Challenge And Response In American Agricultural Economics(AV12807)

no I didn't know I don't a lot of people here more making money down don't you guys worries your get no down jeepers farming today is a tremendous risk today's commercial farmer exists in an environment of complex business and financial uncertainties no longer is the farmer concerned only with the threats from nature technology and insurance have lessened the dangers they pose the farmer is concerned with even greater and more complex risks risks inherent in a vast ever-changing institutional environment where the agricultural system includes more than just farming it encompasses resources labor finance management trading marketing law policy regulating processing packaging merchandising handling Ronnie hey run run sold on my $1,050 fire it's a complex system this agriculture hello I'm Richard Kuykendall a professor of agricultural history at Iowa State University as a historian I'm sensitive to change in human affairs and certainly farming has changed radically since the pioneer family broke the Prairie sod and made a farm and a home on the frontier in some ways life was simpler then at least the pioneer farmers were not heavily involved in the market as modern farmers are nevertheless even then farming was a risky enterprise drought grasshoppers and other menaces threatens the survival of the people as farmers success was by no means guaranteed the farmer had few resources as guides experienced family word-of-mouth from neighbors and perhaps an agricultural journal or two leading narrow existences frontier farm people lived close to the ground and close to home the Civil War a great crisis for the nation opened up opportunities for many people the war created a demand for increased farm production many farmers responding to the challenge became more efficient replacing oxen and and powered tools with horses and horse-drawn machinery in 1862 in the midst of the war three important events took place in Washington that would profoundly affect agriculture the US Department of Agriculture was established signaling the beginning of a formal agricultural presence in national government and promising aid to the farmer the Morrill Act was son offering land for the formation of state colleges that would treat agriculture more as a science than as a way of life also in 1862 the Homestead Act was passed offering free land to people who would make farms it helped to draw millions of farm people to the West in the next half-century the greatest era of fire-making in our history the late 19th century was a period of tremendous growth and excitement but it was also a period of growing uncertainty for farmers the pioneer farmer had been transformed into a commercial farmer and as such was exposed to the fluctuations of a marketplace that was worldwide in scope for many producers even in the farmers good years when producing more than ever before returns were small there was a growing need to know more of the business end of farming yet there were few resources the farmer could turn to agricultural science was in an early stage slowly building up a body of basic knowledge the new agricultural colleges hadn't yet turned out many bulletins or journals on the technologies that were transforming farming and increasing yields and they had turned out even less on the economics of Agriculture the professors in the agricultural colleges were forced to rely upon books that were often grossly out-of-date or essentially philosophical treatises rather than guides to practical farming however one book clearly anticipated what was to come after the turn of the century in 1882 John M Gregory political economists from the University of Illinois published a new political economy and it included a chapter devoted to the economics of Agriculture what was important about this book is that it called attention to the great importance of agriculture in a total economic system let me read one passage from the book of all the industries agriculture alone claims the whole world as its workshop the habitable globe as its marketplace and mankind as its customers by 1890 the Census Bureau reported the frontier had vanished free land was now scarce and with this scarcity came problems such as rapidly increasing farm tendency out of the land problems a field of study called land economics led by Richard te Lee at the University of Wisconsin he had been a co-founder of the American Economic Association in 1885 and by the turn of the century had established the University of Wisconsin as a center for the study of his new field the first two decades of the 20th century were later known as the Golden Age of American agriculture prices had improved the weather was good land-grant institutions had strengthened the agricultural sciences and were beginning to address the problems of farm management the business end of farming in 1902 the USDA established the office of farm management under its create or an organizer William J Stillman get rural problems especially the large scale migration of young people from farm to city still troubled many observers the country life movement with its dream to make rural civilization as effective and satisfying as the rest of civilization inspired many teachers and researchers to seek solutions to the problems of rural life one young researcher whose imagination was fired by the movement was George F Warren at Cornell University Warren came