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?

 What Does that Supply Shift Look Like? Supply Price Quantity Supply 1 Original Price QQ1Q1

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 Dolly Dolly?

The Case for Beef Cattle Supply of Beef Demand for Beef Price of Beef Quantity of Beef Supply 1 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

And the market for Heifers? Supply of Heifers Demand for Heifers Price of Heifers Quantity New Supply of Heifers

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 = Price 1 * Quantity 1 P P1P1 Q Q1Q1 TR 1

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 P1P1 Q Q1Q1 Loss GAINGAIN

The Technological Treadmill Theory Supply Demand Price Quantity S 1 Why does this happen? Inelastic demand of agricultural commodities. P P1P1 Q Q1Q1 Loss GAINGAIN

Emerging Technologies in Production Agriculture Over the Last Decade  First Generation Technologies  Biotechnologies that have made it to market Flavr Savr TM 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? CommodityValue 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