Technology and Agriculture

1. Technology and Agriculture Economic Impacts of Advancing Technology

2. How does technological innovation impact agriculture? • Major Technological Advancements in Agriculture • Mechanization • Chemical Fertilizers • Hybridization • Biotechnology

3. How does technological innovation impact agriculture? • 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

4. How does technological innovation impact agriculture? • What Does that Supply Shift Look Like? Price Supply Supply1 Original Price Quantity Q Q1

5. Supply and Demand Elasticities • Demand Elasticity for Agricultural Products • Inelastic Demand, Why? • What does that mean for the producer? Price Demand for Food (Necessity) Inelastic Demand for Luxury Automobiles Elastic Quantity

6. Supply and Demand Elasticities • Supply Elasticity for Agricultural Products • Short Run • Intermediate Run • Long Run Price Supply - Short Run Supply - Intermediate Run Supply - Long Run Quantity

7. 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?

8. New Technologies in the Livestock Industry • Cloning • The ability to make an exact duplicate animal with the same genetic makeup Dolly? Dolly

9. The Case for Beef Cattle Price of Beef Supply of Beef Supply1 of Beef Original Price New Price Demand for Beef Quantity of Beef

10. What about the market for Steers? Price Steers Supply of Steers New Supply of Steers Demand for Steers Quantity Steers

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

14. The Technological Treadmill Theory How does technology affect the total revenue of the farmer over time? Price Supply Demand Quantity

15. The Technological Treadmill Theory Price Total Revenue = Price * Quantity Supply When supply increases from the technological change, what happens to Total Revenue? P TR Demand Q Quantity

16. The Technological Treadmill Theory Price New Total Revenue = Price1 * Quantity1 Supply S 1 Supply has increased and Total Revenue changes from the tan box to the blue box. P P1 TR1 Demand Q Quantity Q1

17. The Technological Treadmill Theory Price Supply 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 Loss P1 G A I N Demand Q Quantity Q1

18. The Technological Treadmill Theory Price Supply S 1 Why does this happen? Inelastic demand of agricultural commodities. P Loss P1 G A I N Demand Q Quantity Q1

19. 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

20. 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

21. 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