technology and agriculture
TRANSCRIPT
Technology and
Agriculture
Economic Impacts of
Advancing Technology
How does technological innovation
impact agriculture?
Major Technological Advancements in Agriculture
Mechanization
Chemical Fertilizers
Hybridization
Biotechnology
Technology Impacts the Supply of Agricultural Products
Supply Shifters
Prices of Related Goods
Corn – Soybeans
Cattle -- Leather
Price of Inputs
Technology – Allows a farmer to produce more with a given level of inputs
How does technological innovation
impact agriculture?
How does technological innovation
impact agriculture?
What Does that Supply Shift Look Like?
Supply
Price
Quantity
Supply1
Original Price
Q Q1
Supply and Demand Elasticities
Demand Elasticity for Agricultural Products
Inelastic Demand, Why?
What does that mean for the producer?Demand for Food (Necessity)
Inelastic
Price
Quantity
Demand for Luxury Automobiles
Elastic
Supply and Demand Elasticities
Supply Elasticity for Agricultural Products
Short Run
Intermediate Run
Long Run
Supply - Short Run
Price
Quantity
Supply - Intermediate Run
Supply - Long Run
New Technologies in the Livestock
Industry
Artificial Insemination
Sexed Semen
The ability to choose the sex of the offspring
Why Beef Cattle?
Why Dairy Cattle?
New Technologies in the Livestock
Industry
Cloning
The ability to make an exact duplicate animal
with the same genetic makeup
DollyDolly?
The Case for Beef Cattle
Supply of Beef
Demand for Beef
Price of Beef
Quantity of Beef
Supply1 of Beef
Original Price
New Price
What about the market for Steers?
Supply of Steers
Demand for Steers
Price Steers
Quantity Steers
New Supply of Steers
Nutrient Requirements for Heifers and Steers
0
10
20
30
40
50
60
550 1200Th
ou
san
ds
of
MC
ala
rie
s r
eq
uir
ed
to
re
ach
liv
e w
eig
ht
Steers Heifers
And the market for Heifers?
Supply of Heifers
Demand for Heifers
Price of Heifers
Quantity
New Supply of Heifers
Price Differential Between Steer and Heifer Calves
0
20
40
60
80
100
120
74 80 86 92
Year
$ p
er
cw
t.
Heifers Steers
Price
Quantity
The Technological Treadmill Theory
Supply
Demand
How does technology affect
the total revenue of the farmer
over time?
The Technological Treadmill Theory
Supply
Demand
Price
Quantity
When supply increases from the
technological change, what
happens to Total Revenue?
Total Revenue = Price * Quantity
P
Q
TR
The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
Supply has increased and Total Revenue
changes from the tan box to the blue
box.
New Total Revenue = Price1 * Quantity1
P
P1
Q
Q1
TR1
The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
The red shaded region is a loss in
total revenue and the green shaded
region is the gain.
Since the loss is larger than the gain
Total Revenue has gone down.
P
P1
Q
Q1
Loss
G
A
I
N
The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
Why does this happen?
Inelastic demand of agricultural
commodities.P
P1
Q
Q1
Loss
G
A
I
N
Emerging Technologies in Production
Agriculture Over the Last Decade
First Generation Technologies
Biotechnologies that have made it to market
Flavr SavrTM Tomatoes in 1994
Bt Cotton
Roundup Ready Soybeans
Second Generation Technologies
Biotechnology and the Agricultural
Marketing System
How is the marketing system going to handle
new products that used to be just commodities?
Commodity Value Added Product
Other Potential Impacts From
Biotechnology in Agriculture
This impact on the marketing system could
create opportunities for other products as well.
Non-Traditional Crops
Organic Crops
Heritage Crops and Livestock