Gains to Chinese Agricultural Research and Extension

Last week, Nature published this piece on a massive study conducted by Chinese agricultural researchers.  Accompanying the piece was a summary/editorial describing the study:

“Running from 2005 to 2015, the project first assessed how factors including irrigation, plant density and sowing depth affected agricultural productivity. It used the information to guide and spread best practice across several regions: for example, recommending that rice in southern China be sown in 20 holes densely packed in a square metre, rather than the much lower densities farmers were accustomed to using.

The results speak for themselves: maize (corn), rice and wheat output grew by some 11% over that decade, whereas the use of damaging and expensive fertilizers decreased by between 15% and 18%, depending on the crop. Farmers spent less money on their land and earned more from it — and they continue to do so.”

The project appears to have created substantial economic benefits.  The authors of the study write:

“Direct profit, calculated from increased grain output and reduced nitrogen fertilizer use, was US$12.2 billion (Table 1), which does not include relevant environmental benefits associated with reductions in reactive nitrogen losses and in GHG emissions. On the basis of the rough estimates, the cost:benefit ratio would be 1:226. ”

The cost-benefit ratio is in some ways over- and in other ways under-estimated.  The benefits are over-estimated in the sense that it does not appear it takes into consideration the fact that greater grain production will dampen prices (it is also unclear how the benefits and costs are discounted or not over time).  The benefits are under-estimated because they do not include any of the environmental improvements.  

It is useful to contrast these findings with the rather large research on the value of agricultural R&D and extension investments in the U.S.  Jin and Huffman calculated the rate of return on spending on agricultural extension in the U.S. at 100%.  More broadly, Julian Alston gave the fellow's address at this this year's AAEA meetings on precisely this topic, and his remarks were recently published in the American Journal of Agricultural Economics.  He writes:

“Our estimates (Alston et al. 2010a, 2011) indicate that U.S. federal and state government expenditure on agricultural research and extension generates benefit-cost ratios of at least 10:1 (more likely 20:1 or 30:1)—evidence of a serious underinvestment. Pardey and Beddow (2017), echoing Pardey, Alston, and Chan-Kang (2013), suggested that a reasonable first step would be to double U.S. public investment in agricultural R&D—an increase of, say, $4 billion over recent annual expenditures. A conservatively low benefit-cost ratio of 10:1 implies that having failed to spend that additional $4 billion per year on public agricultural R&D imposes a net social cost of $36 billion per year”

Given the lower level of development in China, it is certainly possible to imagine that the rate of return on investments in agricultural research and extension being higher than is the case in the U.S.  But, can the benefit cost ration really be 10 times higher in China than the U.S. (226:1 vs. 20:1)?  One interesting thing about Chinese study in Nature is that, if I read correctly, it didn't entail development of any new genetics, pesticides, etc; rather it seemed to largely entail the application of previously developed "science" and practices to the particular geographies in question, and as such, the costs might have been much lower than in situations where new technologies are being created. 

In a sense, the shows an enormously high value to "better information."  This contrasts with perspectives such as this one by David Pannell, who argues that better technologies are much more impactful than "better information."  One way to reconcile this seeming paradox is that that the "information" conveyed to the Chinese farmers was to use better technologies and practices that were already known to exist.  Here in the developed world, the knowledge/technologies are likely already more widely dispersed.  

I'll end with this quote from Alston's paper, who articulated the value of increased productivity in a createive way:

“Clearly agricultural productivity growth is enormously valuable. Of the actual farm output in 2007, worth about $330 billion, only one-third (i.e., 100/280 = 0.36) or about $118 billion could be accounted for by conventional inputs using 1949 technology, holding productivity constant. The remaining two-thirds (i.e., 180/280 = 0.64) or about $212 billion in that year alone, is attributable to the factors that gave rise to a 180% increase in productivity since 1949—including improvements in infrastructure and inputs (if not captured already in the indexes), as well as new technology, developed and adopted as a result of agricultural research and extension, and other sources of innovations.”

Understanding the Impacts of Food Consumer Choice and Food Policy Outcomes

The journal Applied Economics Perspectives and Policy just published a special issue in which  agricultural and applied economists provide their thoughts on how we might help tackle some of society’s most difficult problems and challenges.  I co-authored one of the articles with Jill McCluskey.  Here's the abstract:

“The food consumer plays an increasingly prominent role in shaping the food and farming system. A better understanding of how public policies affect consumer choice and how those choices impact health, environment, and food security outcomes is needed. This paper addresses several key challenges we see for the future, including issues related to dietary-related diseases and the efficacy of policies designed to improve dietary choices, trust in the food system, acceptance of new food and farm technologies, environmental impacts of food consumption, preferences for increased food quality, and issues related to food safety. We also identify some research challenges and barriers that exist when studying these issues, including data quality and availability, uncertainty in the underlying biological and physical sciences, and the challenges to welfare economics that are presented by behavioral economics. We also identify the unique role that economists can play in helping address these key societal challenges.”

Other contributions in the special issue include:

• "Agricultural and Applied Economics Priorities for Solving Societal Challenges" by Jill McCluskey, Gene Nelson, and Caron Gala
• "Economics of Sustainable Development and the Bioeconomy" by David Zilberman, Ben Gordon, Gal Hochman, Justus Wesseler
• "Sustaining our Natural Resources in the Face of Increasing Societal Demands on Agriculture: Directions for Future Research" by Madhu Khanna, Scott Swinton, Kent D Messer
• "Climate Change as an Agricultural Economics Research Topic" by Bruce McCarl and Tom Hertel
• "Big Data in Agriculture: A Challenge for the Future" by Keith Coble, Ashok Mishra, Shannon Ferrell, and Terry Griffin
• "The Economic Status of Rural America in the President Trump Era and beyond" by Stephan Goetz, Mark Partridge, Heather Stephens
• "Food Insecurity Research in the United States: Where We Have Been and Where We Need to Go" by Craig Gundersen and James Ziliak
• "The Farm Economy: Future Research and Education Priorities" by Allen Featherstone
• "A Research Agenda for International Agricultural Trade" by Will Martin
• "Energy Economics" by Wally Tyner, and Nisal Herath

Do consumers care how a genetically engineered food was created or who created it?

