Research Means Better Ag Productivity, Better Marketing Opportunities

By Tim Duey

Whether he's monitoring elections, working on agricultural projects in the Peace Corps, or working at the University of Nebraska-Lincoln as an agricultural economics professor, Wesley Peterson is always doing something interesting. And while teaching economics at UNL might seem a little more tame than monitoring elections in corrupt eastern European countries or growing crops to feed hungry people in Africa, as far as agriculture is concerned, Nebraska is a pretty exciting place to be. The United States is the world's leading agricultural producer, and according to Peterson, Nebraska is always one of America's top five agricultural producers.

"The agriculture in Nebraska is hugely productive; most farmers in Nebraska would not be very happy with anything less than 200 bushels to the acre of corn," Peterson said. "The average in the United States is probably about 150," he added. "In the United States we were getting 35 bushels to the acre for corn back in the 1930s and today we're getting 150, and that's all technology, that's what this whole campus is doing. They're out there trying to think up better ways to produce food," Peterson said.

According to Peterson, the United States average is far above world standards in terms of the quantity and quality of its agricultural output. But even though Nebraska produces a relatively large amount of high-quality agricultural products, it still needs a place to sell these products. Nebraska's 1.8 million people can't consume anywhere near the amount of food produced in the state. According to Peterson, Nebraska needs to export its agricultural products for its economic well-being and suggests a "thought exercise" to help readers get a better understanding of just how important a role exports play in the state economy.

Dr. Wes Peterson

"Run the hypothetical 'thought experiment' through. What if we didn't export anything?" Peterson said. If Nebraska didn't export anything, the state would have probably a third of the farmers that it does now and the only ones able to make any money out of it at all would be the largest farming operations. Prices would drop to about $1.80 a bushel for corn instead of its current price of nearly six dollars a bushel.

"Through trade we have access to a large world market ... that benefits Nebraska farmers," Peterson said.

The price of corn is historically high right now due to a number of global factors including floods and droughts that have affected some of the world's most productive grain-producing regions in Russia and Australia. While these disasters have increased demand and Nebraska farmers have reaped the benefits, Peterson warns that it is difficult to predict how long grain prices will stay this high.

Peterson points out that experts predict the world population will increase by about two billion people over the next 30 to 40 years and because of that, Nebraska farmers might be able to expect food prices to go up for the foreseeable future. But Peterson's best guess is that, even with such an increase in world population, improved technology and agricultural techniques will probably keep prices from getting too out of control and eventually force them back down.

Increased grain prices could have a negative effect on some economic activities. They drive up the price of the inputs used in other agricultural and industrial sectors. Particularly hard hit by the increase in the price of grain are the Nebraska cattle and ethanol industries.

Nebraska's cattle producers are currently selling more beef for more money than they have in almost a decade, Peterson said. That's because in 2001, Japan banned U.S. beef imports due to a case of bovine spongiform encephalopathy, more commonly known as mad cow disease. Japan was the United States' largest trading partner in beef products at the time. South Korea, America's third-largest beef importer, followed suit shortly thereafter. According to Peterson's colleague and fellowagricultural economist, Darrel R. Mark, Nebraska's beef market is finally starting to recover despite the increasing price of feeding cattle.

"On a volume basis we are exporting almost as much now as we did in 2001," Mark said. "So when we lost those export markets on December 21st 2001, it's taken us basically from then until now to get back to the point where we're exporting almost as much as we did at that time."