The Routledge Handbook of Agricultural Economics

Gail Cramer, Krishna Paudel, Andrew Schmitz, Gail L. Cramer, Krishna P. Paudel, Andrew Schmitz

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781317225751
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

This Handbook offers an up-to-date collection of research on agricultural economics. Drawing together scholarship from experts at the top of their profession and from around the world, this collection provides new insights into the area of agricultural economics.

The Routledge Handbook of Agricultural Economics explores a broad variety of topics including welfare economics, econometrics, agribusiness, and consumer economics. This wide range reflects the way in which agricultural economics encompasses a large sector of any economy, and the chapters present both an introduction to the subjects as well as the methodology, statistical background, and operations research techniques needed to solve practical economic problems. In addition, food economics is given a special focus in the Handbook due to the recent emphasis on health and feeding the world population a quality diet. Furthermore, through examining these diverse topics, the authors seek to provide some indication of the direction of research in these areas and where future research endeavors may be productive.

Acting as a comprehensive, up-to-date, and definitive work of reference, this Handbook will be of use to researchers, faculty, and graduate students looking to deepen their understanding of agricultural economics, agribusiness, and applied economics, and the interrelationship of those areas.

1
An introduction to The Routledge Handbook of Agricultural Economics

Gail L. Cramer

An academic handbook is a reference book of the literature in a subject or area of study. Routledge Handbooks are

prestige reference works providing an overview of a whole subject area or sub-discipline and which survey the state of a field including emerging and cutting edge areas. The aim is to produce a comprehensive, up-to-date, definitive work of reference which can be cited as an authoritative source on the subject. (https://www.routledgehandbooks.com/collection/Business_Economics)

It is used primarily by researchers, faculty, and graduate students to continue to deepen their understanding of areas of interest and the interrelationship of those areas. There are all kinds of Handbooks. This one summarizes the research in agricultural economics, agribusiness, and applied economics. It provides some indication of the direction of the relevant research and where future research endeavors may be productive. In addition, the reference list at the end of each chapter summarizes relevant journal articles and other publications in the field.

This Handbook covers the entire field of Agricultural Economics. Therefore, it integrates microeconomics, macroeconomics, production and consumption, finance, international trade, natural resources and the environment, marketing, management, business, econometrics, and other sub-disciplines.

Agricultural Economics started as a profession by applying farm management and economic and business principles to farms. The current subject covers food from farm to fork and all the important resources influenced by agriculture such as land, water, clean air, environment, animals, rural development, education, forestry, trade, restaurants, oil, gas, agribusinesses, and farms. Therefore, Agricultural Economics has been broadened to include applied economics and business. The title of the profession is Agricultural Economics and Applied Economics. Applied Economics includes all the fields where agricultural economics overlaps with other disciplines. Also, undergraduate degrees are conferred in Agribusiness, Agrifinance, Natural Resources, Food Economics, International Trade or Business, and Economic or Community Development.

Agricultural Economics continues to grow nationally and around the world because the faculty and students are trained to solve practical business and economic problems. Agricultural Economics programs include classwork in agriculture, business and economics, statistics, natural and social sciences, mathematics, language, and research methods. Students can use their research methods and relevant classwork to provide alternative solutions to problems. This background and training allows them to be hired by any organization or business, not just by agribusinesses. Some business schools have developed substitutes for agricultural economists through specific training in operation research techniques, MBAs, and other management and finance programs. In addition, many economics departments have developed more research-oriented master’s and PhD programs, and in recent years, they have added more econometrics and statistics courses to their degree requirements.

The historical Agricultural Economics Handbooks are ageing, although a “major work” was published by Routledge Press in 2011 in four volumes edited by Gail L. Cramer. These volumes reviewed the entire literature in Agricultural and Applied Economics in 76 papers and specifically analyzed “critical concepts in economics.”¹ These volumes were reviewed in the American Journal of Agricultural Economics by Dr. Patricia Duffy at Auburn.² As stated by Dr. Duffy,

I found this set of volumes a highly worthwhile addition to my reference shelf. In addition to the collected articles, the work contains a thoughtful introduction by the editor, giving a broad overview of our discipline that I enjoyed reading.