to Cornell in 1902 to study horticulture under Liberty High Bailey the spiritual leader of the country life movement Bailey had a problem he had been axed by the western new york state apple growers to analyze the economic side of their activities he asked Warren to study it Warren did and in so doing came up not only with his PhD thesis in horticulture but also with what would become the standard statistical survey techniques of farm management Warren had a bent for quantification instead of looking at individual case studies he emphasized the value of studying large numbers of farmers if such results are secured from a few farmers or from general observations the conclusions are not likely to be accurate but if large numbers of experiences are studied by statistical methods for viable results may be obtained the quantitative approach to fire management was Lauren's hallmark he carried it into his research his teaching and his writing it brought him to the forefront of specialists in the study of American fire management Warren's analysis of the economics of Agriculture was at the cutting edge of a new field of study called fire management but his approach and philosophy to the economics of Agriculture would be severely challenged when the American fire Management Association was formed in 1910 in alumni hall here on the Iowa State campus to competing points of view were expressed one advocated by Warren defined fire management as essentially a part of agriculture the other point of view would be championed by a firey economist and we see Taylor Taylor chaired the University of Wisconsin's Department of Agricultural Economics and his mentor was none other than Richard te Lee the land economy according to Taylor fire management was essentially a part of economics not of Agriculture as Lauren's people insisted at the formational meeting of the american farm management association the task before the membership was to define the discipline unfortunately Taylor was absent so the task the definition was in the hands of the agriculture and the statement that they drafted separated farm management from agricultural economics farm management deals with the rural problem from the individual or private point of view it differs from agricultural economics or rural economy in that these subjects view the rural problem from the national or public point of view when Taylor learned of this development he was not happy as he put it he was disturbed he looked upon the economics of farm management as an essential part of agricultural economics Taylor wrote his friend Warren challenging the distinction that had been made why they should consider it the study of economics when viewed from the standpoint of the nation and not considerate economics from the standpoint of the individual farmer I do not fully understand it it seemed to me that the natural line of cleavage was that of the science and art the field of farm management is distinguished from agricultural economics in that it is the art of applying the principles of economics biology and physics on a given farm at a given time I believe that the teacher of farm management will find that his work is much more likely to overlap on that of farm crops horticulture etc than it is to overlap very far on economics underlying his answer must be a knowledge of business principles but the final answer depends on a technical knowledge of these first principles of Agriculture I do not consider farm management to be an art Taylor spent the next several years trying to persuade his fellow workers in the emerging field to broaden their perspective and he found an ally and Thomas effort Hunt had been one of George Warren's teachers and colleagues at Cornell and at Hunt's urging Warren broadened his conceptions in his 1913 text farm management using an economic perspective still this perspective caught on slowly with the rest of the profession as many teachers of fire management had backgrounds in agronomy with little or no formal training in economics but the direction was now set while all this was going on in the field of fire management another independent association was taking shape inside the highly regarded American Economic Association the man leading this new group the association of agricultural economists was Thomas Nixon Carver Carver's approach to farming was that of an economist which coincided with the changing perspective of the farm management association in 1919 the latter association joined forces with Carver's even younger one to form the American Farm Economic Association the direct forbear of the present American agricultural economics Association the AAE a agricultural economics now had a broad solid foundation on which to build a discipline Wayne Rasmussen US Department of Agriculture historian explained over the years the impact in these clients or the discipline of agricultural economics was indeed very great agricultural economics developed as a discipline not as a sub-discipline of agriculture like agronomy or plant pathology but a discipline in its own right this meant that there was room for a new organization of agricultural economists it meant that the development of the Bureau of Agricultural Economics and the Department of Agriculture was a major force in the whole farming operation from then on today agricultural economics is one of the most highly respected and certainly the most widely used of any single discipline in the whole