Agricultural economics is an applied field of

economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...

concerned with the application of economic theory in optimizing the production and distribution of

food Food is any substance consumed by an organism for nutritional support. Food is usually of plant, animal, or fungal origin, and contains essential nutrients, such as carbohydrates, fats, proteins, vitamins, or minerals. The substance is in ...

and

fiber Fiber or fibre (from la, fibra, links=no) 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 incorporate ...

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 c ...

while maintaining a good

soil ecosystem Soil ecology is the study of the interactions among soil organisms, and between biotic and abiotic aspects of the soil environment. It is particularly concerned with the cycling of nutrients, formation and stabilization of the pore structure, the ...

. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader.

Agricultural Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled peopl ...

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 the 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. ...

development economics Development economics is a branch of economics which 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 ...

, 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 or ...

. 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, 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 ma ...

Origins

President Coolidge veto of McNary–Haugen Farm Relief Bill cartoon

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 higher (or tertiary) education and research which awards academic degrees in several academic disciplines. Universities typically offer both undergraduate and postgraduate programs. In the United Stat ...

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 Memorial ...

, 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 ec ...
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; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate ...
countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and
macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, an ...
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 might be subject 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. It decomposes the item being researched into its constituent characteristics, and obtains estimates o ...

pricing models, new technology and diffusion models (

Zvi Griliches Hirsh Zvi Griliches ( ; 12 September 1930 – 4 November 1999) was an economist at Harvard University. The works by Zvi Griliches mostly concerned the economics of technological change, including empirical studies of diffusion of innovations and ...

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 theoretical models whe ...

economic paradigm. In

Asia Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa. Asia covers an are ...

, the Faculty of Agricultural Economics was established in September 1919 in

Hokkaido Imperial University , or , is a Japanese national university in Sapporo, Hokkaido. It was the fifth Imperial University in Japan, which were established to be the nation's finest institutions of higher education or research. Hokkaido University is considere ...

Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...

, as

Tokyo Imperial University , abbreviated as or UTokyo, is a public research university located in Bunkyō, Tokyo, Japan. Established in 1877, the university was the first Imperial University and is currently a Top Type university of the Top Global University Project by ...

's School of Agriculture started a faculty on agricultural economics in its second department of agricultural science. In the

Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...

, agricultural economics was offered first by the

University of the Philippines The University of the Philippines (UP; fil, Pamantasan ng Pilipinas Unibersidad ng Pilipinas) is a state university system in the Philippines. It is the country's national university, as mandated by Republic Act No. 9500 (UP Charter of 20 ...

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 far ...

and prices, agricultural policy and development, food and nutrition economics, and environmental and natural resource economics. 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 Consumer economics is a branch of economics. It is a broad field, principally concerned with microeconomic analysis behavior in units of consumers, families, or individuals (in contrast to traditional economics, which primarily government or ...

; prices and incomes; market structures; trade and development; and

technical change A technical change is a term used in economics to describe a change in the amount of output produced from the same amount of inputs. A technical change is not necessarily technological as it might be organizational, or due to a change in a cons ...

and

human capital Human capital is a concept used by social scientists 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 substantial ...

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 or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either c ...

(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 behavior is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of how the consumer's emotions, attitudes, and p ...

. 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 have an impact on producers and consumers of food. Price levels depend on the food production process, including food marketing ...

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 an economist, Distinguished Professor and Department Head in the Department of Agricultural Economics at Purdue University. He authors books and articles related to contemporary food policy issues. Education and car ...

, 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 are 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 ( ceteris pari ...

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 purchased by agricultural producers, and subsidized by the federal government, to protect against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines ...

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: physical or economic water scarcity. Physical water scarcity is whe ...

and global climate change.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: growi ...

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 published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of eco ...

'', 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 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 Natural fiber, fiber products. Agricultural economics began as a branch of econom ...

''. 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 agricultural research center founded in the early 1970s to improve the understanding of national agricultural and food policies to promote the adoption of innovations ...

. 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 ''

'' 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 Agricultural science (or agriscience for short) is a broad multidisciplinary field of biology that encompasses the parts of exact, natural, economic and social sciences that are used in the practice and understanding of agriculture. Profession ...

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 w ...

commodities markets A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing ...

education Education is a purposeful activity directed at achieving certain aims, such as transmitting knowledge or fostering skills and character traits. These aims may include the development of understanding, rationality, kindness, and honesty ...

financial sector Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, ...

government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government i ...

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 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. Environmental resources management aims ...

real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...

, 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. ...

. Careers in agricultural economics require at least a

bachelor's degree A bachelor's degree (from Middle Latin ''baccalaureus'') or baccalaureate (from Modern Latin ''baccalaureatus'') is an undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to si ...

, and research careers in the field require graduate-level training; see

Masters in Agricultural Economics Master or masters may refer to: Ranks or titles * Ascended master, a term used in the Theosophical religious tradition to refer to spiritually enlightened beings who in past incarnations were ordinary humans *Grandmaster (chess), National Master ...

. 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'', the ScienceDirect collection of electronic journals, '' Trends'', ...

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 {{Authority control Food industry