Three other surveys of the field of Agricultural Economics have been published. One survey was completed by the AAEA (Agricultural and Applied Economics Association) between 1977 and 1992 by Lee Martin. A second was edited by Bruce Gardner and Gordon Raiser and was published in 2001. For the 100th anniversary of AAEA, the organization reviewed the literature again, producing The Centennial Issue of the American Journal of Agricultural Economics, Vol 92, Issue 2, April 2010. This issue covered the field of Agricultural Economics as production economics, marketing, agricultural policy, international trade, agricultural development, natural resources and conservation, environmental economics, food and consumer economics, rural development, agribusiness, and economic developments. This was the first official recognition of the broad field of Agricultural and Applied Economics. Up to the time of Walter Armbruster’s presidency of the AAEA, the AAEA regarded anything out of the areas of production, marketing and trade, econometrics, statistics, and possibly policy to be outside of its core. Other studies were published in AJAE (American Journal of Agricultural Economics), but economic development, international trade, consumer economics, rural and regional economics, and environmental economics were low priority at annual meetings and in the journals. Bruce Gardner advocated for publishing an agricultural policy journal and the cooperative extension economists expressed their desire for a popular extension outlet such as the Choices magazine.

Organization of this Handbook

This Handbook covers the entire field of Agricultural Economics and will be referenced as the primary source of current data, references, and literature.

The Routledge Handbook of Agricultural Economics begins with the topic of welfare theory. Alternative welfare theories are examined and applied to federal agricultural policy. Next, the important subjects of world food and food security are covered. Food and food safety are a daily concern in all countries. Food recalls are becoming more common. Next, natural resources and the environment, including climate change, are covered. Water is given priority because of its significance in food production and its impact on land availability. International trade theories and growth models are explained. Trade usually improves both the production and distribution of good and services. Influences on the marketing system coming from the general economy or macroeconomics is discussed. Advancements in econometrics and modeling are presented and used in estimating demand and supply functions. The marketing system is developed with agribusiness, futures, options, and specific industry studies. The research important to farmers is distributed in the U.S. by the Cooperative Extension Service at Land Grant Universities. The last few chapters emphasize production economics and farm management.

These 41 chapters are well written and represent the entire field of Agricultural Economics at an advanced level. Seniors and graduate students should have the background to read and understand these papers.

Climate change is given significant coverage because of the impact weather has on the world and the question of whether man can reduce the impact of weather changes. It is known that glaciers are melting, sea levels are rising, air and water are being polluted, and the environment is decaying and/or changing. Hypoxia and other factors affecting the planet can be studied and research may find alternative ways to adjust to these influences or reduce their impact on human utility and comfort. The planet is ageing and, with that reality, science must find new ways to improve the human condition.

Progress has been made in combating world hunger. Even as recently as 50 years ago, extreme food shortages were evident in China, India, Russia, Africa, and South and Central America, while elsewhere food was plentiful. With the aid of the CGIAR (formerly known as Consultative Group for International Agricultural Research) and their associated research organizations, as well as United States Agency for International Development (USAID) and changes in free markets, the world food situation has improved substantially. Food deficits occur every day in the United States as well as all other countries of the world. It is possible for the world to produce enough food to feed the world’s population, but we lack the economic and distribution systems to close the food gap. Current resources and policies have proven inadequate to solve this huge problem, which affects about 814 million people worldwide.

The papers in this Handbook were written by outstanding professors in each academic area. These professors teach doctoral courses at the highest levels and are aware of the training that researchers must have in order to make additional academic progress. In fact, some of the articles were written with their PhD students as co-authors.

The future of the study of food, agricultural economics, agribusiness, and applied economics looks very bright, not only at the bachelor degree level, but also at the graduate level. The primary reason for this is the methodology and training of the students. The students are taught logic through their use of economic theory. In addition, they are taught how to use the scientific method in course research papers. With the assistance of basic economic, mathematical, and statistics courses with linear and nonlinear modeling, they can use deductive reasoning to analyze many practical problems.

