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 Soil ecology studies interactions among soil organisms, and their environment. It is particularly concerned with the cycling of nutrients, soil aggregate formation and soil biodiversity. Overview Soil is made up of a multitude of physical, ch ...

. 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 The ''American Journal of Agricultural Economics'' is a peer-reviewed academic journal of agricultural, natural resource, and environmental economics, as well as rural and community development. Published five times per year, it is one of two jou ...

'', 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 Theodore William Schultz ( ; 30 April 1902 – 26 February 1998) was an American agricultural economist and chairman of the University of Chicago Department of Economics. Schultz rose to national prominence after winning the 1979 Nobel Memoria ...

, was among the first to examine

as a problem related directly to agriculture. Schultz was also instrumental in establishing

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 In economics, hedonic regression, also sometimes called hedonic demand theory, is a revealed preference method for estimating demand or value of a characteristic of a differentiated good. It decomposes the item being researched into its constit ...

pricing models, new technology and diffusion models (

Zvi Griliches Hirsh Zvi Griliches ( ; 12 September 1930 – 4 November 1999) was a Lithuanian-born economist at Harvard University. Zvi Griliches's works concerned mostly the economics of technological change, including empirical studies of diffusion of innova ...

multifactor productivity In economics, total-factor productivity (TFP), also called multi-factor productivity, is usually measured as the ratio of aggregate output (e.g., GDP) to aggregate inputs. Under some simplifying assumptions about the production technology, growt ...

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 , or , is a public research university in Sapporo, Hokkaido, Japan. Founded in 1918, it is the fifth-oldest government-authorised university in Japan and one of the former Imperial Universities. The university finds its roots in Sapporo A ...

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 The University of Tokyo (, abbreviated as in Japanese and UTokyo in English) is a public university, public research university in Bunkyō, Tokyo, Japan. Founded in 1877 as the nation's first modern university by the merger of several Edo peri ...

'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 Agricultural marketing covers the services involved in moving an agricultural product from the farm to the consumer. These services involve the planning, organizing, directing and handling of agricultural produce in such a way as to satisfy farm ...

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 Microeconomics is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms. Microeconomics focuses on the ...

; 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" ''

'', 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" ''

'', 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 Jayson Lusk (born 1974) is Vice President and Dean of the Division of Agricultural Sciences and Natural Resources at Oklahoma State University. Prior to that position, he served as Distinguished Professor and Department Head in the Department of ...

, Jill McCluskey and Jean Kinsey (2010). "Food and Consumer 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 Present-day climate change includes both global warming—the ongoing increase in global average temperature—and its wider effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes ...

.Jean-Paul Chavas, Robert G. Chambers and Rulon D. Pope (2010). "Production Economics and Farm Management" ''

'', 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 The ''American Economic Review'' is a monthly peer-reviewed academic journal first published by the American Economic Association in 1911. The current editor-in-chief is Erzo FP Luttmer, a professor of economics at Dartmouth College. The journal i ...

'', v. 92, pp. 160-164.C. Peter Timmer (2002). "Agriculture and economic development" ''

Handbook of Agricultural Economics A handbook is a type of reference work, or other collection of instructions, that is intended to provide ready reference. The term originally applied to a small or portable book containing information useful for its owner, but the ''Oxford Eng ...

'', Vol 2, Part A, pp. 1487-1546.

Professional associations

The

International Association of Agricultural Economists The International Association of Agricultural Economists (IAAE) is an International professional organization for agricultural economists. IAAE publishes the peer-reviewed journal ''Agricultural Economics''. The flagship conference of the Interna ...

(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 The International Food Policy Research Institute (IFPRI) is an international research center focused on agriculture and food systems that provides research-based policy solutions to reduce poverty and end hunger and malnutrition throughout low- ...

. In the United States, the primary professional association is the

Agricultural & Applied Economics Association The Agricultural and Applied Economics Association (AAEA) is a professional association of people working in agricultural and applied economics. History In 1910, the American Farm Management Association was founded at Iowa State University. In 19 ...

(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 ''

'' and ''

Applied Economic Perspectives and Policy ''Applied Economic Perspectives and Policy'' (''AEPP'') is a peer-reviewed journal of applied economics and policy. Published four times per year, it is the one of two journals published by the Agricultural & Applied Economics Association (AAEA), ...

''.

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 ...

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, ...

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 Association

Agricultural & 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 Trade

U.S. Department of Agriculture, Economic Research Service

European Commission on Farming
*Academic journals *

*
''American Journal of Agricultural Economics'' (AJAE)
*
''Applied Economic Perspectives and Policy'' (AEPP)Department of Agricultural and Resource Economics records
at the University of Maryland libraries
eurasian journal of agricultural economics
{{Authority control Food industry