agricultural area the American Farm economic association was formed right after World War one and during that war American agricultural production had risen to meet the needs of the allies in Europe even in the first year after the war 1919 production remained high farmers planted 76 million acres of weak compared to 50 million affordable prude had helped win the war but farmers were to pay a high price for foreign markets shrank Europe recovery in the summer of 1920 arm commodity prices in the u.s. dropped 50% land values plummeted 25% or more armors were in trouble America had an abundance of food but not enough people to buy it US Secretary of Agriculture Henry C Wallace responded calling on agricultural experts from around the country among those whose advice he sought was NBC Taylor who by this time was chief of the USDA's office of farm management and farm economics Taylor's advice was to consolidate all the economic efforts of the department into one Bureau a plan he had been working on for some time sure Hobson was with Taylor when he had first come to the USDA in 1990 he was that year he was appointed chief of the office of farm management and he asked me to go as an assistant chief and of course I accepted with enthusiasm I can't know was absolutely what Taylor's think it was because he'd ever discussed personally with me in the early days the organization of the bill rise essentially Telmex nevertheless I have the Cubs was it that he began working on the development of the bill right because recalling the day after he arrived in Washington as to a real office farm mark farmer easement Taylor's plan for consolidation worked well with Wallace's scheme for it would enable them to effectively use the data the USDA had been gathering over the years to help solve some of the problems at hand let them turn to research with the definite objective of helping struggling farmers work out their problems not alone for their benefit for the benefit of the nation Taylor's plan developed into the Bureau of Agricultural Economics the bae in 1922 with taylor as its first chief once again AG historian duane Rasmussen this new science of agricultural economics and the new Bureau of Agricultural Economics together had a tremendous influence upon economics and agricultural economics as disciplines the bureau offered an opportunity for all of these bright older men and younger men and women working together to develop new statistical techniques to do new survey techniques new ideas of getting out there and actually working with problems that economists had not had never used before one new tool was described in a book by economist Henry L Moore called forecasting the yield and price of cotton published in 1917 in his book Moore used the public information gathered by the USDA and with statistical techniques was able to predict the quantity sold and the price of cotton better than the so called experts at the USDA for this more would be later heralded as the father of statistical demand analysis to the young economist at the bae more statistical techniques were just the tools they needed to help the farmer and they applied them vigorously the problems before in doing this they gave empirical substances that then unproven general economic theories of the time and more importantly they opened up a whole new area in the science of economics the field later to be called econometrics no one epitomized the attitude and intellectual fervor of these jung-bae economists more than Mordechai Ezekiel Ezekiel wasn't just bright he was brilliant at the tender age of 23 he went to work for Taylor at the BAE there is iki o gained nationwide recognition through his pioneering work in multiple correlation methods and agricultural price analysis his first book remains a classic Carl Fox co-authored its 1959 edition I would say that Ezekiel's greatest contribution to agricultural economics and economics generally was the publication his great book methods of correlation analysis in 1930 Zee kill himself was only 31 when this book was published it was really a regression book from very start so here it was a new third dish in 1959 the third edition is still in print in 1985 so this means that this book is no longer the Bible if you will the old maid the Old Testament of multiple regression analysis you see but right after the end of the middle 1960s than other textbooks you see on economic statistics regression analysis would say look if it's regression analysis I want to know about the book is Mordechai Ezekiel's when Taylor set up the Bureau of Agricultural Economics he had a number of prominent people to bring into the bureau Elsie Gray was one of them Oh II Baker was another they had done great service he also brought in a row sociologist Carl Taylor who made great contributions however the great strength of the Bureau at that time was that it brought in a lot of young people all of whom served you might say an apprenticeship in the Bureau people like more to Ezequiel Louie beam Howard thali M L Wilson Milburn L Wilson was a farmer who wanted to be an agricultural economist and was a farm manager who wanted to be a policy planner and was a bureaucrat who wanted to be an innovator and was and a philosopher who wanted others to think tall thoughts and inspired them like many AG economist of his day Wilson started an agriculture from the ground up in 1907 with a bachelor's degree in hand he farmed in Nebraska and later