Ag Economists-Working to Assure Abundant, Safe Food

By Jessica Sorensen

The great challenge of feeding nine billion people by 2050 means an increase of 40 percent over today's population. But in addition, that population is expected to want higher-quality food- the kind of food that developed countries currently enjoy.

According to Larry Van Tassell, head of the Department of Agricultural Economics at the University of Nebraska-Lincoln, department faculty research includes agribusiness, policy, environmental and resource economics, sustainability, distribution of food, farm management and international economics- as well as offering help so that producers get the maximum value out of their products. All affect the challenge of feeding a growing population.

"Agricultural economics takes in the allocation of scarce resources," Van Tassell said. "Those scarce resources we talk about are capital, labor, land management and we are allocating those among competing ends, in order to produce food and fiber to supply to society both now and into the future."

Van Tassell said researchers need to understand what the consumer wants, and because of that, agricultural economics is a broad scope of study. It is especially important worldwide because of communication and the ways products are exchanged between countries.

"Agricultural economics is a very important area of science," Van Tassell said. "You can take a look at production agriculture: producers must be able to make a profit; they must be able to be sustainable; we must be able to get that product out to the public in order to have that consumed."

But at the same time, "agriculture is a very risky industry, all the way from the variability in the climate, to the variability in supply, demand and prices," Van Tassell said. "And so as a department we have an opportunity of working in all of those areas to help assure that we have an abundant and safe food product for the consumers."

Van Tassell said his definition of food scarcity is not having a large enough supply of food, or the right kind of food, to meet the nutritional requirements of individuals. There may be an abundance of food in some areas, but if it cannot be distributed to who needs it then there is a scarcity of food in those areas.

One way researchers are addressing the population-food challenge is by looking for ways to grow food sustainably. There are agricultural government policies in place to help lower risks involved in agriculture, as well as policies that create efficient energy resources for agriculture and for other consumers.

Ag economists also are studying rural development and innovations that are taking place in the rural areas of Nebraska and beyond.

Today's larger farming operations mean that fewer farmers are needed, so there often is a smaller rural population. As a result, Van Tassell said, it's more difficult to keep the communities operating like they have in the past.

Why Nebraska?

According to Van Tassell, not only is the University of Nebraska in a unique position when it comes to providing food for a growing population, but so is the state of Nebraska. He said Nebraska's diversity in ecosystems gives scientists a diverse laboratory to study efficient production systems from a variety of climates, most of which are similar to climates in other countries. Research in Nebraska can be adapted to those other countries.

Nebraska has a fairly large and stable water supply with the High Plains Aquifer, often referred to as the Ogallala Aquifer. This aquifer underlies nearly all of Nebraska, but also parts of Kansas, Oklahoma and Texas. The deepest concentration, however, is in Nebraska.

Also, Van Tassell said, agricultural industries are well-developed in Nebraska and there is the opportunity to add value to products through those industries.

An exciting challenge

"It's very exciting to be involved in something that is so important to the world with the great goal of feeding the world... nine billion people by 2050," Van Tassell said.

He said it is projected to take 70 to 100 percent more food in order to feed a 2050 world population because people in developing countries are becoming more affluent. With affluence comes a desire for more food and for higher-quality food, including more protein. To nearly double food production, advances in technology must be integrated. He said agricultural economics is the heart of that technology adoption, because it is vital in assessing profitability and sustainability. Van Tassell said it is also important when evaluating what consumers want in a final product and how it translates back into how a product should be produced.

To make progress toward finding solutions to this great challenge, Van Tassell said the department's researchers collaborate with researchers from other departments at the university to find solutions. One example of this research is taking a look at optimal production practices in various commodity areas.

Funding makes the work possible

Some of the funding for research in the Department of Agricultural Economics comes from the commodity organizations such as the Nebraska Soybean Association and the Nebraska Corn Growers.

There also are other organizations that contribute to the costs for the department's research.

"A large part of our funding does come from the USDA and other government agencies and initiatives such as the NSF (National Science Foundation)," Van Tassell said. This funding allows UNL researchers an opportunity to perform research that has implications for Nebraska, but for the United States and the world, he added.

Funding also allows the department to look at beef production systems, as well as what production systems are the most economically efficient. It gives researchers in agricultural economics the opportunity to look at conservation practices to see which individuals will adopt and why they will adopt them.

Department researchers currently are studying how consumers look at food security and food safety and what implications there are to the producers, Van Tassell said.

Researchers also are studying food and energy policies, animal welfare, policies that ensure a consistent food source and what kinds of policies will decrease the dependence on foreign oil.

Worldwide comparisons of the cost of food

Van Tassell said the Department of Agricultural Economics is not only looking at what consumers want in the United States, but also worldwide... and how much they can pay.

A combination of factors make food prices different from country to country. For example, Van Tassell said the price of food could depend on import and export duties and regulations, the supply and demand of food in the area, currency rates and the cost of transportation.

"In the United States we are very blessed to be able to have an abundance of food and be able to spend a lower portion of our income on food," Van Tassell said. "Back in the 1920s, we were spending upwards of 25 percent of our disposable income on food. Today that is only about nine percent," he said.

Compare that to Germany, where consumers currently spend almost 11 and a half percent of their income on food. Or Mexico, where the rate is about 25 percent, according to Van Tassell. He said China's rate is around 36 percent, and some places, such as Algeria and Indonesia, have rates as high as 47 and 45 percent, respectively. "When we take a look at the percentage of income that food entails in a consumers budget, there are two things that contribute to that," Van Tassell said. "First of all, their income that they receive and second of all, the cost of food."

According to Van Tassell, the United States has a high per-capita income level and because of that, food can be a smaller percentage of the total income. According to the World Fact Book, published by the Central Intelligence Agency, the 2011 per-capita income in the United States was approximately $48,100. In other countries such as Algeria, where the per capita rate for 2011 was $7,200, or Indonesia where it was $4,700 in 2011, the cost of food takes a large percentage of their income for people that don't make a lot of money.

One analysis that compares the prices of food worldwide is called the Big Mac index. The series is printed in the magazine The Economist and looks at the price of a McDonald's Big Mac sandwich across the world, Van Tassell said.

In January of 2012 the cost of a Big Mac in Switzerland was $6.81 compared to $4.20 in the United States. In Hong Kong the cost was $2.12.

"There's a lot of factors that go into that," Van Tassell said. "One of them is the value of the currencies, the relative value of the currencies between the countries and also in poor countries you would expect a lower price because wage rates and other similar inputs that are less expensive."

Educating tomorrow's leaders

In addition, the department is educating students to address the challenge of feeding the world. According to Van Tassell, it is important that agricultural producers know the economics of the practices they are undertaking so efficient markets are developed.

"We have several academic and research programs and also outreach programs that allow us to be able to help in that efficient production of food," Van Tassell said. "It's very important that farmers know the economics of the practices that they are undertaking."

This importance of knowing the economics of the farming industry is what the UNL Department of Agricultural Economics is instilling in students.

"They are now and will continue to be important in the future as we look at having to feed another two billion people over the next 40 years or so," he said. "The distribution of that food will be very important, and that is definitely something that our students are capable of going out and being able to be an asset to society."