Innovations In U.S AG

INTRODUCTION

• Since the 1930s, U.S. agricultural policy aimed at high-quality, low-cost food.
• Americans spend about $6\%$ of income on food; in some developing countries it can be $45\%$, in France about $14\%$.
• Productivity gains: more output with less land, inputs, and labor; cheap food prompts questions about environmental and rural impacts.
• Growing consumer interest in food origins and sustainability (e.g., Omnivore’s Dilemma).

TYPES OF FARMS

• USDA definition: an entity that sells at least $1{,}000$ of agricultural commodities annually.
• Farm types by annual gross income:
  • Small Family: <$350{,}000$; 89.7% of farms; 52.1% of land; 25.5% of production value
  • Midsize Family: 350{,}000$-$999{,}999; 5.7% of farms; 21.7% land; 24.8% production
  • Large Family: 1{,}000{,}000$–$4{,}999{,}999; 2.0% of farms; 16.2% land; 35.0% production
  • Non-Family: Varies; 2.7% of farms; 10.0% land; 14.7% production
• Implication: most farms are small family, but large and non-family farms account for a substantial share of production value and land use.

SHARECROPPING AND TENANT FARMING IN THE U.S.

• As of 2014, about 39% of U.S. land is rented by farmers.
• Land ownership sources: non-relatives buy (44%), inherited (35%), relative sale (16%), auction (4%).
• Leases can cover farm, mineral, gas/oil, wind, water, and recreation rights.
• Many farmers own some land and lease some; typical leasing relationships run 18–20 years.
• Environmental incentives on leased land depend on lease structure and enforcement.

VALUE OF FARMLAND IN U.S.

• Cropland values vary by state; images show state-by-state values and percent change from 2022 to 2023.
• Average cropland value in the U.S. has trended upward from 2009–2023, with notable regional variation.

FARMING SYSTEMS

• Conventional: uses a broad input mix (pesticides, herbicides, bioengineered seeds); practices include no-till, cover crops, crop rotation, precision ag.
• Organic: follows USDA organic guidelines; cannot use synthetic substances; must be certified for the USDA/Organic seal.
• Discussion: Are organic farms environmentally and health-wise superior to conventional ones?

PUBLIC PERCEPTION OF FARMING

• Public ideal: owner-operator, diversified, tech-enabled, environmentally harmonious, market-open, intergenerational.
• Agribusiness perception: capital-intensive, standardized, highly managed.
• Modern farms are expected to supply food, fiber, biofuels, energy, and ecosystem services while maintaining small-farm ideals.
• Accountability: consumers expect transparency about farming practices.

FARM RESOURCE REGIONS

• Regions include: Basin and Range; Northern Great Plains; Heartland; Northern Crescent; Fruitful Rim; Eastern Uplands; Prairie Gateway; Mississippi Portal; Southern Seaboard.
• Key themes: regional specializations (cattle, wheat, dairy, fruits, vegetables, cotton, etc.), farm size distributions, and cropland shares.
• Notes: ERS provides county-level classifications and production data by region.

ENERGY FOR AGRICULTURE

• Mechanization: shift from human/animal power to gasoline-powered tractors.
• Inputs have risen over time (fuel, nitrogen, pesticides).
• Example trends in corn production inputs (illustrative):
  • Gasoline per acre: from 15 to 22 gallons
  • Nitrogen per acre: from 7 to 112 pounds
  • Pesticides/herbicides per acre: from 0 to about 2.0 pounds
• 1973 oil crisis spurred ethanol discussion; subsidies appeared in the late 1970s, faded, then re-emerged around 2005.

BIOFUELS

• Renewed interest in early 2000s due to high oil prices and policy support.
• Policies: Energy Policy Act (2005) and Energy Independence and Security Act (2007).
• Ethanol production grew from ~1.8 billion gallons in 2000 to ~15 billion gallons in 2014.
• Question: How has ethanol demand affected corn prices and agricultural land use over the long run?

BIOFUELS (DETAILED INSIGHTS)

• Figure: Corn price trend and percent of corn used for ethanol (in 2012 dollars).
• Observations: Higher ethanol use coincides with periods of higher corn demand/prices; policy and energy market dynamics influence price sensitivity.

AGRICULTURAL CHEMICALS

• Pests threaten crops; fertilizers and pesticides are core tools.
• Fertilizers: primary nutrients $N$, $P$, $K$; secondary: $Ca\,Mg\,S$.
• Haber-Bosch: (1913) synthesizes ammonia from natural gas for nitrogen fertilizer.
• Historical note: development supported military needs before agricultural use post-WWII.

FERTILIZER APPLICATION WORLDWIDE

• Non-organic fertilizer use expanded from about 31.2 million tons (1961) to ~141.6 million tons (2005).
• Share of fertilizer use by region rotates over time; major share globally in China, USA, etc.

NITROGEN RUN-OFF AND ENVIRONMENT

• Nitrogen run-off is costly and harms water quality.
• Mitigation strategies: cover crops, buffer zones, targeted irrigation to improve uptake.
• Considerations: fertilizer prices impact farmer profitability and farm viability.

