Farm Management Update

Quarterly Publication of Ohio State University Extension

Winter 2003-2004

Agriculture's Mission in the 21st Century: "Bioresources for a Healthy World"

Carl Zulauf McCormick Professor of Agricultural Marketing and Policy

It is always difficult to capture a mission in a few words, but a reasonable encapsulation of agriculture's mission since its emergence approximately 10,000 years ago is "to provide people with the basic necessities of food, clothing, and shelter." However, this mission mostly has been attained in advanced economies, such as the United States. Most strikingly, the share of expenditures that U.S. consumers spend on U.S. produced farm commodities used for food was only 1.8% in 2000, the last year for which data exists. Stated alternatively, little can happen on the farm anymore, short of a severe and widespread drought, that can noticeably impact U.S. consumers.

Given this situation, the relevancy of agriculture in the U.S. increasingly has come under scrutiny. Some have argued, such as Dr. Steven Blank in his widely-discussed book, The End of Agriculture in the American Portfolio, that agriculture will disappear from the United States. While this scenario is within the realm of plausible outcomes, a more likely outcome in this author's view is that the two-thirds decline in real farm prices since 1910 will create new economic opportunities for U.S. agriculture. Three potential examples of the new economic dynamics at work follow.

Opportunity: Medical Care

Since 1929, the first year that data are available, the share of expenditures that U.S. consumers devote to medical care has increased from 4% to 18%. Medical care is now the largest U.S. economic sector when measured by share of consumer expenditures. Furthermore, its share likely will continue to increase as the baby boomers enter the part of life when medical expenses are highest.

Food and health are closely linked; however, genetic engineering of farm products and foods for attributes that prevent or treat diseases promises an even closer link in the future. This emerging medical delivery system, often referred to as functional foods, is made possible by new technology, but it also is attractive because of the declining price of farm products. Functional foods offer the opportunity to improve health and to slow or even reverse the increase in share of expenditures devoted to medical care.

Opportunity: Energy and Industrial Feedstock

Since the early 1970s, the price of farm products has declined by over two-thirds relative to the price of fuels. The debate over ethanol and its public subsidies has obscured the growing economic attractiveness of farm products as a source for energy and industrial feedstock.

Opportunity: Environmental Quality

As the United States became wealthier, concerns about the environment and the economic resources devoted to addressing these concerns have increased. Farming's impact on the environment is omnipresent as over half of the 1.5 billion acres of nonfederal land in the United States is used for farmrelated activities. The growing importance of environmental programs in the social compact known as the farm bill documents that the day is drawing closer when the general citizenry of the United States will view their well-being as impacted more by farmers as environmental stewards than as producers of farm products used for food. This shift in consumer wants will allow agriculture to sell its environmental assets, such as open space, the ability to improve air and water quality, and potentially even scenic views of corn, cows, and barns.

Summary

The decline in farm prices is usually seen as a bane by farmers, farm leaders, and the farm press. However, these declining prices generate new opportunities, including medicinal foods, energy and industrial feedstock, and environmental benefits. These new opportunities will expand agriculture's scope beyond the basic necessities of food, shelter, and clothing. Thus, a more inclusive view of the hopes and aspirations that the general citizens of a country of wealth have for agriculture in the 21st Century is "Bioresources for a Healthy World."

The author thanks Constance Jackson, Allan Lines, and Luther Tweeten for their comments on and insights on earlier versions of this paper.

A version of this article will appear in THE FUTURIST, September-October 2003 (www.wfs.org). This version emphasizes the changing relationship between agriculture and the U.S. economy and the implications of this changing relationship for the U.S. economy in the 21st Century.