Strengthening World Economies, Increased Production Key to Food Challenges

By Emma Likens

If more economies around the world could sustain solid economic growth, purchasing power for households would increase and "families throughout the world would have the resources they need to purchase food," according to Eric Thompson, director of the University of Nebraska-Lincoln Bureau of Business Research. Thompson said the effort to reduce global food scarcity needs to be about increasing agricultural production, but also on strengthening world economies.

The bureau's research studies local and rural economies and forecasts the futures of these economies, Thompson said. The bureau fulfills university teaching and research missions by engaging faculty, graduate students and undergraduate students from departments throughout the university in economics research projects. Thompson said the role of the UNL Bureau of Business Research is to provide economic information and analysis to the people of Nebraska. He hopes the bureau's research will help encourage the development of policies that will meet state environmental goals, but also in a way that affects agricultural production the least.

Agriculture: the backbone of Nebraska's economy

Thompson said agriculture is Nebraska's leading industry and many other industries depend on it, including manufacturing and transportation. The bureau's research shows how "important agricultural income and production is, particularly in the rural economies of Nebraska but also in the urban economies," Thompson said. Agriculture in rural areas supports manufacturing activity and other industries in urban parts of the state.

During the recession, agriculture did quite well, reaching record income levels in 2011. Thompson called this "countercyclical," or an "an industry that expands when the overall economy shrinks." While agriculture is not always a countercyclical industry, it continues to reach new heights in value and production.

As the U.S. economy continues to recover from the recession, Thompson expects Nebraska's economy to stay strong and continue to improve in the coming years. He expects employment within the state also will continue to improve.

The demand for agricultural products will continue to grow as well, benefiting Nebraska's economy. Thompson said with the growth of the middle class in developing countries like China, India, Indonesia, and Brazil, "It's likely the demand for food products- soy products, particularly meat products- is going to grow quite robustly."

Challenges in population forecasting

Thompson said one of the main sources of error in economic forecasting is population growth. In the last three years, Nebraska's population has grown close to the national rate, but rural communities still are experiencing a loss of population. He said while strong agricultural and manufacturing economies can help counterbalance this population shift, issues related to quality of life make it difficult to attract and maintain people.

Services that spur population growth include health care, education, and recreation and entertainment opportunities, Thompson said.

Based on his research, Thompson said the level of taxation, providing government services in a cost effective way and community involvement can help attract and retain population. He encourages local populations to be active in supporting local arts groups and providing parks, libraries, and other services on a volunteer basis to maintain and expand recreational and public service opportunities.