The study of agricultural economics encompasses all aspects of food production, from farm to table. Agricultural economists use economic principles to make decisions and formulate economic plans for agribusiness. They study the economics of basic management functions such as production, marketing, and break-even analysis. They also examine how market forces impact capital investment and other economic variables. They study institutional changes and emphasize market-type and incentive-based policy mechanisms. Agricultural economists study the impact of policy on agricultural production, trade, and consumption.
In recent decades, relatively little new land has been brought into agriculture, and even moderate land conversions have resulted in substantial biodiversity loss and impacts on the livelihoods of poor communities. While yields have improved in recent decades, most of the gains in production are attributable to improved production methods, not land expansion. In Europe, there is limited room for further agricultural expansion. In sub-Saharan Africa, some future land conversion could still be possible, but would come with substantial environmental costs, likely resulting in the further destruction of rainforest.
In recent decades, investment in agricultural research and innovation has decreased dramatically. As a result, countries have moved from public to private sectors, resulting in increased pressure to convert new land to agriculture. This inevitably results in greater restrictions on intellectual property rights, limiting the transfer of new technology to low-income countries. In addition, these policies tend to have a less focus on the needs of poor countries. This is a concern that will only compound the problems faced by small-scale farmers.
The study of agricultural economics has been largely instrumental in influencing agricultural policy. In the early twentieth century, agricultural economists focused on land use, crop yield, and soil ecosystem. With the emergence of globalization, agricultural economics expanded to encompass a range of applied areas, with much overlap with conventional economics. It has also made significant contributions to economics and econometrics. Its influence on food and agriculture policy is noteworthy.
Currently, food production is one of the most important competitors for land, energy, and freshwater. Moreover, food production is integral to global climate change and competition. To meet this challenge, our food system must be able to withstand a variety of shocks. The spike in global commodity prices in 2008 hinted at the importance of food policy in the coming decades. But there is also a long way to go before we reach the goal of doubling global production.
In recent decades, trade in food products has increased globally. The development of cheaper transportation, decreased trade barriers, and lowered agricultural tariffs have contributed to globalization. While developing countries historically exploited their agricultural sectors, these subsidies are now declining. The population of the developed world will reach 9 billion in 2030, and that of the developing world will double by 2020. But there will be no global surplus if we don’t address the issues of globalization.