatus'') is an undergraduate degree awarded by colleges and universities upon completion of a course of study lasting three to six years ...
, and research careers in the field require graduate-level training;
see
Masters in Agricultural Economics.
A 2011 study by the Georgetown Center on Education and the Workforce rated agricultural economics tied for 8th out of 171 fields in terms of employability.
Literature
* Evenson, Robert E. and Prabhu Pingali (eds.) (2007). ''Handbook of Agricultural Economics''. Amsterdam, NL:
Elsevier
Elsevier ( ) is a Dutch academic publishing company specializing in scientific, technical, and medical content. Its products include journals such as ''The Lancet'', ''Cell (journal), Cell'', the ScienceDirect collection of electronic journals, ...
.
See also
*
Agrarian law
Agrarian laws (from the Latin ''ager'', meaning "land") were Roman law, laws among the Ancient Rome, Romans regulating the division of the public real property, lands, or ''ager publicus''. In its broader definition, it can also refer to the agric ...
*
Agrarian reform
Land reform (also known as agrarian reform) involves the changing of laws, regulations, or customs regarding land ownership, land use, and land transfers. The reforms may be initiated by governments, by interested groups, or by revolution.
Lan ...
*
Agribusiness
Agribusiness is the industry, enterprises, and the field of study of value chains in agriculture and in the bio-economy,
in which case it is also called bio-business or bio-enterprise.
The primary goal of agribusiness is to maximize profit ...
*
Agricultural recession
*
Agricultural value chain
*
Development economics
Development economics is a branch of economics that deals with economic aspects of the development process in low- and middle- income countries. Its focus is not only on methods of promoting economic development, economic growth and structural c ...
*
DIRTI 5
*
Electrical energy efficiency on United States farms
*
Food grading
Food grading involves the inspection, assessment and sorting of various foods regarding quality, freshness, legal conformity and market value.Saravacos, George D.; Maroulis, Zacharias B. (2011''Food Process Engineering Operations'' CRC Press ...
*
Food security
Food security is the state of having reliable access to a sufficient quantity of affordable, healthy Human food, food. The availability of food for people of any class, gender, ethnicity, or religion is another element of food protection. Simila ...
*
Land economics
*
Subsidizing
*
Transport economics
*
Vertical archipelago
The vertical archipelago is a term coined by sociologist and anthropologist John Victor Murra under the influence of economist Karl Polanyi to describe the native Andean agricultural economic model of accessing and distributing resources. While som ...
Further reading
* Nourse, E. G. (1916). "What is Agricultural Economics?". ''Journal of Political Economy''. 24 (4): 363–381.
References
External links
*Independent research institutions
International Food Policy Research Institute (IFPRI)*Academic and professional associations
African Association of Agricultural Economists (AAAE)Australian Agricultural and Resource Economics AssociationAgricultural & Applied Economics Association (AAEA)Canadian Agricultural Economics Society (CAES)
European Association of Agricultural Economists
International Association of Agricultural Economists (IAAE)
*Government agencies
U.S. Agency for International Development, Bureau for Economic Growth, Agriculture, and TradeU.S. Department of Agriculture, Economic Research ServiceEuropean Commission on Farming
*Academic journals
*
*
''American Journal of Agricultural Economics'' (AJAE)*
''Applied Economic Perspectives and Policy'' (AEPP)Department of Agricultural and Resource Economics recordsat the University of Maryland libraries
eurasian journal of agricultural economics
{{Authority control
Food industry