Impacts of Agricultural Research and Extension

About a month ago, I posted on some new research suggesting decline rates of productivity growth in agriculture.  Last week at a conference in Amsterdam, I ran into Wally Huffman from Iowa State University, and knowing he's done work in this area, I asked him if he had any thoughts on the issue.  As it turns out, along with Yu Jin he has a new paper forthcoming in the journal Agricultural Economics on agricultural productivity and the impacts of state and federal spending on agricultural research and extension.  

Jin and Huffman also find evidence of a slowdown in productivity growth, writing: 

“We find a strong impact of trended factors on state agricultural productivity of 1.1 percent per year. The most likely reason is continued strong growth in private agricultural R&D investments. The size and strength of this trend makes it unlikely for average annual TFP growth for the U.S. as a whole to become negative in the near future. However, for two-thirds of the states, the forecast of the mean ln(TFP) over 2004-2010 is less than trend. The primary reason is under-investment in public agricultural research and extension in the past. For public agricultural research where the lags are long, it will be impossible for these states to exceed the trend rate of growth for TFP in the near future.”

They also find large returns to spending on agricultural research, and even larger returns to spending on extension.  They find the following:

“For public agricultural research with a productivity focus the estimated real [internal rate of return] is 67%, and for narrowly defined agricultural and natural resource extension is over 100%. Stated another way, these public investment project could pay a very high interest rate (66% for agricultural research and 100% for extension) and still have a positive net present value. Hence, these [internal rate of return] estimates are quite large relative to alternative public investments in programs of education and health. In addition, there is no evidence of a low returns to public agricultural extension in the U.S., or that public funds should be shifted from public agricultural extension to agricultural research. In fact, if any shifting were to be recommended, it would be to shift some funds from public agricultural research to extension. ”

The paper includes a couple really interesting graphs on research spending and extension employment over time.  First, they show that for four major agricultural states, real spending on agricultural research peaked in the mid 1990s. 

And, while extension staff has declined in some states, it hasn't in others.  

Why we eat better today

Megan McArdle has an excellent post at Bloomberg review that she titled The Economics Behind Grandma's Tuna Casseroles.

McArdle sets out to explain why we eat differently (and in many ways better) than our grandparents.  Here's my favorite passage:

“You have a refrigerator full of good-looking fresh ingredients, and a cabinet overflowing with spices, not because you’re a better person with a more refined palate; you have those things because you live in 2015, when they are cheaply and ubiquitously available. Your average housewife in 1950 did not have the food budget to have 40 spices in her cabinets, or fresh green beans in the crisper drawer all winter.”

She also notes that food preference were probably similar in the 1950s as compared to today, it's just that our grandparents couldn't afford to eat the way we now do, and technological changes have made what were previously "fancy" foods available to the masses.  Take, Jello for instance:

“The foods of today’s lower middle class are the foods of yesterday’s tycoons. Before the 1890s, gelatin was a food that only rich people could regularly have. It had to be laboriously made from irish moss, or calf’s foot jelly (a disgusting process), or primitive gelatin products that were hard to use. The invention of modern powdered gelatin made these things not merely easy, but also cheap. . . . Over time, the ubiquity of these foods made them déclassé. Just as rich people stopped installing wall-to-wall carpeting when it became a standard option in tract homes, they stopped eating so many jello molds and mayonnaise salads when they became the mainstay of every church potluck and school cafeteria. That’s why eating those items now has a strong class connotation.”

There is a lot more at the link and the whole thing is worth reading.

Is the growth in agricultural productivity slowing?

Last week I gave a talk at the University of Nebraska, and Julian Alston from UC Davis was also there.  He presented some recent research with Matt Anderson and Phil Pardey about productivity growth in agriculture.  While I have seen some discussions about the possibility of a slowdown in productivity growth in developing countries, Alston's research suggest it is a phenomenon alive and well here at home.  This is important stuff.  Falling productivity growth has important implications for sustainability, food security, and research and development. They write: 

“We detect sizable and significant slowdowns in the rate of productivity growth. Across the 48 contiguous states for which we have very detailed data for 1949– 2007, U.S. multifactor productivity (MFP) growth averaged just 1.18 percent per year during 1990–2007 compared with 2.02 percent per year for the period 1949–1990. MFP in 44 of the 48 states has been growing at a statistically slower rate since 1990. Using a longer-run national series, since 1990 productivity growth has slowed compared with its longer-run growth rate, which averaged 1.52 percent per year for the entire period, 1910–2007. More subtly, the historically rapid rates of MFP growth during the 1960s, 1970s and 1980s can be seen as an aberration relative to the long-run trend. A cubic time-trend model fits the data very well, with an inflection around 1962. We speculate that a wave of technological progress through the middle of the twentieth century—reflecting the progressive adoption of various mechanical innovations, improved crop varieties, synthetic fertilizers and other chemicals, each in a decades long process—contributed to a sustained surge of faster-than-normal productivity growth throughout the third quarter of the century. A particular feature of this process was to move people off farms, a one-time transformation of agriculture that was largely completed by 1980.”

Here's a graph from their paper showing the change in proportional growth rate in yields (i.e., the log of yields) over time for 6 crops with the inflection point indicated for when growth rates began decelerating.  

Agri-Pulse Interview on GMOs

I was recently interviewed by Agri-Pulse about GMOs, GMO labeling, and technology adoption.  You can hear the whole thing here.

End of Doom

Ronald Bailey has an excellent piece in the October print edition of Reason Magazine entitled, "The End of Doom" and a recently released book with the same title.  It's a nice counterweight to the oft-heard refrain that the world is going to hell.  

Here are a a few quotes I found particularly interesting.  In critiquing Rachel Carson's Silent Spring:

“At its heart is this belief: Nature is beneficent, stable, and even a source of moral good; humanity is arrogant, heedless, and often the source of moral evil. Carson, more than any other person, is responsible for the politicization of science that afflicts our contemporary public policy debates.”

In discussing our out-sized fears of cancers from synthetic chemicals and of biotechnology:

“It should always be borne in mind that environmentalist organizations raise money to support themselves by scaring people. More generally, Bonny observes, “For some people, especially many activists, biotechnology also symbolizes the negative aspects of globalization and economic liberalism.” She adds, “Since the collapse of the communist ideal has made direct opposition to capitalism more difficult today, it seems to have found new forms of expression including, in particular, criticism of globalization, certain aspects of consumption, technical developments, etc.””

He ends with some choice words about the precautionary principle.  

“Why does it matter if the population at large believes these dire predictions about humanity’s future? The primary danger is they may fuel a kind of pathological conservatism that could actually become a self-fulfilling prophecy.”

and

“The precautionary principle is the opposite of the scientific process of trial and error that is the modern engine of knowledge and prosperity. The precautionary principle impossibly demands trials without errors, successes without failures.

...

”An indirect implication of trial without error is that if trying new things is made more costly, there will be fewer departures from past practice; this very lack of change may itself be dangerous in forgoing chances to reduce existing hazards.” ”