Montana soon he was one of Montana's first County agents and then State Extension leader in the fire management Wilson's ties to Extension stayed with him until his retirement in 1953 as director of extension at the USDA but Wilson's contribution to agriculture reached further than his work in extension he was a key player in the policy making of the 1930s Wilson had a dream to help both agriculture and industry during the 20s and 30s the plan was for a domestic allotment program to reduce farm acreage and thus farm production prices would then increase and so would farm income it was a well thought-out plan tempered by the social realities and what such a land retirement policy would bring that is a displacement of farm families Wilson believed that domestic allotment plan was of little value unless there was also a plan for subsistence homesteads and industrial decentralization farmers could thus live off the land while earning an income from industry when Wilson learned that the governor of New York Franklin Roosevelt had been advocating similar ideas the economist reputedly said that's my man for president and when Roosevelt heard a Wilson he soon became part of the New Deal's developing brain trust of advisors often working closely with Wallace Henry a now serving a Secretary of Agriculture the agricultural economist supplied many ideas during the Depression to try to bring the nation out of the doldrums one of the more successful programs was conceived by a team of agricultural economists at Cornell University it proposed the creation of the Farm Credit administration which became the largest farm mortgage lending operation in US history from its inception in 1933 and saved thousands of farmers from going under another was the Agricultural Adjustment Act of 1933 it was a hodgepodge of ideas including Wilson's allotment player and in the years that followed it was found unconstitutional revived changed criticized and vilified yet it was able to come some very troubled waters during the Depression and much of it endures in agricultural policy today one of those parts of the New Deal for agriculture that had a long life the food stamp plan was developed by one of the best mathematical theoreticians in the profession Frederick V wall fred wahl in spite of his theoretical bent was a very practical man and he inspired others he worked within the bae including carl fox fredwad Eman strated both by his own work and work that he did in collaboration with his subordinates but it was possible to take the most abstract most advanced mathematical economic theory and bring it down and apply it to real world important economic problems I think war was a genius effect in fact the economic theorists themselves Jr Hicks valuing capital as a the great theorists were often very skeptical about the possibility of ever estimating in a different surface for example law says if it's good very damn it we ought to be able to take some statistical data and estimate an indifferent surface and he did and in fact fredwad Eman straighted that the impossible were not only possible but for him easy and the inspired some young man to try to do likewise professor Austin see Oscar Hoffman was with law at the bae in 1938 fred wahl is frequently referred to as the father the food staff plan and this is an accolade he deserves it all started one day when he got a cold and stayed home for about a week and when he returned to the office he had the famous article which appeared in the Journal of farm economics in 1938 which was entitled something like marketpro rates and the social welfare probably no article which appeared in the association's Journal ever had more of an impact on public policy than this it was written and was graceful easy-to-understand style no math because he was shooting for a wide audience when henry wallace saw it according to the story he immediately summoned world to his office and instructed him to work with his own people and surplus commodity disposal and took them about two weeks to hammer together the first food stamp plan which they blew stamps and the orange ones truly a magnificent performance by one man agricultural economists have always been called upon at kinds of crisis during the Great Depression agricultural economists were called upon to develop plans to help us overcome the Depression in the farm area I believe that we helped save the country from perhaps real violence out there on the farms the situation was truly desperate we helped restore the national economy by giving farmers purchasing power so that they could go out and buy the things that they needed which in turn stimulated the whole economy now there was more to it than that but agricultural economists really played a major part in helping overcome the Depression of the 1930s all during this time of course we were going ahead collecting our data and collecting our statistics and this is what made the whole price support system possible few years later when World War two hit we again had this accumulation of firm sound data that could be plugged into the system and could be used for allocating resources could be used for rationing food could be used for taking care of labour for deciding who went into the army and who stayed out all of this and the experience of the agricultural economists who went into these new wartime agencies was the tremendous aspects during World War two the exemplary work of agricultural economists