Students who have been trained in the classes, have a command of language, and can solve problems will always be able find employment. With new course work on entrepreneurial concepts, they can start their own firms. Other attractive reasons to major in Applied Economics are the versatility of employment (many types of positions) and the flexibility of employment (ability to change). Economics and business students are in demand by all types of governmental agencies and private enterprises.

Continuing on for a master’s degree is encouraged. A typical MS (Master of Science) or MBA (Master of Business Administration) degree requires about two years. This consists of course work and/or the completion of a thesis. A PhD degree is primarily a research degree. The degree requires about two years of course work and one to two years of research and the completion of a PhD dissertation or three research essays. There are positions for PhDs in government, academia, and private firms. Most of the government positions in the U.S. are with Economic Research Serviceand Foreign Agricultural Service (USDA), USAID, World Bank, International Monetary Fund, and the Departments of the Interior, Treasury, and Commerce. Full-time teaching positions are usually with smaller colleges. Private companies hire economists to model commodities or to use big data to forecast in order to increase the precision of business decisions. Saving a few cents per pound on a unit train of sugar or flour can amount to a substantial sum of money.

The value of the current university training of agricultural economists has been proven over the years. The basic problem the agricultural economics profession faces is how to broaden its base to include the solving of economics and business problems in other industries. The name “Applied Economics” really fits as the needed title, but there is a reluctance to use this terminology because it would create two “economics departments,” and universities might want to combine them. There is little desire to combine Economics and Agricultural Economics departments because of their different missions and different methodologies. Over time, very few departments have found it useful to merge. Most departments that have merged have either separated or operate as two individual departments within the department.

Applied research

Applied Economics programs were started to attract bright incoming students and PhDs to these programs. The graduates receive compensation approximately equivalent to that of engineering and computer science graduates and it is rewarding work.

Agricultural Economics fits well with Applied Economics because agriculture is a major user of land, water, equipment, and other capital items such as health care, roads and highways, energy, and education. Agricultural Economics therefore covers many areas of the general economy because those areas overlap in a large way.

The overlapping of agriculture with the general economy is highlighted in Davis and Goldberg’s book A Concept of Agribusiness, as shown by input–output tables.

Following are examples of applications of cooperation between disciplines in order to solve difficult problems. For example, Midwest farmers affect the quality of water in the Gulf of Mexico in an enormous way. The fertilizer applied to corn fields in Minnesota, Iowa, Ohio, Illinois, and other environs, primarily nitrogen (N) and phosphorous (P), leaches through the farm soils into the underground water supply that eventually drains into the Mississippi River. This flow continues to the Gulf of Mexico and causes the “dead zone” or hypoxia in the Gulf that extends over 100 miles of coast line and kills millions of fish. This situation is being researched by several academic departments, but agricultural economics has been at the forefront because this profession deals with the interrelationships between production inputs.

Many practical research problems result from the hypoxia problem. Some of these involve Midwest corn production, such as what is the optimal amount of N and P to apply to maximize profits for the farmers, or what additional results can be achieved by applying less N and P to lower the N and P in the Mississippi River. Other interesting research would include how much N and P can be eliminated by establishing “no corn growing easements” along the Mississippi River? Also, would it be feasible to take the N and P out of the river water at some location up river? Other research could involve the fish kill. Could the dead fish be used for fertilizer or for some other use?

Another interesting study is to determine if the water could be mixed to eliminate the dead zone. Chemical engineers at Louisiana State University are working on the physical side of the issue. They are attempting to find ways to mix the river water to add oxygen to the dead zone. This would be accomplished by taking the oxygen-rich upper layer of water and mixing it with the oxygen-dead layer below. These water layers can be mixed to provide enough oxygen for fish. What needs to be determined is the type of machine to use to mix the two water levels. Experiments are being implemented to determine the type of propeller, the shape of the propeller blades, and how to provide energy for the machine. Working with the physical scientists, the agricultural economists can deal with the costs and return to an investor or society and suggest if should be done or if it makes economic sense. This is a relatively small situation, but the solution to this problem requires many disciplines working together to find an answer.

Biologists are also working on solving the hypoxia problem biolo...