FERTILIZER PRICES

• Anhydrous nitrogen price peaks in spring 2022 (~$1{,}400/ton$ after around $500/ton$ in 2021).
• Drivers: Russia’s export bans; capital-intensive fertilizer plants; natural gas costs.
• As of recent data, prices have fallen due to lower nat gas costs and expanded capacity.

ECONOMIES OF SCALE

• Definition: average cost per unit declines as farm size increases due to fixed-cost spreading and volume discounts.
• Examples: pollution monitoring infrastructure can serve more pigs; equipment and inputs spread over more acres reduce per-unit costs.

PESTICIDES AND IPM

• Pest management methods include mechanical controls, burning, and chemical pesticides.
• EPA governs pesticide approvals; reviews occur every 15 years.
• Integrated Pest Management (IPM): balances economic returns with environmental minimization of pesticide use; includes biological controls and education for farmers.
• Pesticide use by category (illustrative): herbicides, insecticides, fungicides, others; regional patterns vary.

PESTICIDES BY REGION

• Global distribution of pesticide sales by region shows variations in usage patterns across Europe, Asia, the Americas, and the Middle East/Africa.

PLANT BREEDING

• Plant breeding has evolved from traditional selection to hybrid seeds.
• Key programs began in the 1920s; Hi-Bred seed corn passed $1\text{ million}$ in annual sales by 1949.
• Extension services helped disseminate hybrid seeds; hybrids yield productivity gains.

GENETIC ENGINEERING (GMOs)

• Began in the 1980s; first U.S. GM crop released in 1994: Flavr-Savr tomato.
• GM crops commonly involve HT (herbicide-tolerant) and Bt (insect-resistant) traits; many crops are multi-trait or stacked.
• GM crops are largely fed to livestock, but some GM products are consumed directly (e.g., corn and soybean derivatives).

GENETIC ENGINEERING ADOPTION (1996–2020)

• Adoption by crop: HT soybeans, HT cotton, Bt cotton, Bt corn, HT corn.
• Trends show increasing share of planted acres with HT/Bt traits over time; some crops may have overlapping stacked traits.

GENETIC ENGINEERING: KEY TERMS

• HT = Herbicide-tolerant; Bt = Bacillus thuringiensis insect resistance.
• GM crops: potential to increase yields, tolerate drought/salinity, enhance nutrients, enable plant-based production of vaccines/medicines.
• Most GM crops are used for animal feed, some for direct human consumption.

ADVANTAGES & DISADVANTAGES OF GM CROPS

• Advantages: higher yields, drought/saline tolerance, enhanced nutrients, potential reduced waste, lower management costs.
• Disadvantages: possible GM crop contamination of non-GM crops, unintended ecological effects, dependency on biotech companies, patent-driven dynamics.

PRODUCTIVITY OVER TIME - SOYBEANS

• U.S. soybean yields (1960–2018) show a strong upward trend.
• Best-fit trend line: $y = 0.436x + 21.161$ with $R^2 = 0.8944$.
• Implication: productivity improvements supported by improved seeds and inputs.

PRODUCTIVITY OVER TIME - CORN

• Corn yields show substantial gains over time with multiple breeding paths: Open-pollinated, Double Cross, Single Cross, GMO, and combinations.
• Representative trend lines (schematic):
  • Open-Pollinated vs Open-Pollinated + GMO traits (illustrative)
• Overall implication: scientific plant breeding and GM traits have contributed to productivity growth in corn.

FACTORS BEHIND PRODUCTIVITY GAINS

• Key drivers include nitrogen fertilizer use and hybrid/GM seed development.
• Drought years (e.g., 2012) can affect trend estimates.
• Productivity gains affect both individual farm profitability and the broader economy, including land prices.

BIOENGINEERED FOODS

• List of bioengineered crops approved or commonly used: Alfalfa, Apple (Arctic varieties), Canola, Corn, Cotton, Eggplant, Papaya, Pineapple, Potato, Salmon (AquAdvantage), Soybean, Squash, Sugarbeet, Sugarcane.
• Source: USDA listing of bioengineered foods.

DISCUSSION QUESTIONS

• Do bioengineered foods have implications for international trade?
• Do consumers have a right to know what is in their food? How easy should it be to find out?

U.S.-MEXICO TRADE DISPUTE (AUG 17, 2023)

• U.S. preparing to escalate a dispute over Mexico's ban on GM corn, potentially forming a dispute-resolution panel under USMCA.
• Mexico bans GM corn for human consumption; intends to replace it with GM yellow corn for livestock/feed.
• Underlying issues include health concerns, native varieties, and trade implications.

UPDATE ON GMO S

• December 2020: FDA approved GalSafe pigs for human consumption and medical applications (including drug production and organ/tissue use).
• May 2023: Australia approved GM bananas resistant to a deadly fungus (seen as a safety net for growers).