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)

InelasticPrice

Quantity

Demand for Luxury AutomobilesElastic

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 1200Thou

sand

s of

MC

alar

ies

requ

ired

to

reac

h liv

e w

eigh

t

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

cwt.

Heifers Steers

Price

Quantity

The Technological Treadmill Theory

Supply

Demand

How does technology affect the total revenue of the farmerover 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 Revenuechanges from the tan box to the bluebox.

New Total Revenue = Price1 * Quantity1

P

P1

QQ1

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 gainTotal Revenue has gone down.

P

P1

QQ1

Loss

GAIN

The Technological Treadmill Theory

Supply

Demand

Price

Quantity

S 1

Why does this happen?

Inelastic demand of agriculturalcommodities.P

P1

QQ1

Loss

GAIN

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