in the war raised their status in and out of government in 1946 Congress and President Harry s truman established the President's Council of Economic Advisers as his first head Truman chose Edwin G Norris an agricultural economist Norrises appointment symbolized not only the high status of agricultural economists but also recognition of the great importance of American agriculture in the national and international economies North represented another kind of economist the researcher from a private institution as director of the Institute of economics at the Brookings Institution during the 30s Norris had asked secretary Wallace to authorize a comprehensive study of the triple a Wallace a man with an inquiring mind replied we've been doing so much wishful thinking around here we'd benefit from an independent audit the result culminated in the 1937 classic three years of the Agricultural Adjustment administration authored by eg Norse Joseph s Davis and John D black these three men all of them outside the mainstream of government economist at the time gave great insight and perspective to the profession not to mention giving a nudge or two to keep the insiders on their toes for example Joseph s Davis was crit of governmental controls on farm production in the 1930s from his vantage point as director of the Food Research Institute at Stanford Joe Davis saw things differently in his 1938 book on agricultural policy he wrote much if not most of what deserves the name production control in agriculture seems to me unattainable insofar as it is desirable and undesirable insofar as it is attainable the provocative character of his thinking and his scholarly research made Joe Davis a highly respected member of the profession like Davis John D Black was a scholar he started out as an English teacher a quiet but determined man he joined the profession rather late in life at the age of 32 Henry C Tanner persuaded him in 1915 to work for a PhD in AG economics at Wisconsin the new profession was in its infancy in 1918 when now dr. black arrived at the University of Minnesota's division of research in agricultural economics as its acting head and act he did in less than ten years he took the one-man department and built it into one of the largest in the country after moving on to Harvard he made that school conspicuous in the economics of agriculture black not only built programs he affected the intellectual character of generations of economist once again Oscar Hoffman I think it would be hard to imagine anyone who through his own work and that as students has contributed more to this profession and John D black to me his outstanding characteristic was that he was an activist in the sense that he believed the government should intervene in the interests of the people he also was against what she used to call dilly-dallying in the ivory tower he leads that economists should roll up their sleeves and get down in the marketplace and from this has come something of that good tradition about this profession which is that they're problem solvers preserving the problem-solving orientation in a field that has often been called the dismal science has been a problem for agricultural economists over the years and we still have problems in the farm sector whose solution seems out of reach at the fact that we can face those problems from a scientific point of view offers grounds for hope agricultural economics has come a long way since 1910 it's character forged in the fires of the 20s 30s and 40s remains alive and well Harold F prime eyre professor emeritus of agricultural economics University of Missouri comments the hallmark of agricultural economics has been as remarkable capacity to respond to events of the day the profession is notably versatile pragmatic capable capable of addressing whatever is current in that regard we have heard many calls to make the discipline more scientifically rigorous more sharply defined heavens it's because we have not worried about that feature that we have been so useful over time there have been broad sweeps almost cosmic sweeps we usually mention technology first I tend to stress the monetization of risk we have seen the change of our economy from rural agrarian to urban industrial about the time of World War two we became international and outlook but my final comment is what a motley mixed crowd we are and there again lies much of our strength it's not just that the farm management people had stayed faithful faithful to their promises many years ago but we include the commodity people the agribusiness economists the land economists labor the model building mathematicians more recently the lawyers of come in the International crowd and with this composite composition addressing changing issues of each day the 75 year record of agricultural economics is a grand record one in which we all can take pride and we all can take confidence in being able to address the still changing scene of the future so that's $2,800 number 188 that's on the combine in a green platform thank you so far today my elegant agriculture has truly become more complex and challenging we have found out and continue to find out in enormous detail the realities behind John M Gregory statement of more than a century ago that indeed the whole world is Agriculture's workshop that the habitable globe is in fact its marketplace and that humankind is its customer 17:07 bonito counter now already here senator and Maori