That's the tile of a new paper I co-authored with Brandon McFadden at University of Florida and Norbert Wilson at Tufts that was just released in a special issue of Food Policy, which is focused on genetically engineered food (aka GMOs).

In some ways, our paper is like three papers smushed into one: we tie several analyses together under one theme.  Here's part of the motivation:

“heterogeneity [in preference] across products or breeding technologies rather than people is important because a “GMO” is not a single thing, but rather represents a class of many possible foods and technologies that could have been created for many different reasons by different innovators. The ever-changing capability to modify genomes in new ways requires asking new questions. Understanding consumer reactions to different GE foods, technologies, and innovators is increasingly important as new technologies such as CRISPR or gene editing have
emerged which avoid transgenic manipulations. Additionally, new start-ups and non-profits have entered the space with new products that differ from those commercialized by large agribusinesses”

In addition to documenting whether concern for GMOs has increased over time (answer: they haven't), we study whether:

“(1) certain kinds of GE foods or plant breeding technologies are more acceptable to consumers, (2) consumers prefer that all biotech applications applied to food be regulated identically, and (3) preferences for GE food depend on the innovator. ”

We find that people are most supportive of regulations that focus on the outcomes from plant breeding rather than focusing on the particulars of which breeding method was used.  We also find that support or opposition to a GMO depends on who created the GMO.  Finally, concerns about the safety of GMOs are related to consumers' perceptions of who benefits from the GMO.  Here's one of the key figures.  

USDA Economic Research Service

The president's latest budget proposal suggests the following: 

“The Budget proposes to streamline the research efforts of the Economic Research Service by eliminating low priority research that is being conducted within the private sector and by non-profits and focusing on core data analyses in line with priority research areas. The Budget fully funds the anticipated needs for the release of the Census of Agriculture and provides a framework to better streamline the Department’s statistical functions, leverage administrative efficiencies, and focus on core data products similar to other statistical agencies elsewhere within the Government.”

This budget document (page 69) proposes a significant 47.7% cut for the Economic Research Service (ERS) - from $86 million to $45 million.  

Of course this is just a proposal and may not be enacted, but the size of the proposed cut is sufficient to raise eyebrows.  This is particularly true for agricultural economics profession, which often relies on ERS for data, funding, leadership, and employment. 

If you're not familiar with the ERS, there is a good chance a google search about almost any important topic related food or agricultural economics will ultimately point you to their website (here is one summary of the agency by a former ERS administrator). 

Ever wonder how we know things like: the farmer's share of the retail dollar, or per-capita consumption of beef, or cost of producing corn, or how food prices will change next year or the price of broccoli, or how farm sizes and structure have changed over time, or whether US agriculture is more or less productive now than in the past?  If so, you can thank the ERS.  It is true that many university researchers also work on these topics and produce similar statistics, but the ERS often provides widely established benchmarks and "gold standards." 

If you want to see the kinds of things the ERS does, following their daily "chart of note" is a good place to start.

Who Says They Waste Food (and when)?

Applied Economics Perspectives and Policy just published a paper I co-authored with Brenna Ellison entitled "Examining Household Food Waste Decisions: A Vignette Approach."  Here is a summary of the paper:

“The purpose of this research is to examine household (consumer) food waste decisions. Because measuring food waste is fraught with difficulty, our first contribution is the application of vignette methodology to the issue of food waste. Our second contribution is to systematically determine how decisions to waste food vary with factors such as price, location, cost of replacement, and freshness, among other factors. The empirical analysis is concentrated on specific food waste decisions: one focused on leftovers from a fully prepared meal and a second related to a single product (milk). The empirical results show that decisions to discard food are a function of consumers’ demographic characteristics and some of the factors experimentally varied in the vignette design.”

In particular, each subject saw a description like the following (where they saw one of the values in each of the brackets): 

“Imagine this evening you go to the refrigerator to pour a glass of milk. While taking out the carton of milk, which is [one quarter; three quarters] full, you notice that it is one day past the expiration date. You open the carton and the milk smells [fine; slightly sour]. [There is another unopened carton of milk in your refrigerator that has not expired; no statement about replacement]. Assuming the price of a half-gallon carton of milk at stores in your area is [$2.50; $5.00], what would you do? “Pour the expired milk down the drain” or “Go ahead and drink the expired milk””

I suspect you won't be too surprised to hear that "smell" had a significant effect on consumers' decisions to waste or not waste.  Apparently food safety considerations are one key driver of household food waste decisions.  

We also had another vignette surrounding the decision of whether to keep a leftover meal.  The findings?

“In the case of meal leftovers, respondents were generally less likely to waste the leftovers when the meal cost was high, when there were leftovers for a whole meal, when there were no future meal plans, and when the meal was prepared at home. Many of these relationships have a very obvious time component. Leftovers can save individuals time when there is enough for a whole meal and there are no future meal plans; further, when a meal is prepared at home, there is already a time cost for that meal (albeit a sunk cost) that people do not want to discount by throwing the leftovers out. ”