About Agricultural Economics

Agricultural economics applies economic principles to farm production.

Since the 1700s, economists have examined issues of farm production, given the significance of agriculture as a source of national wealth. By the 1800s, agricultural economics had developed as a specialty within the larger field of economics. Although the agricultural sector has declined in many nations, agricultural economics remains a widely studied subject, exploring not only farm and ranch production, but also environmental issues, trade, economic development and more.

Identification

Agricultural economics applies economic theories and principles, as well as marketing and organizational theory, to issues of farm production and land use. Agricultural economists apply the economic theory of the firm, which conceptualizes firms as profit-maximizing organizations that allocate their resources so as to achieve the highest level of profit, to examine agricultural production.

History

Economics has looked at agricultural issues since the discipline's beginning. Economic thinkers of the 18th century such as Francois Quesnay, Adam Smith and Thomas Malthus examined agricultural issues in their works. Quesnay wrote about the use of land as an input to generate agricultural outputs, while Smith emphasized agriculture's significance as a source of national wealth. Malthus, meanwhile, expressed concern about society's ability to produce a sufficient amount of food to meet the demands of a rapidly growing population.

Role of Government

The federal government played a significant role in the development of agricultural economics in the United States. Economist C. Ford Runge of the University of Minnesota wrote that the creation of the US Department of Agriculture (USDA) in the 1860s, along with the later creation of land grant colleges and the USDA's Agricultural Experiment Stations, established an institutional foundation for the scientific study of agricultural matters.

Changes in Emphasis

After the 1960s, as the farming sector of many industrialized nations began to shrink, many agricultural economists turned their attention to issues of agricultural production and rural development in the world's poorer nations, which relied more on agricultural activity. These economists also began to examine issues of natural resource and land conservation, as well as international trade in agricultural commodities. Runge observed that many US economists became less interested in domestic farm and ranch production than in environmental protection and the reduction of the poverty in underdeveloped nations.

Contemporary Scope

According to Runge, agricultural economics since the 1970s has contributed important insights to economic thought in several areas: environmental and natural resource issues; global trade and economic development; agricultural risk, consumption and food supply; the organization of agricultural industries; and issues of income stabilization and prices.

References

• Dictionary of Economics: Agricultural Economics
• AgEcon Search: A Brief Intellectual History
• Investopedia: Theory of the Firm

Resources

• Choices Magazine