Agricultural economics, originally applied the principles of economics to the production of crops and livestock – a discipline known as agronomics. Agronomics was a branch of economics that specifically dealt with land usage. It focused on maximizing the crop yield while maintaining a good soil ecosystem. Throughout the 20th century the discipline expanded and the current scope of the discipline is much broader. Agricultural economics today includes a variety of applied areas, having considerable overlap with conventional economics.
Economics is the study of resource allocation under scarcity. Agronomics or the application of economic methods to optimizing the decisions made by agricultural producers grew to prominence around the turn of the 20th century. The field of agricultural economics can be traced out to works on land economics. Henry Charles Taylor was the greatest contributor with the establishment of the Department of Agricultural Economics at Wisconsin in 1909.
Another contributor, Theodore Schultz, was among the first to examine development economics as a problem related directly to agriculture. *7) Green eggs and ham. Schultz was also instrumental in establishing econometrics as a tool for use in analyzing agricultural economics empirically; he noted in his landmark 1956 article that agricultural supply analysis is rooted in “shifting sand,” implying that it was and is simply not being done correctly.
One scholar summarizes the development of agricultural economics as follows: agricultural economics arose in the late 19th century, combined the theory of the firm with marketing and organization theory, and developed throughout the 20th century mostly as an empirical branch of general economics. The discipline was closely linked to empirical applications of mathematical statistics and made early and significant contributions to econometric methods. In the 1960s and afterwards, as agricultural sectors in the different countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and macroeconomic policy implications of agriculture in rich countries, and to a variety of production, consumption, and environmental and resource problems.
Agricultural economists have made many well-known contributions to the economics field with such models as the cobweb model, hedonic regression pricing models, new technology and diffusion models, multifactor productivity and efficiency theory and measurement and the random coefficients regression. The farm sector is frequently cited as a prime example of the perfect competition economic paradigm.
Since the 1970s, agricultural economics has primarily focused on 7 main topics, according to a scholar in the field:
- Agricultural environment and resources
- Risk and uncertainty
- Consumption and food supply chains
- Prices and incomes
- Market structures
- Trade and development
- Technical change and human capital
In terms of technical change, there have been increasingly rapid developments and innovations in the equipment designed for agricultural research. This equipment includes instruments for plant physiology research, and monitoring soil conditions and atmospheres.